Question 1

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Accepted Answer

A) a sharp decline in petroleum exports from the U.S. 
B) a significant increase in petroleum imports into the U.S. 
C) a significant decline in the petroleum imports into the U.S. 
D) a huge increase in petroleum exports from the U.S. 
A) a sharp decline in petroleum exports from the U.S. 
B) a significant increase in petroleum imports into the U.S. 
C) a significant decline in the petroleum imports into the U.S. 
D) a huge increase in petroleum exports from the U.S.

Question 2

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 3

Suppose the domestic price (no-international-trade price)of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

Accepted Answer

A) have a domestic surplus of copper. 
B) export copper. 
C) import copper. 
D) neither export nor import copper. 
A) have a domestic surplus of copper. 
B) export copper. 
C) import copper. 
D) neither export nor import copper.

Question 4

In recent years, the United States has

Accepted Answer

A) exported more services abroad than it has imported. 
B) had a small goods trade surplus with Japan. 
C) had a large goods trade surplus with the rest of the world. 
D) maintained an overall trade surplus (goods and services combined)with the rest of the world. 
A) exported more services abroad than it has imported. 
B) had a small goods trade surplus with Japan. 
C) had a large goods trade surplus with the rest of the world. 
D) maintained an overall trade surplus (goods and services combined)with the rest of the world.

Question 5

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities   Sigma's production possibilities
  On the basis of this information,

Accepted Answer

A) Gamma should export both tea and pots to Sigma. 
B) Sigma should export tea to Gamma, and Gamma should export pots to Sigma. 
C) Gamma should export tea to Sigma, and Sigma should export pots to Gamma. 
D) Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots. 
A) Gamma should export both tea and pots to Sigma. 
B) Sigma should export tea to Gamma, and Gamma should export pots to Sigma. 
C) Gamma should export tea to Sigma, and Sigma should export pots to Gamma. 
D) Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots.

Question 6

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

Accepted Answer

A) the government. 
B) domestic consumers. 
C) domestic producers. 
D) foreign exporters. 
A) the government. 
B) domestic consumers. 
C) domestic producers. 
D) foreign exporters.

Question 7

Which of the following statements is true?

Accepted Answer

A) Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. 
B) Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner. 
C) Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. 
D) Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product. 
A) Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. 
B) Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner. 
C) Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. 
D) Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.

Question 8

"NAFTA" stands for

Accepted Answer

A) North African Free Trade Area. 
B) North American Free Trade Agreement. 
C) North Asian Free Trade Agreement. 
D) New Zealand-Australia Free Trade Agreement. 
A) North African Free Trade Area. 
B) North American Free Trade Agreement. 
C) North Asian Free Trade Agreement. 
D) New Zealand-Australia Free Trade Agreement.

Question 9

Differences in production efficiencies among nations in producing a particular good result from

Accepted Answer

A) different endowments of fertile soil. 
B) different amounts of skilled labor. 
C) different levels of technological knowledge. 
D) all of these. 
A) different endowments of fertile soil. 
B) different amounts of skilled labor. 
C) different levels of technological knowledge. 
D) all of these.

Question 10

"Offshoring" of certain production activities refers to

Accepted Answer

A) businesses shifting production activities from being done domestically to foreign locations. 
B) businesses acquiring other businesses abroad. 
C) investors putting their funds into foreign assets instead of investing them in local businesses. 
D) firms opening new markets offshore and expanding their targeted export areas. 
A) businesses shifting production activities from being done domestically to foreign locations. 
B) businesses acquiring other businesses abroad. 
C) investors putting their funds into foreign assets instead of investing them in local businesses. 
D) firms opening new markets offshore and expanding their targeted export areas.

Question 11

In comparing a tariff and an import quota, we find that

Accepted Answer

A) the tariff and quota both generate the same amount of revenue for the U.S. Treasury. 
B) the tariff generates revenue for the U.S. Treasury, but the quota does not. 
C) the quota generates revenue for the U.S. Treasury, but the tariff does not. 
D) neither the tariff nor the quota generates revenue for the U.S. Treasury. 
A) the tariff and quota both generate the same amount of revenue for the U.S. Treasury. 
B) the tariff generates revenue for the U.S. Treasury, but the quota does not. 
C) the quota generates revenue for the U.S. Treasury, but the tariff does not. 
D) neither the tariff nor the quota generates revenue for the U.S. Treasury.

Question 12

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 of this product is $1, this nation will

Accepted Answer

A) export all of the product. 
B) import all of the product. 
C) import some of the product and produce some of the product domestically. 
D) neither export nor import the product. 
A) export all of the product. 
B) import all of the product. 
C) import some of the product and produce some of the product domestically. 
D) neither export nor import the product.

Question 13

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

Accepted Answer

A) the terms of trade will be 3X equals 1Y. 
B) Alpha should specialize in Y and Beta in X. 
C) Alpha should specialize in X and Beta in Y. 
D) there is no basis for mutually beneficial specialization and trade. 
A) the terms of trade will be 3X equals 1Y. 
B) Alpha should specialize in Y and Beta in X. 
C) Alpha should specialize in X and Beta in Y. 
D) there is no basis for mutually beneficial specialization and trade.

Question 14

Answer the question using the accompanying cost ratios for two products, fish (F)and chicken (C), in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world.Singsong: 1F = 2CHarmony: 1F = 4CIf these two nations specialize based on comparative advantage,

Accepted Answer

A) Singsong will both produce chicken and catch fish. 
B) Harmony will both produce chicken and catch fish. 
C) Harmony will produce chicken and Singsong will catch fish. 
D) Singsong will produce chicken and Harmony will catch fish. 
A) Singsong will both produce chicken and catch fish. 
B) Harmony will both produce chicken and catch fish. 
C) Harmony will produce chicken and Singsong will catch fish. 
D) Singsong will produce chicken and Harmony will catch fish.

Question 15

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Accepted Answer

A) True 
 B)False

Question 16

The law of increasing opportunity costs

Accepted Answer

A) applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. 
B) results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. 
C) refutes the principle of comparative advantage. 
D) may limit the extent to which a nation specializes in producing a particular product. 
A) applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. 
B) results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. 
C) refutes the principle of comparative advantage. 
D) may limit the extent to which a nation specializes in producing a particular product.

Question 17

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Accepted Answer

A) It spawned a global trade war. 
B) It triggered the Great Depression. 
C) It favored imports over domestic producers. 
D) It is a classic example of the dumping argument. 
A) It spawned a global trade war. 
B) It triggered the Great Depression. 
C) It favored imports over domestic producers. 
D) It is a classic example of the dumping argument.

Question 18

Refer to the accompanying table for a certain product's market in Econland. If the world price for this product were $6, then Econland would import

Accepted Answer

A) 400 units and domestic producers would supply 1,400. 
B) 800 units and domestic producers would supply 1,400. 
C) 800 units and domestic producers would supply 2,200. 
D) 400 units and domestic producers would supply 2,200. 
A) 400 units and domestic producers would supply 1,400. 
B) 800 units and domestic producers would supply 1,400. 
C) 800 units and domestic producers would supply 2,200. 
D) 400 units and domestic producers would supply 2,200.

Question 19

Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit imported is imposed, then the quantity of output that would be supplied domestically would be

Accepted Answer

A) 1,400 units, and the quantity of output that would be imported would be 800 units. 
B) 1,600 units, and the quantity of output that would be imported would be 800 units. 
C) 1,600 units, and the quantity of output that would be imported would be 400 units. 
D) 1,400 units, and the quantity of output that would be imported would be 400 units. 
A) 1,400 units, and the quantity of output that would be imported would be 800 units. 
B) 1,600 units, and the quantity of output that would be imported would be 800 units. 
C) 1,600 units, and the quantity of output that would be imported would be 400 units. 
D) 1,400 units, and the quantity of output that would be imported would be 400 units.

Question 20

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

Accepted Answer

A) textiles 
B) accounting services 
C) steel 
D) apparel 
A) textiles 
B) accounting services 
C) steel 
D) apparel

Exam 26: International Trade

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Suppose the domestic price (no-international-trade price)of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will

In recent years, the United States has

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities Sigma's production possibilities On the basis of this information,

Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by

Which of the following statements is true?

"NAFTA" stands for

Differences in production efficiencies among nations in producing a particular good result from

"Offshoring" of certain production activities refers to

In comparing a tariff and an import quota, we find that

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 of this product is $1, this nation will

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

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

The law of increasing opportunity costs

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Refer to the accompanying table for a certain product's market in Econland. If the world price for this product were $6, then Econland would import

Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit imported is imposed, then the quantity of output that would be supplied domestically would be

Which of the U.S. industries below has not seen major shutdowns and layoffs because of free foreign trade?

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

Health Care

Immigration

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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