Question 1

When tariffs on imported products are removed by a nation, it will result in

Accepted Answer

A) higher prices and lower quantities consumed in that nation. 
B) higher prices and higher quantities consumed in that nation. 
C) lower prices and lower quantities consumed in that nation. 
D) lower prices and higher quantities consumed in that nation. 
A) higher prices and lower quantities consumed in that nation. 
B) higher prices and higher quantities consumed in that nation. 
C) lower prices and lower quantities consumed in that nation. 
D) lower prices and higher quantities consumed in that nation.

Question 2

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Accepted Answer

A) U.S. firms and workers must be protected from the cheaper labor in nations where wages are low. 
B) All nations cannot simultaneously succeed in restricting imports while maintaining exports. 
C) Reducing tariffs will benefit all consumers and domestic producers. 
D) The need to protect U.S. workers from unemployment is not a concern in international economics. 
A) U.S. firms and workers must be protected from the cheaper labor in nations where wages are low. 
B) All nations cannot simultaneously succeed in restricting imports while maintaining exports. 
C) Reducing tariffs will benefit all consumers and domestic producers. 
D) The need to protect U.S. workers from unemployment is not a concern in international economics.

Question 3

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Accepted Answer

A) specialization in production 
B) nationalization of industries 
C) regulation of production and trade 
D) spreading out of resources in more industries 
A) specialization in production 
B) nationalization of industries 
C) regulation of production and trade 
D) spreading out of resources in more industries

Question 4

Refer to the accompanying production possibilities tables. Data are in millions of units. If Germany and the United States engage in trade, the mutually beneficial terms of trade will be between

Accepted Answer

A) 3 and 4 units of autos for 1 unit of chemicals. 
B) 2 and 4 units of autos for 1 unit of chemicals. 
C) 2 and 4 units of chemicals for 1 unit of autos. 
D) 0.33 and 0.5 units of autos for 1 unit of chemicals. 
A) 3 and 4 units of autos for 1 unit of chemicals. 
B) 2 and 4 units of autos for 1 unit of chemicals. 
C) 2 and 4 units of chemicals for 1 unit of autos. 
D) 0.33 and 0.5 units of autos for 1 unit of chemicals.

Question 5

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

Accepted Answer

A) decrease in supply and an increase in the price of the product. 
B) decrease in demand and a decrease in the price of the product. 
C) decrease in supply of, and an increase in demand for, the product. 
D) increase in supply of, and a decrease in demand for, the product. 
A) decrease in supply and an increase in the price of the product. 
B) decrease in demand and a decrease in the price of the product. 
C) decrease in supply of, and an increase in demand for, the product. 
D) increase in supply of, and a decrease in demand for, the product.

Question 6

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data suggest that

Accepted Answer

A) West Lothian should specialize in, and export, beer. 
B) both countries will be better off if they do not engage in specialization and trade involving these two products. 
C) West Lothian should specialize in, and export, pizza. 
D) East Lothian should specialize in, and export, beer. 
A) West Lothian should specialize in, and export, beer. 
B) both countries will be better off if they do not engage in specialization and trade involving these two products. 
C) West Lothian should specialize in, and export, pizza. 
D) East Lothian should specialize in, and export, beer.

Question 7

A side benefit of international trade is that it links national interests and increases the opportunity costs of war.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs. It can be deduced that

Accepted Answer

A) Greece has a comparative advantage in chemicals. 
B) Greece has the absolute advantage in both products. 
C) Italy has a comparative advantage in chemicals. 
D) it is more costly in terms of resources to produce steel in Italy. 
A) Greece has a comparative advantage in chemicals. 
B) Greece has the absolute advantage in both products. 
C) Italy has a comparative advantage in chemicals. 
D) it is more costly in terms of resources to produce steel in Italy.

Question 9

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. Therefore, Alpha should specialize in Y and Beta in X.

Accepted Answer

A) True 
 B)False

Question 10

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

Accepted Answer

A) U.S. firms to establish export markets around the world. 
B) other nations to become familiar with, and adjust to, U.S. products. 
C) workers displaced by imports or plant relocations abroad. 
D) businesses who wish to globalize and compete in the world market. 
A) U.S. firms to establish export markets around the world. 
B) other nations to become familiar with, and adjust to, U.S. products. 
C) workers displaced by imports or plant relocations abroad. 
D) businesses who wish to globalize and compete in the world market.

Question 11

Comparative advantage is another name for absolute advantage.

Accepted Answer

A) True 
 B)False

Question 12

Tariffs and quotas are costly to consumers because

Accepted Answer

A) the price of the imported good falls. 
B) the supply of the imported good increases. 
C) import competition increases for domestic goods. 
D) consumers have to switch to higher-priced domestic goods. 
A) the price of the imported good falls. 
B) the supply of the imported good increases. 
C) import competition increases for domestic goods. 
D) consumers have to switch to higher-priced domestic goods.

Question 13

The so-called eurozone refers to

Accepted Answer

A) all members of the European Union. 
B) the EU nations that have adopted a common currency. 
C) the combined Eastern and Western Europe. 
D) nations in Europe where the U.S. has military bases. 
A) all members of the European Union. 
B) the EU nations that have adopted a common currency. 
C) the combined Eastern and Western Europe. 
D) nations in Europe where the U.S. has military bases.

Question 14

The terms of trade reflect the

Accepted Answer

A) rate at which gold exchanges internationally for any domestic currency. 
B) ratio at which nations will exchange two goods. 
C) fact that the gains from trade will be equally divided. 
D) cost conditions embodied in a single country's production possibilities curve. 
A) rate at which gold exchanges internationally for any domestic currency. 
B) ratio at which nations will exchange two goods. 
C) fact that the gains from trade will be equally divided. 
D) cost conditions embodied in a single country's production possibilities curve.

Question 15

NAFTA

Accepted Answer

A) has increased the standard of living in the North African member nations. 
B) benefits workers in the participating nations but hurts consumers by raising prices. 
C) allows completely unrestricted movement of goods, services, and resources between the member nations. 
D) has reduced most trade barriers between Canada, Mexico, and the United States. 
A) has increased the standard of living in the North African member nations. 
B) benefits workers in the participating nations but hurts consumers by raising prices. 
C) allows completely unrestricted movement of goods, services, and resources between the member nations. 
D) has reduced most trade barriers between Canada, Mexico, and the United States.

Question 16

In the theory of comparative advantage, a good should be produced in that nation where

Accepted Answer

A) the production possibilities line lies further to the right than the trading possibilities line. 
B) its cost is least in terms of alternative goods that might otherwise be produced. 
C) its absolute cost in terms of real resources used is least. 
D) its absolute money cost of production is least. 
A) the production possibilities line lies further to the right than the trading possibilities line. 
B) its cost is least in terms of alternative goods that might otherwise be produced. 
C) its absolute cost in terms of real resources used is least. 
D) its absolute money cost of production is least.

Question 17

Tariffs and import quotas would benefit the following groups, except

Accepted Answer

A) consumers of the product. 
B) domestic producers of the product. 
C) workers in domestic firms producing the product. 
D) the government of the importing country. 
A) consumers of the product. 
B) domestic producers of the product. 
C) workers in domestic firms producing the product. 
D) the government of the importing country.

Question 18

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.   The total amount of revenue collected from a $1-per-unit tariff on this product will be

Accepted Answer

A) $22. 
B) $8. 
C) $7. 
D) $14. 
A) $22. 
B) $8. 
C) $7. 
D) $14.

Question 19

How will the difference between the world price and the domestic price of a good encourage exports and imports?

Accepted Answer

If an economy is open to international t

Question 20

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $0.50, this nation will experience a domestic

Accepted Answer

A) shortage of 160 units, which it will meet with 160 units of imports. 
B) shortage of 160 units, which will increase the domestic price to $1.60. 
C) surplus of 160 units, which it will export. 
D) surplus of 160 units, which will reduce the world price to $1.00. 
A) shortage of 160 units, which it will meet with 160 units of imports. 
B) shortage of 160 units, which will increase the domestic price to $1.60. 
C) surplus of 160 units, which it will export. 
D) surplus of 160 units, which will reduce the world price to $1.00.

Exam 26: International Trade

When tariffs on imported products are removed by a nation, it will result in

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Refer to the accompanying production possibilities tables. Data are in millions of units. If Germany and the United States engage in trade, the mutually beneficial terms of trade will be between

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The data suggest that

A side benefit of international trade is that it links national interests and increases the opportunity costs of war.

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs. It can be deduced that

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. Therefore, Alpha should specialize in Y and Beta in X.

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

Comparative advantage is another name for absolute advantage.

Tariffs and quotas are costly to consumers because

The so-called eurozone refers to

The terms of trade reflect the

NAFTA

In the theory of comparative advantage, a good should be produced in that nation where

Tariffs and import quotas would benefit the following groups, except

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. The total amount of revenue collected from a $1-per-unit tariff on this product will be

How will the difference between the world price and the domestic price of a good encourage exports and imports?

Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $0.50, this nation will experience a domestic

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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Immigration

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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