Question 1

If a nation has "cheap labor,"

Accepted Answer

A)  it can still benefit from trade. 
B)  other nations can still compete with it. 
C)  it cannot have a comparative advantage in everything. 
D)  All of the above are t. 
A)  it can still benefit from trade. 
B)  other nations can still compete with it. 
C)  it cannot have a comparative advantage in everything. 
D)  All of the above are t.

Question 2

If one country has an absolute advantage in every commodity,there is no reason for it to trade.

Accepted Answer

A) True 
 B)False

Question 3

If a nation does not have an absolute advantage in producing anything,it

Accepted Answer

A)  has no comparative advantage either. 
B)  will have a comparative advantage in the activity in which it is least inefficient. 
C)  will try to get along without trade. 
D)  will export raw materials and import finished products. 
A)  has no comparative advantage either. 
B)  will have a comparative advantage in the activity in which it is least inefficient. 
C)  will try to get along without trade. 
D)  will export raw materials and import finished products.

Question 4

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 5

Figure 18-9
  
-In Figure 18-9,Pestoland at price OA

Accepted Answer

A)  is importing MN pasta from Pastaland. 
B)  is exporting MN pasta to Pastaland. 
C)  is exporting XY pasta to Pastaland. 
D)  is exporting OZ pasta to Pastaland. 
A)  is importing MN pasta from Pastaland. 
B)  is exporting MN pasta to Pastaland. 
C)  is exporting XY pasta to Pastaland. 
D)  is exporting OZ pasta to Pastaland.

Question 6

Figure 18-9
  
-In Figure 18-9,Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Accepted Answer

A)  OC 
B)  OJ 
C)  OA 
D)  OK 
A)  OC 
B)  OJ 
C)  OA 
D)  OK

Question 7

Baumol and Blinder offer some reasons why countries trade with each other.List three of the reasons,and give an example of each to illustrate the reason.

Accepted Answer

The three reasons are:
1.Every country l

Question 8

What would be the output combination for two products A and B on the production possibility frontier,if a country uses its entire resources for producing A?

Accepted Answer

A)  A - Maximum; B - Zero 
B)  A- Maximum, B - Maximum 
C)  A - Zero, B - Maximum 
D)  A - Zero, B - Minimum 
A)  A - Maximum; B - Zero 
B)  A- Maximum, B - Maximum 
C)  A - Zero, B - Maximum 
D)  A - Zero, B - Minimum

Question 9

How extensively does the United States use quotas?

Accepted Answer

A)  Very little; there are few quotas on imports. 
B)  Selectively; there are more quotas than most people realize. 
C)  Widely; quotas are extensive and cover a wide range of goods. 
D)  Widely; although the United States prefers to use tariffs, which cover a wide range of goods. 
A)  Very little; there are few quotas on imports. 
B)  Selectively; there are more quotas than most people realize. 
C)  Widely; quotas are extensive and cover a wide range of goods. 
D)  Widely; although the United States prefers to use tariffs, which cover a wide range of goods.

Question 10

Specialization permits larger outputs and offers economies of large-scale production.

Accepted Answer

A) True 
 B)False

Question 11

Figure 18-9
  
-In Figure 18-9,at price OC

Accepted Answer

A)  quantity supplied of pasta exceeds quantity demanded so price will fall. 
B)  quantity demanded for pasta exceeds quantity supplied so price will rise. 
C)  exports of pasta equal XY. 
D)  imports of pasta equal XY. 
A)  quantity supplied of pasta exceeds quantity demanded so price will fall. 
B)  quantity demanded for pasta exceeds quantity supplied so price will rise. 
C)  exports of pasta equal XY. 
D)  imports of pasta equal XY.

Question 12

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

Accepted Answer

A) True 
 B)False

Question 13

Among the impediments to the international mobility of capital are

Accepted Answer

A)  restrictions on foreign ownership. 
B)  fear of nationalization or political instability. 
C)  fluctuations in exchange rates. 
D)  All of the above are correct. 
A)  restrictions on foreign ownership. 
B)  fear of nationalization or political instability. 
C)  fluctuations in exchange rates. 
D)  All of the above are correct.

Question 14

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

Accepted Answer

A) True 
 B)False

Question 15

In the past,when the United States enjoyed a continuing trade surplus,wages in the United States

Accepted Answer

A)  were much lower than wages in countries that imported U.S. products. 
B)  were much higher than wages in countries that imported U.S. products. 
C)  were roughly the same as wages in countries that imported U.S. products. 
D)  fell throughout that period, enabling the continuing trade surplus. 
E)  rose throughout that period, ending the trade surplus. 
A)  were much lower than wages in countries that imported U.S. products. 
B)  were much higher than wages in countries that imported U.S. products. 
C)  were roughly the same as wages in countries that imported U.S. products. 
D)  fell throughout that period, enabling the continuing trade surplus. 
E)  rose throughout that period, ending the trade surplus.

Question 16

Strategic trade policy relies on threats of protectionism to protect free trade.

Accepted Answer

A) True 
 B)False

Question 17

A country can gain by importing a good that it can make itself if

Accepted Answer

A)  this enables the country to make another good in which it is extremely efficient. 
B)  it has an absolute disadvantage in the good. 
C)  this permits the country to establish comparative advantage in the good. 
D)  All of the above are correct. 
A)  this enables the country to make another good in which it is extremely efficient. 
B)  it has an absolute disadvantage in the good. 
C)  this permits the country to establish comparative advantage in the good. 
D)  All of the above are correct.

Question 18

Comparative advantage is the rule that ordinarily prevents a nation from independently producing all of the goods it requires.

Accepted Answer

A) True 
 B)False

Question 19

Figure 18-7
  
-In Figure 18-7,AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph,Pestoland has a comparative advantage in

Accepted Answer

A)  pasta because OA/OB < OC/OD. 
B)  pesto because OA/OB < OC/OD. 
C)  pasta because OA/OB OC/OD. 
D)  pesto because OA/OB OC/OD. 
A)  pasta because OA/OB < OC/OD. 
B)  pesto because OA/OB < OC/OD. 
C)  pasta because OA/OB OC/OD. 
D)  pesto because OA/OB OC/OD.

Question 20

Equilibrium price in international trade is the common price between exporting and importing countries.

Accepted Answer

A) True 
 B)False

If a nation has "cheap labor,"

If one country has an absolute advantage in every commodity,there is no reason for it to trade.

If a nation does not have an absolute advantage in producing anything,it

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

Figure 18-9 -In Figure 18-9,Pestoland at price OA

Figure 18-9 -In Figure 18-9,Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Baumol and Blinder offer some reasons why countries trade with each other.List three of the reasons,and give an example of each to illustrate the reason.

What would be the output combination for two products A and B on the production possibility frontier,if a country uses its entire resources for producing A?

How extensively does the United States use quotas?

Specialization permits larger outputs and offers economies of large-scale production.

Figure 18-9 -In Figure 18-9,at price OC

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

Among the impediments to the international mobility of capital are

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

In the past,when the United States enjoyed a continuing trade surplus,wages in the United States

Strategic trade policy relies on threats of protectionism to protect free trade.

A country can gain by importing a good that it can make itself if

Comparative advantage is the rule that ordinarily prevents a nation from independently producing all of the goods it requires.

Figure 18-7 -In Figure 18-7,AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph,Pestoland has a comparative advantage in

Equilibrium price in international trade is the common price between exporting and importing countries.

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

If a nation has "cheap labor,"

If one country has an absolute advantage in every commodity,there is no reason for it to trade.

If a nation does not have an absolute advantage in producing anything,it

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,England has the comparative advantage in both goods.

Figure 18-9 -In Figure 18-9,Pestoland at price OA

Figure 18-9 -In Figure 18-9,Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Baumol and Blinder offer some reasons why countries trade with each other.List three of the reasons,and give an example of each to illustrate the reason.

What would be the output combination for two products A and B on the production possibility frontier,if a country uses its entire resources for producing A?

How extensively does the United States use quotas?

Specialization permits larger outputs and offers economies of large-scale production.

Figure 18-9 -In Figure 18-9,at price OC

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

Among the impediments to the international mobility of capital are

The "infant industry argument" recommends protectionism for industries that produce children's clothing.

In the past,when the United States enjoyed a continuing trade surplus,wages in the United States

Strategic trade policy relies on threats of protectionism to protect free trade.

A country can gain by importing a good that it can make itself if

Comparative advantage is the rule that ordinarily prevents a nation from independently producing all of the goods it requires.

Figure 18-7 -In Figure 18-7,AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph,Pestoland has a comparative advantage in

Equilibrium price in international trade is the common price between exporting and importing countries.

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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