Question 1

If the production possibilities curves of two countries have the same slope,

Accepted Answer

A)  neither has a comparative advantage, and there are no gains from trade. 
B)  although there is no comparative advantage, there are potential gains if there are differences in absolute advantage. 
C)  neither has an absolute advantage, and there cannot be gains from trade. 
D)  both have an absolute advantage, and can gain from trade. 
A)  neither has a comparative advantage, and there are no gains from trade. 
B)  although there is no comparative advantage, there are potential gains if there are differences in absolute advantage. 
C)  neither has an absolute advantage, and there cannot be gains from trade. 
D)  both have an absolute advantage, and can gain from trade.

Question 2

What are the two approaches followed by the U.S.government to ease the burden on the victims of free trade?

Accepted Answer

The U.S.government follows two basic app

Question 3

Variability in exchange rates of currencies used in international trade

Accepted Answer

A)  causes a complete breakdown of trade. 
B)  renders the theory of gains from trade null in practice. 
C)  brings with it a host of complications in trade policy. 
D)  has no impact on trade. 
A)  causes a complete breakdown of trade. 
B)  renders the theory of gains from trade null in practice. 
C)  brings with it a host of complications in trade policy. 
D)  has no impact on trade.

Question 4

If Argentina has a large amount of farmland and Great Britain has many factories,

Accepted Answer

A)  the two nations have no reason to trade. 
B)  Argentina will be willing to trade but Great Britain will not. 
C)  Great Britain will be willing to trade but Argentina will not. 
D)  the two nations will probably engage in mutually advantageous trade. 
A)  the two nations have no reason to trade. 
B)  Argentina will be willing to trade but Great Britain will not. 
C)  Great Britain will be willing to trade but Argentina will not. 
D)  the two nations will probably engage in mutually advantageous trade.

Question 5

Quotas increase the profits of importers but decrease the profits of exporters.

Accepted Answer

A) True 
 B)False

Question 6

Countries that are unable to produce goods as efficiently as other countries will never be able to trade.

Accepted Answer

A) True 
 B)False

Question 7

Table 18-2
  
-Using the data from Table 18-2,suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Accepted Answer

A)  16 wine, 8 cloth. 
B)  16 wine, 16 cloth. 
C)  12 wine, 12 cloth. 
D)  8 wine, 16 cloth. 
A)  16 wine, 8 cloth. 
B)  16 wine, 16 cloth. 
C)  12 wine, 12 cloth. 
D)  8 wine, 16 cloth.

Question 8

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

Accepted Answer

A)  It accepts the situation, and does nothing about it. 
B)  It seeks greater efficiency in order to offset the tariff. 
C)  It refuses to sell to the country that imposes the tariff. 
D)  It retaliates by imposing tariffs or quotas on items from the other country. 
A)  It accepts the situation, and does nothing about it. 
B)  It seeks greater efficiency in order to offset the tariff. 
C)  It refuses to sell to the country that imposes the tariff. 
D)  It retaliates by imposing tariffs or quotas on items from the other country.

Question 9

"Free trade benefits one country at another country's expense." Evaluate this statement using economic analysis.

Accepted Answer

The statement is f.Trade must

Question 10

At least two demand curves are present in an international equilibrium model.

Accepted Answer

A) True 
 B)False

Question 11

Table 18-1
  
-From Table 18-1,the opportunity cost of one bushel of wheat in Great Britain is

Accepted Answer

A)  1/4 yard of textiles. 
B)  3 yards of textiles. 
C)  12 yards of textiles. 
D)  4 yards of textiles. 
A)  1/4 yard of textiles. 
B)  3 yards of textiles. 
C)  12 yards of textiles. 
D)  4 yards of textiles.

Question 12

If all countries produce the goods for which they have comparative advantages,all countries benefit with the increased production of goods with no additional resources being used.

Accepted Answer

A) True 
 B)False

Question 13

Carefully define the following terms and explain their importance to the study of economics.
a.specialization
b.absolute advantage
c.comparative advantage
d.quota
e.trade adjustment assistance

Accepted Answer

a.Specialization means that a country de

Question 14

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Accepted Answer

A) True 
 B)False

Question 15

Absolute advantage states that a country has an advantage over another if it can produce a good with fewer resources.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products.How would the analysis used to explain international trade apply?

Accepted Answer

The analysis is identical.If nations and

Question 17

Table 18-4
  
-Table 18-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries,what are the equilibrium price and quantity in Japan?

Accepted Answer

A)  P = $100, Q = 100 
B)  P = $200, Q = 85 
C)  P = $300, Q = 70 
D)  P = $400, Q = 60 
A)  P = $100, Q = 100 
B)  P = $200, Q = 85 
C)  P = $300, Q = 70 
D)  P = $400, Q = 60

Question 18

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

Accepted Answer

A)  effectively, ineffectively 
B)  haphazardly, carefully 
C)  equally, capriciously 
D)  unfairly, fairly 
E)  unequally, unequally 
A)  effectively, ineffectively 
B)  haphazardly, carefully 
C)  equally, capriciously 
D)  unfairly, fairly 
E)  unequally, unequally

Question 19

If a country produces a commodity in the range of decreasing returns to scale,and the country begins to export more in a pure free trade system,the domestic price of the commodity will

Accepted Answer

A)  fall. 
B)  rise. 
C)  exceed the price in foreign countries. 
D)  be below the price in foreign countries. 
E)  One cannot predict the impact on the price of the commodity. 
A)  fall. 
B)  rise. 
C)  exceed the price in foreign countries. 
D)  be below the price in foreign countries. 
E)  One cannot predict the impact on the price of the commodity.

Question 20

Economists believe that trade is necessary for prosperity because

Accepted Answer

A)  every country lacks some vital resources that it can get only by trade. 
B)  each country's climate makes it a relatively efficient producer of some goods, and an inefficient producer of other goods. 
C)  specialization permits large outputs and can produce economies of scale. 
D)  All of the above are correct. 
A)  every country lacks some vital resources that it can get only by trade. 
B)  each country's climate makes it a relatively efficient producer of some goods, and an inefficient producer of other goods. 
C)  specialization permits large outputs and can produce economies of scale. 
D)  All of the above are correct.

If the production possibilities curves of two countries have the same slope,

What are the two approaches followed by the U.S.government to ease the burden on the victims of free trade?

Variability in exchange rates of currencies used in international trade

If Argentina has a large amount of farmland and Great Britain has many factories,

Quotas increase the profits of importers but decrease the profits of exporters.

Countries that are unable to produce goods as efficiently as other countries will never be able to trade.

Table 18-2 -Using the data from Table 18-2,suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

"Free trade benefits one country at another country's expense." Evaluate this statement using economic analysis.

At least two demand curves are present in an international equilibrium model.

Table 18-1 -From Table 18-1,the opportunity cost of one bushel of wheat in Great Britain is

If all countries produce the goods for which they have comparative advantages,all countries benefit with the increased production of goods with no additional resources being used.

Carefully define the following terms and explain their importance to the study of economics. a.specialization b.absolute advantage c.comparative advantage d.quota e.trade adjustment assistance

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Absolute advantage states that a country has an advantage over another if it can produce a good with fewer resources.

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products.How would the analysis used to explain international trade apply?

Table 18-4 -Table 18-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries,what are the equilibrium price and quantity in Japan?

A tariff on imports affects foreign suppliers ; a quota affects foreign suppliers .

If a country produces a commodity in the range of decreasing returns to scale,and the country begins to export more in a pure free trade system,the domestic price of the commodity will

Economists believe that trade is necessary for prosperity because

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

Exam 18: International Trade and Comparative Advantage

If the production possibilities curves of two countries have the same slope,

What are the two approaches followed by the U.S.government to ease the burden on the victims of free trade?

Variability in exchange rates of currencies used in international trade

If Argentina has a large amount of farmland and Great Britain has many factories,

Quotas increase the profits of importers but decrease the profits of exporters.

Countries that are unable to produce goods as efficiently as other countries will never be able to trade.

Table 18-2 -Using the data from Table 18-2,suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

"Free trade benefits one country at another country's expense." Evaluate this statement using economic analysis.

At least two demand curves are present in an international equilibrium model.

Table 18-1 -From Table 18-1,the opportunity cost of one bushel of wheat in Great Britain is

If all countries produce the goods for which they have comparative advantages,all countries benefit with the increased production of goods with no additional resources being used.

Carefully define the following terms and explain their importance to the study of economics. a.specialization b.absolute advantage c.comparative advantage d.quota e.trade adjustment assistance

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Absolute advantage states that a country has an advantage over another if it can produce a good with fewer resources.

Suppose that the citizens of South Dakota decided to limit imports of citrus fruit from Florida and California on the grounds that climatic differences give those two states an unfair advantage in the production of those products.How would the analysis used to explain international trade apply?

Table 18-4 -Table 18-4 presents the demand and supply schedules for television sets in Japan and the United States.If there is no trade between these countries,what are the equilibrium price and quantity in Japan?

A tariff on imports affects foreign suppliers ____; a quota affects foreign suppliers ____.

If a country produces a commodity in the range of decreasing returns to scale,and the country begins to export more in a pure free trade system,the domestic price of the commodity will

Economists believe that trade is necessary for prosperity because

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

A tariff on imports affects foreign suppliers ; a quota affects foreign suppliers .