Question 1

Using graphs to illustrate the concepts,absolute advantage

Accepted Answer

A)  is shown with differences in slope of a production possibilities curve; comparative advantage is shown with a lower curve. 
B)  requires a very steep curve; comparative advantage requires a curve with a shallow slope. 
C)  on one good requires that the slope of the production possibilities curve be steeper for that good. 
D)  is shown with a higher production possibilities curve; comparative advantage is shown with differences in slope of the curves. 
A)  is shown with differences in slope of a production possibilities curve; comparative advantage is shown with a lower curve. 
B)  requires a very steep curve; comparative advantage requires a curve with a shallow slope. 
C)  on one good requires that the slope of the production possibilities curve be steeper for that good. 
D)  is shown with a higher production possibilities curve; comparative advantage is shown with differences in slope of the curves.

Question 2

A quota brings a more serious misallocation of resources than a tariff.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following positions would a mercantilist support?

Accepted Answer

A)  Trade in manufacturing goods is good for the US. 
B)  Imports to the U.S. from Japan are beneficial to the U.S. 
C)  Exports from Japan to the U.K. are beneficial to Japan. 
D)  Movement of labor from UK to US is beneficial to US. 
A)  Trade in manufacturing goods is good for the US. 
B)  Imports to the U.S. from Japan are beneficial to the U.S. 
C)  Exports from Japan to the U.K. are beneficial to Japan. 
D)  Movement of labor from UK to US is beneficial to US.

Question 4

By tradition,Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses,they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Accepted Answer

A)  beggar my neighbor. 
B)  helpfulism. 
C)  strategic trade policy. 
D)  dumping. 
A)  beggar my neighbor. 
B)  helpfulism. 
C)  strategic trade policy. 
D)  dumping.

Question 5

Trade between two nations is complicated by

Accepted Answer

A)  the variability in exchange rates of the respective nation's currencies. 
B)  different production techniques in the nations. 
C)  the age and experience of the respective nation's diplomats. 
D)  the variability in climate between the nations. 
A)  the variability in exchange rates of the respective nation's currencies. 
B)  different production techniques in the nations. 
C)  the age and experience of the respective nation's diplomats. 
D)  the variability in climate between the nations.

Question 6

Is the call for protection on the basis of national defense valid?

Accepted Answer

A)  No, because protection has no place in national defense. 
B)  No, protection is always improper. 
C)  Uncertain, economic theory has no answer to this question. 
D)  Yes, although it can be overstated and abused. 
A)  No, because protection has no place in national defense. 
B)  No, protection is always improper. 
C)  Uncertain, economic theory has no answer to this question. 
D)  Yes, although it can be overstated and abused.

Question 7

Economists say that voluntary exchange makes both parties better off.What is the explanation that they offer to back up this conclusion?

Accepted Answer

This analysis was developed in Chapter 1

Question 8

How can tariffs lead to a situation in which all parties to a trade lose?

Accepted Answer

In effect,a tariff amounts to government

Question 9

Labor is defined as cheap only if its productivity is very low.

Accepted Answer

A) True 
 B)False

Question 10

An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.

Accepted Answer

A) True 
 B)False

Question 11

If a country begins to import more of a commodity,one can normally expect the price of the commodity to

Accepted Answer

A)  remain unchanged in that nation. 
B)  rise and then fall below where it was originally. 
C)  rise in that nation. 
D)  drop in that nation. 
A)  remain unchanged in that nation. 
B)  rise and then fall below where it was originally. 
C)  rise in that nation. 
D)  drop in that nation.

Question 12

A nation can gain from imposing a tariff on imports if it forces exporting countries

Accepted Answer

A)  to raise their prices to pay the tariff. 
B)  to lower their prices to avoid stocks of unsold goods. 
C)  to produce at diseconomies of scale. 
D)  to accept some imports from the tariff-imposing nation. 
A)  to raise their prices to pay the tariff. 
B)  to lower their prices to avoid stocks of unsold goods. 
C)  to produce at diseconomies of scale. 
D)  to accept some imports from the tariff-imposing nation.

Question 13

What matters most in determining efficient distribution of production over the world is

Accepted Answer

A)  absolute advantage. 
B)  efficiency. 
C)  the stock of resources. 
D)  comparative advantage. 
A)  absolute advantage. 
B)  efficiency. 
C)  the stock of resources. 
D)  comparative advantage.

Question 14

A quota reduces quantity sold by operating through the demand side of the market.

Accepted Answer

A) True 
 B)False

Question 15

Table 18-3
  
-The data in Table 18-3 indicate that the United States has

Accepted Answer

A)  an absolute advantage in both goods, and a comparative advantage in cotton. 
B)  an absolute advantage in both goods, and a comparative advantage in wheat. 
C)  only a comparative advantage in wheat. 
D)  only a comparative advantage in cotton. 
A)  an absolute advantage in both goods, and a comparative advantage in cotton. 
B)  an absolute advantage in both goods, and a comparative advantage in wheat. 
C)  only a comparative advantage in wheat. 
D)  only a comparative advantage in cotton.

Question 16

If two countries each are currently producing two goods,and each begins to specialize in the good in which it has a comparative advantage,what will happen to total (world)output?

Accepted Answer

A)  It will increase. 
B)  It will decrease. 
C)  It will be unchanged in both countries. 
D)  It will rise in one country and fall in the other, but the total is unchanged. 
E)  Uncertain; economic theory has no answer to this question. 
A)  It will increase. 
B)  It will decrease. 
C)  It will be unchanged in both countries. 
D)  It will rise in one country and fall in the other, but the total is unchanged. 
E)  Uncertain; economic theory has no answer to this question.

Question 17

One reason why nations trade is because

Accepted Answer

A)  trading provides opportunities to earn profits. 
B)  the rate of interest is not the same in all countries. 
C)  resources are not equally distributed to all nations. 
D)  some nations like to build one thing while others like to build another. 
A)  trading provides opportunities to earn profits. 
B)  the rate of interest is not the same in all countries. 
C)  resources are not equally distributed to all nations. 
D)  some nations like to build one thing while others like to build another.

Question 18

If Brazil voluntarily ships coffee to the United States in return for airplanes,

Accepted Answer

A)  Brazil will benefit, but the United States will lose. 
B)  one of the two nations will benefit and the other nation will lose since the trade does not increase the physical quantities of coffee and airplanes available. 
C)  both Brazil and the United States will benefit since the trade allows each nation to acquire items. 
D)  both Brazil and the United States will lose since there is no increase in the production of coffee or airplanes and the trade will involve certain transaction costs. 
A)  Brazil will benefit, but the United States will lose. 
B)  one of the two nations will benefit and the other nation will lose since the trade does not increase the physical quantities of coffee and airplanes available. 
C)  both Brazil and the United States will benefit since the trade allows each nation to acquire items. 
D)  both Brazil and the United States will lose since there is no increase in the production of coffee or airplanes and the trade will involve certain transaction costs.

Question 19

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

Accepted Answer

A) True 
 B)False

Question 20

According to the ____ view,a nation's wealth consists of the amount of gold or other monies at its command.

Accepted Answer

A)  Keynesian 
B)  free trade 
C)  mercantilist 
D)  monetarist 
A)  Keynesian 
B)  free trade 
C)  mercantilist 
D)  monetarist

Using graphs to illustrate the concepts,absolute advantage

A quota brings a more serious misallocation of resources than a tariff.

Which of the following positions would a mercantilist support?

By tradition,Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses,they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Trade between two nations is complicated by

Is the call for protection on the basis of national defense valid?

Economists say that voluntary exchange makes both parties better off.What is the explanation that they offer to back up this conclusion?

How can tariffs lead to a situation in which all parties to a trade lose?

Labor is defined as cheap only if its productivity is very low.

An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.

If a country begins to import more of a commodity,one can normally expect the price of the commodity to

A nation can gain from imposing a tariff on imports if it forces exporting countries

What matters most in determining efficient distribution of production over the world is

A quota reduces quantity sold by operating through the demand side of the market.

Table 18-3 -The data in Table 18-3 indicate that the United States has

If two countries each are currently producing two goods,and each begins to specialize in the good in which it has a comparative advantage,what will happen to total (world)output?

One reason why nations trade is because

If Brazil voluntarily ships coffee to the United States in return for airplanes,

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

According to the ____ view,a nation's wealth consists of the amount of gold or other monies at its command.

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

Using graphs to illustrate the concepts,absolute advantage

A quota brings a more serious misallocation of resources than a tariff.

Which of the following positions would a mercantilist support?

By tradition,Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses,they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Trade between two nations is complicated by

Is the call for protection on the basis of national defense valid?

Economists say that voluntary exchange makes both parties better off.What is the explanation that they offer to back up this conclusion?

How can tariffs lead to a situation in which all parties to a trade lose?

Labor is defined as cheap only if its productivity is very low.

An export subsidy helps reduce the selling price of a product by allowing individual producers to charge less and still cover all of their production costs.

If a country begins to import more of a commodity,one can normally expect the price of the commodity to

A nation can gain from imposing a tariff on imports if it forces exporting countries

What matters most in determining efficient distribution of production over the world is

A quota reduces quantity sold by operating through the demand side of the market.

Table 18-3 -The data in Table 18-3 indicate that the United States has

If two countries each are currently producing two goods,and each begins to specialize in the good in which it has a comparative advantage,what will happen to total (world)output?

One reason why nations trade is because

If Brazil voluntarily ships coffee to the United States in return for airplanes,

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

According to the ____ view,a nation's wealth consists of the amount of gold or other monies at its command.

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