Question 1

According to international trade theory, a country can gain if it

Accepted Answer

A)  imports goods when they can be purchased cheaper from domestic producers. 
B)  imports goods when foreigners are willing to pay higher prices than domestic consumers. 
C)  specializes in producing those things it does best (produces at a low cost). 
D)  trades with high-income countries but not low-income countries. 
A)  imports goods when they can be purchased cheaper from domestic producers. 
B)  imports goods when foreigners are willing to pay higher prices than domestic consumers. 
C)  specializes in producing those things it does best (produces at a low cost). 
D)  trades with high-income countries but not low-income countries.

Question 2

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

Accepted Answer

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

Question 3

International trade is advantageous because trade makes it possible for people in each country to

Accepted Answer

A)  import more than they export. 
B)  export more than they import. 
C)  employ more of their domestic resources producing things that are costly for them to produce domestically. 
D)  acquire goods from foreigners more economically than they could be produced domestically. 
E)  do all of the above. 
A)  import more than they export. 
B)  export more than they import. 
C)  employ more of their domestic resources producing things that are costly for them to produce domestically. 
D)  acquire goods from foreigners more economically than they could be produced domestically. 
E)  do all of the above.

Question 4

In recent years, the largest trading partners of the United States have been

Accepted Answer

A)  Germany, France, Spain, and the United Kingdom. 
B)  Canada, Mexico, China, and Japan. 
C)  Canada, Brazil, Argentina, and Chile. 
D)  Russia, Venezuela, Saudi Arabia, and Indonesia. 
A)  Germany, France, Spain, and the United Kingdom. 
B)  Canada, Mexico, China, and Japan. 
C)  Canada, Brazil, Argentina, and Chile. 
D)  Russia, Venezuela, Saudi Arabia, and Indonesia.

Question 5

Figure 17-5   Refer to Figure 17-5. If this country chooses to trade, the price of baskets in this country will be

Accepted Answer

A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically. 
A)  $10 and 40 baskets will be sold domestically. 
B)  $10 and 105 baskets will be domestically. 
C)  $7 and 70 baskets will be sold domestically. 
D)  $7 and 40 baskets will be sold domestically.

Question 6

The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that

Accepted Answer

A)  all industries will claim that they are infant industries in order to gain protection. 
B)  the protected industry will become too efficient and drive out foreign competition. 
C)  once in place, it is difficult to remove protection even as the industry matures. 
D)  it causes the goods that are produced in the protected industry to have lower prices. 
A)  all industries will claim that they are infant industries in order to gain protection. 
B)  the protected industry will become too efficient and drive out foreign competition. 
C)  once in place, it is difficult to remove protection even as the industry matures. 
D)  it causes the goods that are produced in the protected industry to have lower prices.

Question 7

Figure 17-13   In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, which area represents the amount of tariff revenue the United States government collects?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  f 
E)  e 
A)  a 
B)  b 
C)  c 
D)  f 
E)  e

Question 8

Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer. This statement best describes the implications of the

Accepted Answer

A)  free rider problem. 
B)  law of comparative advantage. 
C)  infant-industry argument. 
D)  law of diminishing marginal returns. 
A)  free rider problem. 
B)  law of comparative advantage. 
C)  infant-industry argument. 
D)  law of diminishing marginal returns.

Question 9

Figure 17-5   Refer to Figure 17-5. With free trade, this country will

Accepted Answer

A)  import 40 baskets. 
B)  import 70 baskets. 
C)  export 35 baskets. 
D)  export 65 baskets. 
A)  import 40 baskets. 
B)  import 70 baskets. 
C)  export 35 baskets. 
D)  export 65 baskets.

Question 10

During the last several decades, the size of the trade sector (exports plus imports) of the United States has been

Accepted Answer

A)  increasing as a share of the economy. 
B)  relatively constant as a share of the economy. 
C)  declining as a share of the economy. 
D)  increasing during periods of recession, but declining during periods of strong economic growth. 
A)  increasing as a share of the economy. 
B)  relatively constant as a share of the economy. 
C)  declining as a share of the economy. 
D)  increasing during periods of recession, but declining during periods of strong economic growth.

Question 11

Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would

Accepted Answer

A)  rise, but domestic output would fall. 
B)  decline, but domestic output would rise. 
C)  decline as would domestic output. 
D)  rise as would domestic output. 
A)  rise, but domestic output would fall. 
B)  decline, but domestic output would rise. 
C)  decline as would domestic output. 
D)  rise as would domestic output.

Question 12

In 1993 the negotiations over the North American Free Trade Agreement and the General Agreement on Tariffs and Trade were frequently characterized by comments such as, "Free trade with low-wage countries will cause the wages of U.S. workers to fall." Identify the errors in statements such as this.

Accepted Answer

One error is that higher wages do not me

Question 13

Figure 17-6 The domestic country is China.
  Refer to Figure 17-6. With trade, China will

Accepted Answer

A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners. 
A)  import 100 pencil sharpeners. 
B)  import 250 pencil sharpeners. 
C)  export 150 pencil sharpeners. 
D)  export 250 pencil sharpeners.

Question 14

Trade restrictions that limit the sale of low-price foreign goods in the U.S. market

Accepted Answer

A)  increase the real income of Americans. 
B)  benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries. 
C)  help channel more of our resources into producing goods for which we are a low-cost producer. 
D)  reduce unemployment and increase the productivity of American workers. 
A)  increase the real income of Americans. 
B)  benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries. 
C)  help channel more of our resources into producing goods for which we are a low-cost producer. 
D)  reduce unemployment and increase the productivity of American workers.

Question 15

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Accepted Answer

A)  steel producers, who supply steel to the domestic automobile industry. 
B)  foreign producers of automobiles. 
C)  importers of automobiles. 
D)  domestic distributors of foreign automobiles. 
A)  steel producers, who supply steel to the domestic automobile industry. 
B)  foreign producers of automobiles. 
C)  importers of automobiles. 
D)  domestic distributors of foreign automobiles.

Question 16

Dumping is

Accepted Answer

A)  the sale of a good by a foreign supplier in another country at a price below that charged by the supplier in its home market. 
B)  an inappropriate method for getting rid of byproducts from a production process. 
C)  a method to increase competitiveness in a market. 
D)  all of the above. 
E)  both a and c above. 
A)  the sale of a good by a foreign supplier in another country at a price below that charged by the supplier in its home market. 
B)  an inappropriate method for getting rid of byproducts from a production process. 
C)  a method to increase competitiveness in a market. 
D)  all of the above. 
E)  both a and c above.

Question 17

Figure 17-13   In Figure 17-13, the world price of a baseball is $3. With free trade, how many baseballs will the United States import?

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 18

When the nation of Venezia allows trade and as a result becomes an exporter of shoes,

Accepted Answer

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

Question 19

Figure 17-10   Refer to Figure 17-10. As a result of the tariff, there is a deadweight loss that amounts to

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 20

According to public choice theory, tariffs, quotas, and other trade restrictions are primarily the result of the

Accepted Answer

A)  political clout of foreigners. 
B)  political clout of domestic consumers. 
C)  political power of special interest groups. 
D)  political desire for economic efficiency. 
A)  political clout of foreigners. 
B)  political clout of domestic consumers. 
C)  political power of special interest groups. 
D)  political desire for economic efficiency.

According to international trade theory, a country can gain if it

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

International trade is advantageous because trade makes it possible for people in each country to

In recent years, the largest trading partners of the United States have been

Figure 17-5 Refer to Figure 17-5. If this country chooses to trade, the price of baskets in this country will be

The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that

Figure 17-13 In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, which area represents the amount of tariff revenue the United States government collects?

Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer. This statement best describes the implications of the

Figure 17-5 Refer to Figure 17-5. With free trade, this country will

During the last several decades, the size of the trade sector (exports plus imports) of the United States has been

Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would

In 1993 the negotiations over the North American Free Trade Agreement and the General Agreement on Tariffs and Trade were frequently characterized by comments such as, "Free trade with low-wage countries will cause the wages of U.S. workers to fall." Identify the errors in statements such as this.

Figure 17-6 The domestic country is China. Refer to Figure 17-6. With trade, China will

Trade restrictions that limit the sale of low-price foreign goods in the U.S. market

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Dumping is

Figure 17-13 In Figure 17-13, the world price of a baseball is $3. With free trade, how many baseballs will the United States import?

When the nation of Venezia allows trade and as a result becomes an exporter of shoes,

Figure 17-10 Refer to Figure 17-10. As a result of the tariff, there is a deadweight loss that amounts to

According to public choice theory, tariffs, quotas, and other trade restrictions are primarily the result of the

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

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Exam 18: Gaining From International Trade

According to international trade theory, a country can gain if it

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

International trade is advantageous because trade makes it possible for people in each country to

In recent years, the largest trading partners of the United States have been

Figure 17-5 Refer to Figure 17-5. If this country chooses to trade, the price of baskets in this country will be

The main problem with using the infant industries argument to justify protecting an industry from foreign competition is that

Figure 17-13 In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, which area represents the amount of tariff revenue the United States government collects?

Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer. This statement best describes the implications of the

Figure 17-5 Refer to Figure 17-5. With free trade, this country will

During the last several decades, the size of the trade sector (exports plus imports) of the United States has been

Relative to a no-trade situation, if the United States imported jeans, the U.S. domestic price of jeans would

In 1993 the negotiations over the North American Free Trade Agreement and the General Agreement on Tariffs and Trade were frequently characterized by comments such as, "Free trade with low-wage countries will cause the wages of U.S. workers to fall." Identify the errors in statements such as this.

Figure 17-6 The domestic country is China. Refer to Figure 17-6. With trade, China will

Trade restrictions that limit the sale of low-price foreign goods in the U.S. market

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Dumping is

Figure 17-13 In Figure 17-13, the world price of a baseball is $3. With free trade, how many baseballs will the United States import?

When the nation of Venezia allows trade and as a result becomes an exporter of shoes,

Figure 17-10 Refer to Figure 17-10. As a result of the tariff, there is a deadweight loss that amounts to

According to public choice theory, tariffs, quotas, and other trade restrictions are primarily the result of the

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