Question 1

Figure 34-6
 
From Figure 34-6, one can infer that

Accepted Answer

A)  Honduras will be willing to trade bananas for corn at a unit ratio of no less than 2 corn:1 banana. 
B)  Honduras will be willing to trade bananas as long as the unit exchange ratio is greater than 1/2 corn:1 banana. 
C)  Honduras has no potential to gain from trade. 
D)  Honduras will be unwilling to trade at an exchange ratio. 
A)  Honduras will be willing to trade bananas for corn at a unit ratio of no less than 2 corn:1 banana. 
B)  Honduras will be willing to trade bananas as long as the unit exchange ratio is greater than 1/2 corn:1 banana. 
C)  Honduras has no potential to gain from trade. 
D)  Honduras will be unwilling to trade at an exchange ratio.

Question 2

The strategic argument for protectionism holds that a nation may sometimes have to threaten protectionism to induce other countries to drop their own protectionist measures.

Accepted Answer

A) True 
 B)False

Question 3

Figure 34-10
 
Figure 34-10 shows the effect on the market for disk drives of a(n)

Accepted Answer

A)  quota. 
B)  tariff. 
C)  export subsidy. 
D)  import subsidy. 
E)  export tax. 
A)  quota. 
B)  tariff. 
C)  export subsidy. 
D)  import subsidy. 
E)  export tax.

Question 4

Table 34-4   Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If there is no trade between these countries, what are the equilibrium price and quantity in the United States?

Accepted Answer

A)  P = $100, Q = 100 
B)  P = $200, Q = 85 
C)  P = $300, Q = 70 
D)  P = $500, Q = 50 
A)  P = $100, Q = 100 
B)  P = $200, Q = 85 
C)  P = $300, Q = 70 
D)  P = $500, Q = 50

Question 5

Political factors influence international trade because

Accepted Answer

A)  foreign trade always involves at least two governments. 
B)  foreign governments are much less concerned with the welfare of citizens in other countries. 
C)  foreign governments often establish impediments to free international trade. 
D)  All of the above are correct. 
A)  foreign trade always involves at least two governments. 
B)  foreign governments are much less concerned with the welfare of citizens in other countries. 
C)  foreign governments often establish impediments to free international trade. 
D)  All of the above are correct.

Question 6

A program of protection that results in preserving jobs in certain industries

Accepted Answer

A)  raises average productivity in all sectors of the economy. 
B)  does so at very high cost to consumers of the products from those industries. 
C)  is an efficient way to preserve employment and is cheaper than other forms of maintaining full employment. 
D)  is an effective way of encouraging innovation and improvement in production. 
A)  raises average productivity in all sectors of the economy. 
B)  does so at very high cost to consumers of the products from those industries. 
C)  is an efficient way to preserve employment and is cheaper than other forms of maintaining full employment. 
D)  is an effective way of encouraging innovation and improvement in production.

Question 7

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Accepted Answer

A) True 
 B)False

Question 8

Labor is defined as cheap only if its productivity is very low.

Accepted Answer

A) True 
 B)False

Question 9

The essential logic behind international trade is not different from that underlying trade among different states. Why, then, do we study international trade as a special subject?

Accepted Answer

There are at least three reasons. 
1. Do

Question 10

A tariff is

Accepted Answer

A)  a tax on imports. 
B)  a tax on exports. 
C)  a payment by the government to an exporter. 
D)  a legal limit on the amount of a good that may be imported. 
A)  a tax on imports. 
B)  a tax on exports. 
C)  a payment by the government to an exporter. 
D)  a legal limit on the amount of a good that may be imported.

Question 11

A complicating factor in international trade is that

Accepted Answer

A)  barter is the basis for trade between countries; money is not used. 
B)  gold is used for payments; there are no international payments without gold. 
C)  many other countries prefer to use the U.S. dollar as currency, causing monetary shortage in the United States. 
D)  trade between countries requires different currencies rather than one currency. 
A)  barter is the basis for trade between countries; money is not used. 
B)  gold is used for payments; there are no international payments without gold. 
C)  many other countries prefer to use the U.S. dollar as currency, causing monetary shortage in the United States. 
D)  trade between countries requires different currencies rather than one currency.

Question 12

If a nation has "cheap labor,"

Accepted Answer

A)  it can still benefit from trade. 
B)  other nations can still compete with it. 
C)  it cannot have a comparative advantage in everything. 
D)  All of the above are true. 
A)  it can still benefit from trade. 
B)  other nations can still compete with it. 
C)  it cannot have a comparative advantage in everything. 
D)  All of the above are true.

Question 13

The following table shows the units of output a worker can produce per month in country A and country B. Country   Which of the following statements about absolute advantage is true?

Accepted Answer

A)  Country A has the absolute advantage in the production of food while country B has the absolute advantage in the production of electronics. 
B)  Country A has the absolute advantage in the production of both food and electronics. 
C)  Country B has the absolute advantage in the production of both food and electronics. 
D)  All of these. 
A)  Country A has the absolute advantage in the production of food while country B has the absolute advantage in the production of electronics. 
B)  Country A has the absolute advantage in the production of both food and electronics. 
C)  Country B has the absolute advantage in the production of both food and electronics. 
D)  All of these.

Question 14

A country that must inhibit imports should give preference to

Accepted Answer

A)  quotas over tariffs because quotas are less likely to distort trade patterns between nations. 
B)  tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. 
C)  export subsidies over quotas or tariffs because export subsidies can protect a nation's domestic producers. 
D)  an embargo wherever possible because an embargo can serve as a political weapon in addition to being a "trade stopper." 
A)  quotas over tariffs because quotas are less likely to distort trade patterns between nations. 
B)  tariffs over quotas because, unlike quotas, tariffs offer no special benefits to inefficient exporters. 
C)  export subsidies over quotas or tariffs because export subsidies can protect a nation's domestic producers. 
D)  an embargo wherever possible because an embargo can serve as a political weapon in addition to being a "trade stopper."

Question 15

Quebec is capable of producing 10 pallets of wood shingles or 8 barrels of maple syrup with a unit of labor. Vermont is capable of producing 12 pallets of wood shingles or 12 barrels of maple syrup with a unit of labor. Assume that this is typical of the labor force as a whole. Which location has the absolute advantage and which has the comparative advantage, in the production of each good? Can these locations reap gains from trade?

Accepted Answer

From the numbers given, Vermont has the

Question 16

A country has a comparative advantage over another in the production of gadgets if it can produce

Accepted Answer

A)  more gadgets than can the other country. 
B)  more gadgets than can any other country. 
C)  gadgets more efficiently than it can produce any other good. 
D)  gadgets at lower opportunity cost than can the other country. 
A)  more gadgets than can the other country. 
B)  more gadgets than can any other country. 
C)  gadgets more efficiently than it can produce any other good. 
D)  gadgets at lower opportunity cost than can the other country.

Question 17

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week. From these numbers, we can conclude

Accepted Answer

A)  Captain Canada has a comparative advantage in the production of hockey sticks. 
B)  Captain Germany has a comparative advantage in the production of maple syrup. 
C)  Captain Canada has an absolute advantage in the production of hockey sticks. 
D)  All of the above conclusions are correct. 
A)  Captain Canada has a comparative advantage in the production of hockey sticks. 
B)  Captain Germany has a comparative advantage in the production of maple syrup. 
C)  Captain Canada has an absolute advantage in the production of hockey sticks. 
D)  All of the above conclusions are correct.

Question 18

A nation can gain from imposing a tariff on imports if it forces exporting countries

Accepted Answer

A)  to raise their prices to pay the tariff. 
B)  to lower their prices to avoid stocks of unsold goods. 
C)  to produce at diseconomies of scale. 
D)  to accept some imports from the tariff-imposing nation. 
A)  to raise their prices to pay the tariff. 
B)  to lower their prices to avoid stocks of unsold goods. 
C)  to produce at diseconomies of scale. 
D)  to accept some imports from the tariff-imposing nation.

Question 19

By tradition, Japanese employers cannot "lay off" workers. As a result they have goods that they cannot sell on the domestic market without driving down prices. To minimize losses, they sell goods such as steel and televisions in foreign markets at prices well below those in Japan. This is called

Accepted Answer

A)  beggar my neighbor. 
B)  helpfulism. 
C)  strategic trade policy. 
D)  dumping. 
A)  beggar my neighbor. 
B)  helpfulism. 
C)  strategic trade policy. 
D)  dumping.

Question 20

Variability in exchange rates of currencies used in international trade

Accepted Answer

A)  causes a complete breakdown of trade. 
B)  renders the theory of gains from trade null in practice. 
C)  brings with it a host of complications in trade policy. 
D)  has no impact on trade. 
A)  causes a complete breakdown of trade. 
B)  renders the theory of gains from trade null in practice. 
C)  brings with it a host of complications in trade policy. 
D)  has no impact on trade.

Figure 34-6 From Figure 34-6, one can infer that

The strategic argument for protectionism holds that a nation may sometimes have to threaten protectionism to induce other countries to drop their own protectionist measures.

Figure 34-10 Figure 34-10 shows the effect on the market for disk drives of a(n)

Table 34-4 Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If there is no trade between these countries, what are the equilibrium price and quantity in the United States?

Political factors influence international trade because

A program of protection that results in preserving jobs in certain industries

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Labor is defined as cheap only if its productivity is very low.

The essential logic behind international trade is not different from that underlying trade among different states. Why, then, do we study international trade as a special subject?

A tariff is

A complicating factor in international trade is that

If a nation has "cheap labor,"

The following table shows the units of output a worker can produce per month in country A and country B. Country Which of the following statements about absolute advantage is true?

A country that must inhibit imports should give preference to

A country has a comparative advantage over another in the production of gadgets if it can produce

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week. From these numbers, we can conclude

A nation can gain from imposing a tariff on imports if it forces exporting countries

By tradition, Japanese employers cannot "lay off" workers. As a result they have goods that they cannot sell on the domestic market without driving down prices. To minimize losses, they sell goods such as steel and televisions in foreign markets at prices well below those in Japan. This is called

Variability in exchange rates of currencies used in international trade

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Us Economy

Filters

Exam 34: International Trade and Comparative Advantage

Figure 34-6 From Figure 34-6, one can infer that

The strategic argument for protectionism holds that a nation may sometimes have to threaten protectionism to induce other countries to drop their own protectionist measures.

Figure 34-10 Figure 34-10 shows the effect on the market for disk drives of a(n)

Table 34-4 Table 34-4 presents the demand and supply schedules for television sets in Japan and the United States. If there is no trade between these countries, what are the equilibrium price and quantity in the United States?

Political factors influence international trade because

A program of protection that results in preserving jobs in certain industries

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Labor is defined as cheap only if its productivity is very low.

The essential logic behind international trade is not different from that underlying trade among different states. Why, then, do we study international trade as a special subject?

A tariff is

A complicating factor in international trade is that

If a nation has "cheap labor,"

The following table shows the units of output a worker can produce per month in country A and country B. Country Which of the following statements about absolute advantage is true?

A country that must inhibit imports should give preference to

A country has a comparative advantage over another in the production of gadgets if it can produce

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week. From these numbers, we can conclude

A nation can gain from imposing a tariff on imports if it forces exporting countries

By tradition, Japanese employers cannot "lay off" workers. As a result they have goods that they cannot sell on the domestic market without driving down prices. To minimize losses, they sell goods such as steel and televisions in foreign markets at prices well below those in Japan. This is called

Variability in exchange rates of currencies used in international trade

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Us Economy

Filters