Question 1

Table 18-1
  
-From Table 18-1,the United States

Accepted Answer

A)  has an absolute advantage over Great Britain in the production of textiles. 
B)  has an absolute advantage over Great Britain in the production of wheat. 
C)  has a comparative advantage in the production of textiles. 
D)  should export textiles to Great Britain. 
A)  has an absolute advantage over Great Britain in the production of textiles. 
B)  has an absolute advantage over Great Britain in the production of wheat. 
C)  has a comparative advantage in the production of textiles. 
D)  should export textiles to Great Britain.

Question 2

From 1975 to 2008,which of the following countries experienced greater wage increases than the U.S.?

Accepted Answer

A)  Japan 
B)  South Korea 
C)  Taiwan 
D)  all of the above 
A)  Japan 
B)  South Korea 
C)  Taiwan 
D)  all of the above

Question 3

If nations begin to specialize in production for the purpose of trade,

Accepted Answer

A)  the utility from consumption will increase, but not the total output. 
B)  total world output will increase, as well as well being from consumption. 
C)  total world output will increase, but well being from consumption will not. 
D)  neither total output nor well being from consumption will change. 
E)  the impact on total output and well being cannot be predicted. 
A)  the utility from consumption will increase, but not the total output. 
B)  total world output will increase, as well as well being from consumption. 
C)  total world output will increase, but well being from consumption will not. 
D)  neither total output nor well being from consumption will change. 
E)  the impact on total output and well being cannot be predicted.

Question 4

One of the main reasons that people want to limit imports is the

Accepted Answer

A)  fear that imports will decrease the income of Americans. 
B)  idea that cheap foreign labor destroys American jobs. 
C)  concept that if trade benefits another country, it must harm the United States. 
D)  All of the above are correct. 
A)  fear that imports will decrease the income of Americans. 
B)  idea that cheap foreign labor destroys American jobs. 
C)  concept that if trade benefits another country, it must harm the United States. 
D)  All of the above are correct.

Question 5

According to William Safire,"helpfulism" is basically protectionism.

Accepted Answer

A) True 
 B)False

Question 6

Figure 18-2
  
-In Figure 18-2,if the United States and Mexico are negotiating to trade wheat for petroleum,

Accepted Answer

A)  the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B)  Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C)  the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D)  if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not. 
A)  the United States must receive more than 1 2/3 units of petroleum for a unit of wheat. 
B)  Mexico must receive more than 1 2/3 units of petroleum for a unit of wheat. 
C)  the limits of the agreement are between 1 unit of wheat for 2/3 unit of petroleum for the United States and 1 unit of wheat for 1 1/2 units of petroleum for Mexico. 
D)  if the agreement is formalized at 1 unit of wheat for 1 unit of petroleum, then Mexico will benefit from the trade but the United States will not.

Question 7

Foreign competition will always put a domestic industry at a disadvantage.This leads to massive trade adjustment assistance on the part of each country.

Accepted Answer

A) True 
 B)False

Question 8

Figure 18-5
  
-From the graph in Figure 18-5 (curves show output per unit of labor input),one can infer that

Accepted Answer

A)  Japan has an absolute advantage in TVs and computers, but a comparative advantage only in TVs. 
B)  Japan has only a comparative advantage in TVs. 
C)  Japan has an absolute advantage in both TVs and computers, but a comparative advantage only in computers. 
D)  China has a comparative advantage in computers. 
A)  Japan has an absolute advantage in TVs and computers, but a comparative advantage only in TVs. 
B)  Japan has only a comparative advantage in TVs. 
C)  Japan has an absolute advantage in both TVs and computers, but a comparative advantage only in computers. 
D)  China has a comparative advantage in computers.

Question 9

A quota is

Accepted Answer

A)  a tax on exported items. 
B)  a tax on imported items. 
C)  a limit on the amount of imports. 
D)  a subsidy to export. 
A)  a tax on exported items. 
B)  a tax on imported items. 
C)  a limit on the amount of imports. 
D)  a subsidy to export.

Question 10

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 11

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice)will

Accepted Answer

A)  import guns. 
B)  have a comparative advantage in guns. 
C)  have an absolute advantage in guns. 
D)  have a comparative advantage in rice. 
A)  import guns. 
B)  have a comparative advantage in guns. 
C)  have an absolute advantage in guns. 
D)  have a comparative advantage in rice.

Question 12

Discuss national defense,infant industry,and strategic trade as arguments for protection.

Accepted Answer

National defense arguments can be made f

Question 13

If a nation can produce greater quantities of a good than another nation,it has a(n)

Accepted Answer

A)  comparative advantage. 
B)  absolute advantage. 
C)  declarative advantage. 
D)  entire advantage. 
A)  comparative advantage. 
B)  absolute advantage. 
C)  declarative advantage. 
D)  entire advantage.

Question 14

Table 18-2
  
-Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers,we can conclude that

Accepted Answer

A)  the United States has a comparative advantage in the production of cars. 
B)  France has a comparative advantage in the production of wine. 
C)  the United States has an absolute advantage in the production of cars. 
D)  All of the above are correct. 
A)  the United States has a comparative advantage in the production of cars. 
B)  France has a comparative advantage in the production of wine. 
C)  the United States has an absolute advantage in the production of cars. 
D)  All of the above are correct.

Question 15

If two countries have production possibilities curves with different slopes,there is no possibility for gains from trade.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements regarding the cheap foreign labor argument is correct?

Accepted Answer

A)  If there is an abrupt change in foreign competition that severely penalizes American workers, the U.S. government should immediately adopt protectionist measures. 
B)  In the long run, labor will be cheap (wages are low) in those nations where labor is most productive. 
C)  If workers in other countries are willing to supply their products with little compensation, this must ultimately raise the standard of living of the average American worker. 
D)  American workers can never suffer from foreign competition since our monetary and fiscal policies always produce high employment at home. 
A)  If there is an abrupt change in foreign competition that severely penalizes American workers, the U.S. government should immediately adopt protectionist measures. 
B)  In the long run, labor will be cheap (wages are low) in those nations where labor is most productive. 
C)  If workers in other countries are willing to supply their products with little compensation, this must ultimately raise the standard of living of the average American worker. 
D)  American workers can never suffer from foreign competition since our monetary and fiscal policies always produce high employment at home.

Question 17

Tariffs are different from quotas because they

Accepted Answer

A)  increase government revenue. 
B)  increase profits. 
C)  increase the quantity traded. 
D)  place all the burden on foreigners. 
A)  increase government revenue. 
B)  increase profits. 
C)  increase the quantity traded. 
D)  place all the burden on foreigners.

Question 18

If the United States imposes a tariff on the import of Japanese cars instead of a quota,the price

Accepted Answer

A)  increase in Japanese cars goes into the revenue of U.S. automakers. 
B)  increase in Japanese cars goes into the revenue of Japanese automakers. 
C)  increase in Japanese cars goes into the revenue of the U.S. government. 
D)  decrease in Japanese cars comes out of the revenue of U.S. automakers. 
E)  decrease in Japanese cars comes out of the revenue of the U.S. government. 
A)  increase in Japanese cars goes into the revenue of U.S. automakers. 
B)  increase in Japanese cars goes into the revenue of Japanese automakers. 
C)  increase in Japanese cars goes into the revenue of the U.S. government. 
D)  decrease in Japanese cars comes out of the revenue of U.S. automakers. 
E)  decrease in Japanese cars comes out of the revenue of the U.S. government.

Question 19

In a situation of free trade

Accepted Answer

A)  countries with comparative advantage will export more than countries with comparative disadvantage import. 
B)  the total quantity of an item exported will be greater than the total quantity imported. 
C)  importing countries will always produce some good, so that total quantity imported is less than total quantity exported. 
D)  the total quantity of an item exported will equal the total quantity imported. 
A)  countries with comparative advantage will export more than countries with comparative disadvantage import. 
B)  the total quantity of an item exported will be greater than the total quantity imported. 
C)  importing countries will always produce some good, so that total quantity imported is less than total quantity exported. 
D)  the total quantity of an item exported will equal the total quantity imported.

Question 20

Figure 18-1
  
-In Figure 18-1,

Accepted Answer

A)  Great Britain has an absolute advantage over Germany in the production of both scientific equipment and woolens. 
B)  Germany has a comparative advantage over Great Britain in the production of woolens. 
C)  Great Britain has a comparative advantage in the production of woolens. 
D)  Great Britain should export scientific equipment to Germany, and Germany should export woolens to Great Britain. 
A)  Great Britain has an absolute advantage over Germany in the production of both scientific equipment and woolens. 
B)  Germany has a comparative advantage over Great Britain in the production of woolens. 
C)  Great Britain has a comparative advantage in the production of woolens. 
D)  Great Britain should export scientific equipment to Germany, and Germany should export woolens to Great Britain.

Table 18-1 -From Table 18-1,the United States

From 1975 to 2008,which of the following countries experienced greater wage increases than the U.S.?

If nations begin to specialize in production for the purpose of trade,

One of the main reasons that people want to limit imports is the

According to William Safire,"helpfulism" is basically protectionism.

Figure 18-2 -In Figure 18-2,if the United States and Mexico are negotiating to trade wheat for petroleum,

Foreign competition will always put a domestic industry at a disadvantage.This leads to massive trade adjustment assistance on the part of each country.

Figure 18-5 -From the graph in Figure 18-5 (curves show output per unit of labor input),one can infer that

A quota is

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

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice)will

Discuss national defense,infant industry,and strategic trade as arguments for protection.

If a nation can produce greater quantities of a good than another nation,it has a(n)

Table 18-2 -Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers,we can conclude that

If two countries have production possibilities curves with different slopes,there is no possibility for gains from trade.

Which of the following statements regarding the cheap foreign labor argument is correct?

Tariffs are different from quotas because they

If the United States imposes a tariff on the import of Japanese cars instead of a quota,the price

In a situation of free trade

Figure 18-1 -In Figure 18-1,

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

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Exam 18: International Trade and Comparative Advantage

Table 18-1 -From Table 18-1,the United States

From 1975 to 2008,which of the following countries experienced greater wage increases than the U.S.?

If nations begin to specialize in production for the purpose of trade,

One of the main reasons that people want to limit imports is the

According to William Safire,"helpfulism" is basically protectionism.

Figure 18-2 -In Figure 18-2,if the United States and Mexico are negotiating to trade wheat for petroleum,

Foreign competition will always put a domestic industry at a disadvantage.This leads to massive trade adjustment assistance on the part of each country.

Figure 18-5 -From the graph in Figure 18-5 (curves show output per unit of labor input),one can infer that

A quota is

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

Japan and China produce guns and rice.The country with the lowest opportunity cost of guns (in terms of rice)will

Discuss national defense,infant industry,and strategic trade as arguments for protection.

If a nation can produce greater quantities of a good than another nation,it has a(n)

Table 18-2 -Suppose that the United States can make 15 cars or 20 bottles of wine with one year's worth of labor.France can make 10 cars or 18 bottles of wine with one year's worth of labor.From these numbers,we can conclude that

If two countries have production possibilities curves with different slopes,there is no possibility for gains from trade.

Which of the following statements regarding the cheap foreign labor argument is correct?

Tariffs are different from quotas because they

If the United States imposes a tariff on the import of Japanese cars instead of a quota,the price

In a situation of free trade

Figure 18-1 -In Figure 18-1,

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

Filters