Question 1

Figure 17-10   Refer to Figure 17-10. Producer surplus with trade and without a tariff is

Accepted Answer

A)  G. 
B)  C + G. 
C)  A + C + G. 
D)  A + B + C + G. 
A)  G. 
B)  C + G. 
C)  A + C + G. 
D)  A + B + C + G.

Question 2

Assume, for the U.S., that the domestic price of beef without international trade is lower than the world price of beef. This suggests that with trade,

Accepted Answer

A)  the U.S. has a comparative advantage in the production of beef over other countries and the U.S. will export beef. 
B)  the U.S. has a comparative advantage in the production of beef over other countries and the U.S. will import beef. 
C)  other countries have a comparative advantage over the U.S. in the production of beef and the U.S. will export beef. 
D)  other countries have a comparative advantage over the U.S. in the production of beef and the U.S. will import beef. 
A)  the U.S. has a comparative advantage in the production of beef over other countries and the U.S. will export beef. 
B)  the U.S. has a comparative advantage in the production of beef over other countries and the U.S. will import beef. 
C)  other countries have a comparative advantage over the U.S. in the production of beef and the U.S. will export beef. 
D)  other countries have a comparative advantage over the U.S. in the production of beef and the U.S. will import beef.

Question 3

If a country allows trade and, for a certain good, the domestic price without trade is lower 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 4

Figure 17-6 The domestic country is China.
  Refer to Figure 17-6. If China were to abandon a no-trade policy in favor of a free-trade policy,

Accepted Answer

A)  Chinese producers of pencil sharpeners would become worse off. 
B)  Chinese consumers of pencil sharpeners would become better off. 
C)  total surplus in the Chinese economy would increase. 
D)  All of the above are correct. 
A)  Chinese producers of pencil sharpeners would become worse off. 
B)  Chinese consumers of pencil sharpeners would become better off. 
C)  total surplus in the Chinese economy would increase. 
D)  All of the above are correct.

Question 5

Data on trade barriers, income levels, and the growth of per capita GDP indicate that

Accepted Answer

A)  there is no link between trade restrictions and either the per capita income levels or growth rates of economies. 
B)  countries that impose high trade restrictions have both high income levels and rapid rates of economic growth. 
C)  countries that impose high trade restrictions have low income levels, but they have been growing rapidly in recent decades. 
D)  countries that have lower trade restrictions have both higher income levels and more rapid rates of economic growth than those with high trade barriers. 
A)  there is no link between trade restrictions and either the per capita income levels or growth rates of economies. 
B)  countries that impose high trade restrictions have both high income levels and rapid rates of economic growth. 
C)  countries that impose high trade restrictions have low income levels, but they have been growing rapidly in recent decades. 
D)  countries that have lower trade restrictions have both higher income levels and more rapid rates of economic growth than those with high trade barriers.

Question 6

Figure 17-10   Refer to Figure 17-10. The amount of government revenue created by the tariff is

Accepted Answer

A)  B. 
B)  E. 
C)  D + F. 
D)  B + D + E + F. 
A)  B. 
B)  E. 
C)  D + F. 
D)  B + D + E + F.

Question 7

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

Accepted Answer

A)  c + h 
B)  h 
C)  c 
D)  c + g 
E)  g 
A)  c + h 
B)  h 
C)  c 
D)  c + g 
E)  g

Question 8

If the U.S. put an import quota on clothes dryers, it would

Accepted Answer

A)  raise U.S. net exports of clothes dryers and raise net exports of other U.S. goods. 
B)  raise U.S. net exports of clothes dryers and lower net exports of other U.S. goods. 
C)  lower U.S. net exports of clothes dryers and raise net exports of other U.S. goods. 
D)  lower U.S. net exports of clothes dryers and lower net exports of other U.S. goods. 
A)  raise U.S. net exports of clothes dryers and raise net exports of other U.S. goods. 
B)  raise U.S. net exports of clothes dryers and lower net exports of other U.S. goods. 
C)  lower U.S. net exports of clothes dryers and raise net exports of other U.S. goods. 
D)  lower U.S. net exports of clothes dryers and lower net exports of other U.S. goods.

Question 9

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Accepted Answer

A)  The domestic price of shoes would fall. 
B)  The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. 
C)  The number of unemployed workers in the domestic shoe industry would decline. 
D)  The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations. 
A)  The domestic price of shoes would fall. 
B)  The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. 
C)  The number of unemployed workers in the domestic shoe industry would decline. 
D)  The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations.

Question 10

Figure 17-13   Figure 17-13 shows domestic supply and demand for baseballs in the United States. The world price of a baseball is $3. With free trade, how many baseballs will be purchased in the United States?

Accepted Answer

A)  4,000 
B)  6,000 
C)  8,000 
D)  10,000 
E)  12,000 
A)  4,000 
B)  6,000 
C)  8,000 
D)  10,000 
E)  12,000

Question 11

At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?

Accepted Answer

This is a bad strategy. When few goods a

Question 12

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

Accepted Answer

A)  Domestic producers in the United States, Canada, and Mexico have free access to larger markets. 
B)  The low wages of Mexican workers have made it virtually impossible for American and Canadian producers to export goods to Mexico. 
C)  A smaller variety of goods are available to consumers in all three countries. 
D)  Unemployment has increased in all three countries. 
A)  Domestic producers in the United States, Canada, and Mexico have free access to larger markets. 
B)  The low wages of Mexican workers have made it virtually impossible for American and Canadian producers to export goods to Mexico. 
C)  A smaller variety of goods are available to consumers in all three countries. 
D)  Unemployment has increased in all three countries.

Question 13

If Country A has an absolute advantage over Country B in the production of every commodity,

Accepted Answer

A)  mutual gains from trade between Country A and Country B would be impossible. 
B)  Country B would be able to gain from trade but not country A. 
C)  the joint output of the two countries could not be increased through specialization and exchange. 
D)  mutual gains from trade would still be possible. 
A)  mutual gains from trade between Country A and Country B would be impossible. 
B)  Country B would be able to gain from trade but not country A. 
C)  the joint output of the two countries could not be increased through specialization and exchange. 
D)  mutual gains from trade would still be possible.

Question 14

"Economists have demonstrated that imports benefit consumers while causing losses to producers, and exports benefit producers while causing losses to consumers. In the balance then, international trade neither benefits nor hurts a nation as a whole." Evaluate this statement.

Accepted Answer

The first part is true, but the conclusi

Question 15

A basic problem with the infant-industry argument is that

Accepted Answer

A)  most industries need protection when they are mature, not when they are first established. 
B)  the amount of the tariff is unlikely to have much impact on the success of an infant industry. 
C)  political pressure will likely prevent the withdrawal of the tariff when the industry matures. 
D)  domestic consumers will continue to buy the foreign products anyway, regardless of the tariff. 
A)  most industries need protection when they are mature, not when they are first established. 
B)  the amount of the tariff is unlikely to have much impact on the success of an infant industry. 
C)  political pressure will likely prevent the withdrawal of the tariff when the industry matures. 
D)  domestic consumers will continue to buy the foreign products anyway, regardless of the tariff.

Question 16

Which of the following has occurred since the North American Free Trade Agreement (NAFTA) took affect in 1994?

Accepted Answer

A)  U.S. trade with both Mexico and Canada has increased. 
B)  Employment in the United States is now slightly lower than before the agreement. 
C)  Employment in the United States is now substantially higher than before the agreement. 
D)  Both a and b are true. 
E)  Both a and c are true. 
A)  U.S. trade with both Mexico and Canada has increased. 
B)  Employment in the United States is now slightly lower than before the agreement. 
C)  Employment in the United States is now substantially higher than before the agreement. 
D)  Both a and b are true. 
E)  Both a and c are true.

Question 17

An increase in the tariff on foreign-produced automobiles would most likely help

Accepted Answer

A)  the domestic producers of automobiles. 
B)  steel producers that sell most of their output to foreign producers of automobiles. 
C)  workers in the foreign automobile industry. 
D)  consumers looking for alternatives to domestic automobiles. 
A)  the domestic producers of automobiles. 
B)  steel producers that sell most of their output to foreign producers of automobiles. 
C)  workers in the foreign automobile industry. 
D)  consumers looking for alternatives to domestic automobiles.

Question 18

Globalization is becoming more of a worldwide phenomenon because

Accepted Answer

A)  more countries want to become self-sufficient. 
B)  less-developed countries are increasing their trade restrictions. 
C)  technological advancements are decreasing transportation costs. 
D)  trade hurts workers in poor countries. 
A)  more countries want to become self-sufficient. 
B)  less-developed countries are increasing their trade restrictions. 
C)  technological advancements are decreasing transportation costs. 
D)  trade hurts workers in poor countries.

Question 19

Compared to the no-trade situation, when a country exports a good,

Accepted Answer

A)  domestic consumers gain, domestic producers lose, and the gains outweigh the losses. 
B)  domestic producers gain, domestic consumers lose, and the gains outweigh the losses. 
C)  domestic consumers gain, domestic producers lose, and the losses outweigh the gains. 
D)  domestic producers gain, but domestic consumers lose an equal amount. 
A)  domestic consumers gain, domestic producers lose, and the gains outweigh the losses. 
B)  domestic producers gain, domestic consumers lose, and the gains outweigh the losses. 
C)  domestic consumers gain, domestic producers lose, and the losses outweigh the gains. 
D)  domestic producers gain, but domestic consumers lose an equal amount.

Question 20

Which of the following is correct?

Accepted Answer

A)  An increase in the tariff on foreign-produced automobiles will benefit U.S. consumers of domestic cars. 
B)  An ongoing result of the North American Free Trade Agreement is that producers in both countries will benefit at the expense of consumers. 
C)  The wages of U.S. workers would sharply decline if we traded freely with low-wage countries like India and China. 
D)  Exports provide a nation with its primary source of purchasing power used to buy imported goods. 
A)  An increase in the tariff on foreign-produced automobiles will benefit U.S. consumers of domestic cars. 
B)  An ongoing result of the North American Free Trade Agreement is that producers in both countries will benefit at the expense of consumers. 
C)  The wages of U.S. workers would sharply decline if we traded freely with low-wage countries like India and China. 
D)  Exports provide a nation with its primary source of purchasing power used to buy imported goods.

Figure 17-10 Refer to Figure 17-10. Producer surplus with trade and without a tariff is

Assume, for the U.S., that the domestic price of beef without international trade is lower than the world price of beef. This suggests that with trade,

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

Figure 17-6 The domestic country is China. Refer to Figure 17-6. If China were to abandon a no-trade policy in favor of a free-trade policy,

Data on trade barriers, income levels, and the growth of per capita GDP indicate that

Figure 17-10 Refer to Figure 17-10. The amount of government revenue created by the tariff is

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

If the U.S. put an import quota on clothes dryers, it would

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Figure 17-13 Figure 17-13 shows domestic supply and demand for baseballs in the United States. The world price of a baseball is $3. With free trade, how many baseballs will be purchased in the United States?

At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

If Country A has an absolute advantage over Country B in the production of every commodity,

"Economists have demonstrated that imports benefit consumers while causing losses to producers, and exports benefit producers while causing losses to consumers. In the balance then, international trade neither benefits nor hurts a nation as a whole." Evaluate this statement.

A basic problem with the infant-industry argument is that

Which of the following has occurred since the North American Free Trade Agreement (NAFTA) took affect in 1994?

An increase in the tariff on foreign-produced automobiles would most likely help

Globalization is becoming more of a worldwide phenomenon because

Compared to the no-trade situation, when a country exports a good,

Which of the following is correct?

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

Figure 17-10 Refer to Figure 17-10. Producer surplus with trade and without a tariff is

Assume, for the U.S., that the domestic price of beef without international trade is lower than the world price of beef. This suggests that with trade,

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

Figure 17-6 The domestic country is China. Refer to Figure 17-6. If China were to abandon a no-trade policy in favor of a free-trade policy,

Data on trade barriers, income levels, and the growth of per capita GDP indicate that

Figure 17-10 Refer to Figure 17-10. The amount of government revenue created by the tariff is

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

If the U.S. put an import quota on clothes dryers, it would

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Figure 17-13 Figure 17-13 shows domestic supply and demand for baseballs in the United States. The world price of a baseball is $3. With free trade, how many baseballs will be purchased in the United States?

At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is the relationship between exports and imports?

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

If Country A has an absolute advantage over Country B in the production of every commodity,

"Economists have demonstrated that imports benefit consumers while causing losses to producers, and exports benefit producers while causing losses to consumers. In the balance then, international trade neither benefits nor hurts a nation as a whole." Evaluate this statement.

A basic problem with the infant-industry argument is that

Which of the following has occurred since the North American Free Trade Agreement (NAFTA) took affect in 1994?

An increase in the tariff on foreign-produced automobiles would most likely help

Globalization is becoming more of a worldwide phenomenon because

Compared to the no-trade situation, when a country exports a good,

Which of the following is correct?

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