Question 1

People living in different countries can benefit from international trade because

Accepted Answer

A)  different countries use different currencies. 
B)  trade makes it possible for the residents of different countries to specialize in the production of those things they do best. 
C)  trade makes it possible for people to acquire goods from foreigners cheaper than they could be produced domestically. 
D)  both b and c are correct. 
E)  all of the above are correct. 
A)  different countries use different currencies. 
B)  trade makes it possible for the residents of different countries to specialize in the production of those things they do best. 
C)  trade makes it possible for people to acquire goods from foreigners cheaper than they could be produced domestically. 
D)  both b and c are correct. 
E)  all of the above are correct.

Question 2

"Trade restrictions will stop foreign imports, which will increase American employment and protect American jobs." Most economists realize this argument is wrong. Can you explain why?

Accepted Answer

Trade restrictions will stop foreign imp

Question 3

Figure 17-8   Refer to Figure 17-8. If this country allows free trade in wagons,

Accepted Answer

A)  consumers will gain and producers will lose. 
B)  consumers will lose and producers will gain. 
C)  both consumers and producers will gain. 
D)  both consumers and producers will lose. 
A)  consumers will gain and producers will lose. 
B)  consumers will lose and producers will gain. 
C)  both consumers and producers will gain. 
D)  both consumers and producers will lose.

Question 4

Opening trade between two nations would

Accepted Answer

A)  shift their production possibilities curves outward. 
B)  shift their production possibilities curves inward. 
C)  leave the production possibilities unchanged and increase their consumption possibilities. 
D)  leave the production possibilities unchanged and decreased their consumption possibilities. 
A)  shift their production possibilities curves outward. 
B)  shift their production possibilities curves inward. 
C)  leave the production possibilities unchanged and increase their consumption possibilities. 
D)  leave the production possibilities unchanged and decreased their consumption possibilities.

Question 5

Figure 17-3     In Figure 17-3, in the absence of trade, the domestic price of soybeans is Pn. If the world price of soybeans is Pw, which of the following will occur when the United States begins to trade internationally?

Accepted Answer

A)  The domestic price of soybeans will rise, and domestic consumption will fall. 
B)  Both the domestic price of soybeans and domestic consumption will rise. 
C)  Both the domestic price of soybeans and domestic consumption will fall. 
D)  The domestic price of soybeans will fall, and domestic consumption will rise. 
A)  The domestic price of soybeans will rise, and domestic consumption will fall. 
B)  Both the domestic price of soybeans and domestic consumption will rise. 
C)  Both the domestic price of soybeans and domestic consumption will fall. 
D)  The domestic price of soybeans will fall, and domestic consumption will rise.

Question 6

Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs

Accepted Answer

A)  would rise, and domestic output would also rise. 
B)  would decline, but the domestic output would rise. 
C)  would decline, and domestic output would decline also. 
D)  would rise, but domestic output would fall. 
A)  would rise, and domestic output would also rise. 
B)  would decline, but the domestic output would rise. 
C)  would decline, and domestic output would decline also. 
D)  would rise, but domestic output would fall.

Question 7

Figure 17-9   Refer to Figure 17-9. Without trade, the equilibrium price of carnations is

Accepted Answer

A)  $8 and the equilibrium quantity is 300. 
B)  $6 and the equilibrium quantity is 200. 
C)  $6 and the equilibrium quantity is 400. 
D)  $4 and the equilibrium quantity is 500. 
A)  $8 and the equilibrium quantity is 300. 
B)  $6 and the equilibrium quantity is 200. 
C)  $6 and the equilibrium quantity is 400. 
D)  $4 and the equilibrium quantity is 500.

Question 8

When a country allows trade and becomes an exporter of a good,

Accepted Answer

A)  the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. 
B)  the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. 
C)  the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. 
D)  the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good. 
A)  the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. 
B)  the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. 
C)  the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. 
D)  the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.

Question 9

If domestic producers have a comparative advantage in producing a good,

Accepted Answer

A)  trade restrictions will be required before the producers can benefit from their comparative advantage. 
B)  trade restrictions will still be required before the domestic producers can compete with low-wage producers abroad. 
C)  they will be able to compete effectively in a competitive world market. 
D)  the government should subsidize production of the good so the domestic producers will be able to achieve a larger share of the world market. 
A)  trade restrictions will be required before the producers can benefit from their comparative advantage. 
B)  trade restrictions will still be required before the domestic producers can compete with low-wage producers abroad. 
C)  they will be able to compete effectively in a competitive world market. 
D)  the government should subsidize production of the good so the domestic producers will be able to achieve a larger share of the world market.

Question 10

International trade does all the following except

Accepted Answer

A)  allow a country to specialize in producing certain goods and services. 
B)  reduce world output. 
C)  allow a country to move to higher consumption levels. 
D)  increase world output. 
A)  allow a country to specialize in producing certain goods and services. 
B)  reduce world output. 
C)  allow a country to move to higher consumption levels. 
D)  increase world output.

Question 11

As a result of a tariff on imports,

Accepted Answer

A)  imports will fall, exports will fall, and total output will decline. 
B)  imports will fall, exports will rise, and total output will decline. 
C)  imports will rise, exports will fall, and total output will expand. 
D)  imports will rise, exports will rise, and total output will expand. 
A)  imports will fall, exports will fall, and total output will decline. 
B)  imports will fall, exports will rise, and total output will decline. 
C)  imports will rise, exports will fall, and total output will expand. 
D)  imports will rise, exports will rise, and total output will expand.

Question 12

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Accepted Answer

A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither. 
A)  the country will be an exporter of the good. 
B)  the country will be an importer of the good. 
C)  the country will be neither an exporter nor an importer of the good. 
D)  Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.

Question 13

In 2002, President Bush enacted a 30 percent tariff on imported steel. The primary beneficiaries of this tariff were

Accepted Answer

A)  U.S. steel companies and employees. 
B)  U.S. automobile companies and employees. 
C)  foreign steel companies. 
D)  foreign steel workers. 
E)  both a and b above. 
A)  U.S. steel companies and employees. 
B)  U.S. automobile companies and employees. 
C)  foreign steel companies. 
D)  foreign steel workers. 
E)  both a and b above.

Question 14

Figure 17-12   At a world price of $1.00 in Figure 17-12,

Accepted Answer

A)  20 units will be exported 
B)  20 units will be imported 
C)  50 units will be exported 
D)  50 units will be imported 
E)  10 units will be exported 
A)  20 units will be exported 
B)  20 units will be imported 
C)  50 units will be exported 
D)  50 units will be imported 
E)  10 units will be exported

Question 15

Use the table below to answer the following question. The table outlines the production possibilities of Slavia and Italia for food and clothing.   The law of comparative advantage suggests that

Accepted Answer

A)  neither country could gain from trade, even if the costs of transporting the products were zero. 
B)  Italia could not gain from trade because it has an absolute advantage in producing both goods. 
C)  both countries could gain if Italia traded food for clothing produced in Slavia. 
D)  both countries could gain if Slavia traded food for clothing produced in Italia. 
A)  neither country could gain from trade, even if the costs of transporting the products were zero. 
B)  Italia could not gain from trade because it has an absolute advantage in producing both goods. 
C)  both countries could gain if Italia traded food for clothing produced in Slavia. 
D)  both countries could gain if Slavia traded food for clothing produced in Italia.

Question 16

Figure 17-12   If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

Accepted Answer

A)  a 
B)  b + d 
C)  c + i + e + f 
D)  c 
E)  d 
A)  a 
B)  b + d 
C)  c + i + e + f 
D)  c 
E)  d

Question 17

The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the

Accepted Answer

A)  General Agreement on Tariffs and Trade. 
B)  Uruguay Round. 
C)  North American Free Trade Agreement. 
D)  Tariff Reduction Act of 1993. 
A)  General Agreement on Tariffs and Trade. 
B)  Uruguay Round. 
C)  North American Free Trade Agreement. 
D)  Tariff Reduction Act of 1993.

Question 18

Suppose the United States levies a tariff, t, on automobiles. Which of the following correctly describes the effect on the tariff?

Accepted Answer

A)  U.S. consumers will suffer from the tariff because now they will pay a higher price, P(world) + t, for foreign cars. 
B)  The tariff has no effect on U.S. consumers because they still will buy foreign cars at the world price, P(world). 
C)  The tariff benefits U.S. consumers because they will pay a lower price, P(world) -- t, for foreign cars. 
D)  The tariff benefits U.S. foreign producers of automobiles because they will now sell cars at a higher price, P(world) + t, to the U.S. consumers. 
A)  U.S. consumers will suffer from the tariff because now they will pay a higher price, P(world) + t, for foreign cars. 
B)  The tariff has no effect on U.S. consumers because they still will buy foreign cars at the world price, P(world). 
C)  The tariff benefits U.S. consumers because they will pay a lower price, P(world) -- t, for foreign cars. 
D)  The tariff benefits U.S. foreign producers of automobiles because they will now sell cars at a higher price, P(world) + t, to the U.S. consumers.

Question 19

What are the effects of a tariff, and who benefits and who loses when tariffs are imposed? What are the effects of a quota, and who benefits and who loses when quotas are imposed?

Accepted Answer

A tariff raises the domestic price of th

Question 20

Hong Kong and Singapore both have relatively

Accepted Answer

A)  high trade barriers and high rates of economic growth. 
B)  high trade barriers and low rates of economic growth. 
C)  low trade barriers and high rates of economic growth. 
D)  low trade barriers and low rates of economic growth. 
A)  high trade barriers and high rates of economic growth. 
B)  high trade barriers and low rates of economic growth. 
C)  low trade barriers and high rates of economic growth. 
D)  low trade barriers and low rates of economic growth.

People living in different countries can benefit from international trade because

"Trade restrictions will stop foreign imports, which will increase American employment and protect American jobs." Most economists realize this argument is wrong. Can you explain why?

Figure 17-8 Refer to Figure 17-8. If this country allows free trade in wagons,

Opening trade between two nations would

Figure 17-3 In Figure 17-3, in the absence of trade, the domestic price of soybeans is P_n. If the world price of soybeans is P_w, which of the following will occur when the United States begins to trade internationally?

Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs

Figure 17-9 Refer to Figure 17-9. Without trade, the equilibrium price of carnations is

When a country allows trade and becomes an exporter of a good,

If domestic producers have a comparative advantage in producing a good,

International trade does all the following except

As a result of a tariff on imports,

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

In 2002, President Bush enacted a 30 percent tariff on imported steel. The primary beneficiaries of this tariff were

Figure 17-12 At a world price of $1.00 in Figure 17-12,

Use the table below to answer the following question. The table outlines the production possibilities of Slavia and Italia for food and clothing. The law of comparative advantage suggests that

Figure 17-12 If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the

Suppose the United States levies a tariff, t, on automobiles. Which of the following correctly describes the effect on the tariff?

What are the effects of a tariff, and who benefits and who loses when tariffs are imposed? What are the effects of a quota, and who benefits and who loses when quotas are imposed?

Hong Kong and Singapore both have relatively

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 18: Gaining From International Trade

People living in different countries can benefit from international trade because

"Trade restrictions will stop foreign imports, which will increase American employment and protect American jobs." Most economists realize this argument is wrong. Can you explain why?

Figure 17-8 Refer to Figure 17-8. If this country allows free trade in wagons,

Opening trade between two nations would

Figure 17-3 In Figure 17-3, in the absence of trade, the domestic price of soybeans is Pn. If the world price of soybeans is Pw, which of the following will occur when the United States begins to trade internationally?

Relative to a no-trade situation, if the United States exported chairs, the domestic price of chairs

Figure 17-9 Refer to Figure 17-9. Without trade, the equilibrium price of carnations is

When a country allows trade and becomes an exporter of a good,

If domestic producers have a comparative advantage in producing a good,

International trade does all the following except

As a result of a tariff on imports,

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

In 2002, President Bush enacted a 30 percent tariff on imported steel. The primary beneficiaries of this tariff were

Figure 17-12 At a world price of $1.00 in Figure 17-12,

Use the table below to answer the following question. The table outlines the production possibilities of Slavia and Italia for food and clothing. The law of comparative advantage suggests that

Figure 17-12 If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

The agreement of the United States, Canada, and Mexico to eliminate tariffs on the shipment of most products among the three countries is called the

Suppose the United States levies a tariff, t, on automobiles. Which of the following correctly describes the effect on the tariff?

What are the effects of a tariff, and who benefits and who loses when tariffs are imposed? What are the effects of a quota, and who benefits and who loses when quotas are imposed?

Hong Kong and Singapore both have relatively

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Special Topics

Filters

Figure 17-3 In Figure 17-3, in the absence of trade, the domestic price of soybeans is P_n. If the world price of soybeans is P_w, which of the following will occur when the United States begins to trade internationally?