Question 1

If import restrictions prohibit foreigners from selling various goods in the U.S. market,

Accepted Answer

A)  the United States will be able to export more goods abroad. 
B)  foreigners will have fewer U.S. dollars with which to buy goods from Americans. 
C)  the United States will be able to produce a larger output than would otherwise be the case. 
D)  the domestic producers in the protected industries will supply goods to U.S. consumers at lower prices than would otherwise be the case. 
A)  the United States will be able to export more goods abroad. 
B)  foreigners will have fewer U.S. dollars with which to buy goods from Americans. 
C)  the United States will be able to produce a larger output than would otherwise be the case. 
D)  the domestic producers in the protected industries will supply goods to U.S. consumers at lower prices than would otherwise be the case.

Question 2

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

Accepted Answer

A)  a decrease in both U.S. imports and exports 
B)  an increase in both U.S. imports and exports 
C)  a decrease in U.S. imports and an increase in U.S. exports 
D)  an increase in U.S. imports and a decrease in U.S. exports 
A)  a decrease in both U.S. imports and exports 
B)  an increase in both U.S. imports and exports 
C)  a decrease in U.S. imports and an increase in U.S. exports 
D)  an increase in U.S. imports and a decrease in U.S. exports

Question 3

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Accepted Answer

A)  The opportunity cost of producing watches is lower in Denmark. 
B)  The opportunity cost of producing cheese is lower in Denmark. 
C)  The opportunity cost of producing watches is identical in both countries. 
D)  It is impossible to compare opportunity costs because the two countries use different currencies. 
E)  In Germany the opportunity cost of producing one pound of cheese is one watch. 
A)  The opportunity cost of producing watches is lower in Denmark. 
B)  The opportunity cost of producing cheese is lower in Denmark. 
C)  The opportunity cost of producing watches is identical in both countries. 
D)  It is impossible to compare opportunity costs because the two countries use different currencies. 
E)  In Germany the opportunity cost of producing one pound of cheese is one watch.

Question 4

Figure 17-10   Refer to Figure 17-10. With the tariff, the quantity of saddles imported is

Accepted Answer

A)  Q3 − Q1. 
B)  Q3 − Q2. 
C)  Q4 − Q1. 
D)  Q4 − Q2. 
A)  Q3 − Q1. 
B)  Q3 − Q2. 
C)  Q4 − Q1. 
D)  Q4 − Q2.

Question 5

Figure 17-9   Refer to Figure 17-9. With trade and without a tariff,

Accepted Answer

A)  the domestic price is equal to the world price. 
B)  carnations are sold at $8 in this market. 
C)  there is a shortage of 400 carnations in this market. 
D)  this country imports 200 carnations. 
A)  the domestic price is equal to the world price. 
B)  carnations are sold at $8 in this market. 
C)  there is a shortage of 400 carnations in this market. 
D)  this country imports 200 carnations.

Question 6

Figure 17-9   Refer to Figure 17-9. The imposition of a tariff on carnations

Accepted Answer

A)  increases the number of carnations imported by 100. 
B)  increases the number of carnations imported by 200. 
C)  decreases the number of carnations imported by 200. 
D)  decreases the number of carnations imported by 400. 
A)  increases the number of carnations imported by 100. 
B)  increases the number of carnations imported by 200. 
C)  decreases the number of carnations imported by 200. 
D)  decreases the number of carnations imported by 400.

Question 7

When the nation of Roma allows trade and as a result becomes an importer of scooters,

Accepted Answer

A)  residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma rises. 
B)  residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma falls. 
C)  residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma rises. 
D)  residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma falls. 
A)  residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma rises. 
B)  residents who produce scooters become worse off; residents who buy scooters become better off; and the economic well-being of Roma falls. 
C)  residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma rises. 
D)  residents who produce scooters become better off; residents who buy scooters become worse off; and the economic well-being of Roma falls.

Question 8

Trade restrictions like tariffs and quotas will

Accepted Answer

A)  protect American jobs and increase employment. 
B)  ensure that more dollars stay in the United States. 
C)  reduce the value of goods and services that we will be able to produce and consume. 
D)  make all Americans better off. 
A)  protect American jobs and increase employment. 
B)  ensure that more dollars stay in the United States. 
C)  reduce the value of goods and services that we will be able to produce and consume. 
D)  make all Americans better off.

Question 9

If a foreign supplier sells a good in another country at a cheaper price than it sells the good in its home market, the

Accepted Answer

A)  foreign supplier will gain a monopoly in the foreign market. 
B)  consumers in the receiving country will be harmed by the dumping of the good into its domestic market. 
C)  consumers in the receiving country can gain from buying the foreign-produced good if it is cheaper than the cost of producing the good domestically. 
D)  usual implications of the law of comparative advantage with trade restrictions do not hold in this case, particularly if the low-cost supplier is subsidized by a foreign government. 
A)  foreign supplier will gain a monopoly in the foreign market. 
B)  consumers in the receiving country will be harmed by the dumping of the good into its domestic market. 
C)  consumers in the receiving country can gain from buying the foreign-produced good if it is cheaper than the cost of producing the good domestically. 
D)  usual implications of the law of comparative advantage with trade restrictions do not hold in this case, particularly if the low-cost supplier is subsidized by a foreign government.

Question 10

Figure 17-8   Refer to Figure 17-8. With trade, this country

Accepted Answer

A)  exports 20 wagons. 
B)  exports 50 wagons. 
C)  imports 30 wagons. 
D)  imports 50 wagons. 
A)  exports 20 wagons. 
B)  exports 50 wagons. 
C)  imports 30 wagons. 
D)  imports 50 wagons.

Question 11

Which of the following is true?

Accepted Answer

A)  Specialization and trade leads to mutual gains for countries. 
B)  Protectionism (i.e., policies that limit trade in certain goods) promotes both economic prosperity and greater employment. 
C)  Countries that have a lot of resources, like the United States, are always hurt by trade. 
D)  Countries will have a higher standard of living when they produce as many goods as possible domestically. 
A)  Specialization and trade leads to mutual gains for countries. 
B)  Protectionism (i.e., policies that limit trade in certain goods) promotes both economic prosperity and greater employment. 
C)  Countries that have a lot of resources, like the United States, are always hurt by trade. 
D)  Countries will have a higher standard of living when they produce as many goods as possible domestically.

Question 12

If tariffs are decreased, the long-run effect is most likely to be

Accepted Answer

A)  a decrease in both U.S. imports and exports. 
B)  an increase in both U.S. imports and exports. 
C)  a decrease in U.S. imports and an increase in U.S. exports. 
D)  an increase in U.S. imports and a decrease in U.S. exports. 
A)  a decrease in both U.S. imports and exports. 
B)  an increase in both U.S. imports and exports. 
C)  a decrease in U.S. imports and an increase in U.S. exports. 
D)  an increase in U.S. imports and a decrease in U.S. exports.

Question 13

Use the table below, which outlines the production possibilities of Qatar and Botswana in wine and wheat, to answer the following question.   The law of comparative advantage suggests that

Accepted Answer

A)  neither country would gain from trade, even if the costs for transporting the products were zero. 
B)  Qatar would not gain from trade because it has an absolute advantage in producing both goods. 
C)  both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat. 
D)  both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine. 
A)  neither country would gain from trade, even if the costs for transporting the products were zero. 
B)  Qatar would not gain from trade because it has an absolute advantage in producing both goods. 
C)  both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat. 
D)  both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine.

Question 14

Countries that impose high tariffs, exchange rate controls, and other barriers that restrict international trade have, on average,

Accepted Answer

A)  high rates of economic growth. 
B)  low rates of economic growth. 
C)  a large export sector. 
D)  a large import sector. 
A)  high rates of economic growth. 
B)  low rates of economic growth. 
C)  a large export sector. 
D)  a large import sector.

Question 15

International trade can be mutually advantageous because it

Accepted Answer

A)  encourages the adoption of sound institutions and policies. 
B)  reduces the competitiveness of domestic industries and, thereby, makes it easier for the domestic producers to raise their prices. 
C)  permits the trading partners to take advantage of reductions in per-unit costs in industries where economies of scale are important. 
D)  does all of the above. 
E)  does both a and c. 
A)  encourages the adoption of sound institutions and policies. 
B)  reduces the competitiveness of domestic industries and, thereby, makes it easier for the domestic producers to raise their prices. 
C)  permits the trading partners to take advantage of reductions in per-unit costs in industries where economies of scale are important. 
D)  does all of the above. 
E)  does both a and c.

Question 16

After the adoption of the North American Free Trade Agreement (NAFTA), trade between the United States and Mexico____, and trade between the United States and Canada ____.

Accepted Answer

A)  rose; fell 
B)  rose; rose 
C)  fell; fell 
D)  fell; rose 
A)  rose; fell 
B)  rose; rose 
C)  fell; fell 
D)  fell; rose

Question 17

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will

Accepted Answer

A)  reduce the demand for U.S. export goods since foreigners will be less able to buy our goods if they cannot sell to us. 
B)  benefit producers in industries that export goods. 
C)  increase the nation's income since it protects domestic jobs. 
D)  enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage. 
A)  reduce the demand for U.S. export goods since foreigners will be less able to buy our goods if they cannot sell to us. 
B)  benefit producers in industries that export goods. 
C)  increase the nation's income since it protects domestic jobs. 
D)  enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage.

Question 18

A nation benefits from international trade if it

Accepted Answer

A)  exports more than it imports. 
B)  imports more than it exports. 
C)  imports goods for which it is a low opportunity cost producer. 
D)  exports goods for which it is a low opportunity cost producer. 
A)  exports more than it imports. 
B)  imports more than it exports. 
C)  imports goods for which it is a low opportunity cost producer. 
D)  exports goods for which it is a low opportunity cost producer.

Question 19

If nation A has an absolute advantage over nation B in the production of a product, this implies that

Accepted Answer

A)  it requires fewer resources in A to produce the good than in B. 
B)  the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. 
C)  nation B could not benefit by engaging in trade with A. 
D)  nation A should acquire this product by trading with B. 
E)  nation A could not benefit by engaging in trade with B. 
A)  it requires fewer resources in A to produce the good than in B. 
B)  the cost of producing the good in terms of some other good's production that must be sacrificed is lower in A than in B. 
C)  nation B could not benefit by engaging in trade with A. 
D)  nation A should acquire this product by trading with B. 
E)  nation A could not benefit by engaging in trade with B.

Question 20

Figure 17-8   Refer to Figure 17-8. With trade, the price of wagons in this country is

Accepted Answer

A)  $8, with 70 wagons being produced in this country, 20 of which are exported. 
B)  $8, with 90 wagons being produced in this country, 50 of which are exported. 
C)  $5, with 40 wagons being produced in this country and another 30 wagons being imported. 
D)  $5, with 40 wagons being produced in this country and another 50 wagons being imported. 
A)  $8, with 70 wagons being produced in this country, 20 of which are exported. 
B)  $8, with 90 wagons being produced in this country, 50 of which are exported. 
C)  $5, with 40 wagons being produced in this country and another 30 wagons being imported. 
D)  $5, with 40 wagons being produced in this country and another 50 wagons being imported.

If import restrictions prohibit foreigners from selling various goods in the U.S. market,

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Figure 17-10 Refer to Figure 17-10. With the tariff, the quantity of saddles imported is

Figure 17-9 Refer to Figure 17-9. With trade and without a tariff,

Figure 17-9 Refer to Figure 17-9. The imposition of a tariff on carnations

When the nation of Roma allows trade and as a result becomes an importer of scooters,

Trade restrictions like tariffs and quotas will

If a foreign supplier sells a good in another country at a cheaper price than it sells the good in its home market, the

Figure 17-8 Refer to Figure 17-8. With trade, this country

Which of the following is true?

If tariffs are decreased, the long-run effect is most likely to be

Use the table below, which outlines the production possibilities of Qatar and Botswana in wine and wheat, to answer the following question. The law of comparative advantage suggests that

Countries that impose high tariffs, exchange rate controls, and other barriers that restrict international trade have, on average,

International trade can be mutually advantageous because it

After the adoption of the North American Free Trade Agreement (NAFTA), trade between the United States and Mexico, and trade between the United States and Canada .

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will

A nation benefits from international trade if it

If nation A has an absolute advantage over nation B in the production of a product, this implies that

Figure 17-8 Refer to Figure 17-8. With trade, the price of wagons in this country is

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

If import restrictions prohibit foreigners from selling various goods in the U.S. market,

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

Figure 17-10 Refer to Figure 17-10. With the tariff, the quantity of saddles imported is

Figure 17-9 Refer to Figure 17-9. With trade and without a tariff,

Figure 17-9 Refer to Figure 17-9. The imposition of a tariff on carnations

When the nation of Roma allows trade and as a result becomes an importer of scooters,

Trade restrictions like tariffs and quotas will

If a foreign supplier sells a good in another country at a cheaper price than it sells the good in its home market, the

Figure 17-8 Refer to Figure 17-8. With trade, this country

Which of the following is true?

If tariffs are decreased, the long-run effect is most likely to be

Use the table below, which outlines the production possibilities of Qatar and Botswana in wine and wheat, to answer the following question. The law of comparative advantage suggests that

Countries that impose high tariffs, exchange rate controls, and other barriers that restrict international trade have, on average,

International trade can be mutually advantageous because it

After the adoption of the North American Free Trade Agreement (NAFTA), trade between the United States and Mexico____, and trade between the United States and Canada ____.

A U.S. trade policy that restricts the sale of foreign goods in the U.S. market will

A nation benefits from international trade if it

If nation A has an absolute advantage over nation B in the production of a product, this implies that

Figure 17-8 Refer to Figure 17-8. With trade, the price of wagons in this country is

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

After the adoption of the North American Free Trade Agreement (NAFTA), trade between the United States and Mexico, and trade between the United States and Canada .