Question 1

For a country that uses them,the general result of tariffs and quotas is an increase in

Accepted Answer

A)  the volume of trade. 
B)  the standard of living. 
C)  the level of imports. 
D)  domestic prices. 
E)  the quantities demanded. 
A)  the volume of trade. 
B)  the standard of living. 
C)  the level of imports. 
D)  domestic prices. 
E)  the quantities demanded. D

Question 2

Excluded from among the important bases for specialization is the existence of

Accepted Answer

A)  perfect resource homogeneity and mobility. 
B)  differences in the quality of resources. 
C)  relative differences in the quantities of human and nonhuman resources. 
D)  comparative advantage. 
E)  differences in technology. 
A)  perfect resource homogeneity and mobility. 
B)  differences in the quality of resources. 
C)  relative differences in the quantities of human and nonhuman resources. 
D)  comparative advantage. 
E)  differences in technology. A

Question 3

A husband and wife both work during the week and decide that on Saturday morning the inside of the house must be cleaned and the yard must be mowed and weeded.If it takes the husband four hours to clean the house and two hours to do the yard work,and the wife can do these tasks in two hours and one hour,respectively

Accepted Answer

A)  the husband has a comparative advantage in yard work. 
B)  the husband has a comparative advantage in cleaning. 
C)  the wife has a comparative advantage in both tasks. 
D)  neither has a comparative advantage in either task, but the wife has an absolute advantage in both. 
E)  the wife should let the husband do both tasks so he can improve his time. 
A)  the husband has a comparative advantage in yard work. 
B)  the husband has a comparative advantage in cleaning. 
C)  the wife has a comparative advantage in both tasks. 
D)  neither has a comparative advantage in either task, but the wife has an absolute advantage in both. 
E)  the wife should let the husband do both tasks so he can improve his time. D

Question 4

The following question are based on the following information. Country A can produce either 10,000 barrels of petroleum or 12,000 bushels of wheat with one unit of its resources. Country B can produce either 7,000 barrels of petroleum or 15,000 bushels of wheat with one unit of its resources.
-From this information,country

Accepted Answer

A)  A has an absolute advantage in petroleum. 
B)  A has an absolute advantage in wheat. 
C)  A has a comparative advantage in wheat. 
D)  B has an absolute advantage in petroleum. 
E)  B has a comparative advantage in petroleum. 
A)  A has an absolute advantage in petroleum. 
B)  A has an absolute advantage in wheat. 
C)  A has a comparative advantage in wheat. 
D)  B has an absolute advantage in petroleum. 
E)  B has a comparative advantage in petroleum.

Question 5

The following question are based on the following diagrams:
  
-From the diagrams,it can be seen that

Accepted Answer

A)  country A has a comparative advantage in both commodities. 
B)  country B has an absolute advantage in both commodities. 
C)  country B has a comparative advantage in chemicals. 
D)  it is more costly in terms of resources to produce steel in country A. 
E)  the slopes of the two curves indicate both countries will specialize in chemicals. 
A)  country A has a comparative advantage in both commodities. 
B)  country B has an absolute advantage in both commodities. 
C)  country B has a comparative advantage in chemicals. 
D)  it is more costly in terms of resources to produce steel in country A. 
E)  the slopes of the two curves indicate both countries will specialize in chemicals.

Question 6

When foreign trade is permitted,the eventual price of a given item will reflect the level where

Accepted Answer

A)  maximum resources are utilized. 
B)  worldwide demand cannot go higher. 
C)  the exporting country's demand curve is the same as its supply curve. 
D)  the amount one country wants to export equals the amount the other wants to import. 
E)  the importing country's demand equals that of the exporting country. 
A)  maximum resources are utilized. 
B)  worldwide demand cannot go higher. 
C)  the exporting country's demand curve is the same as its supply curve. 
D)  the amount one country wants to export equals the amount the other wants to import. 
E)  the importing country's demand equals that of the exporting country.

Question 7

The following question are based on the following graphs for men's shirts in South Korea and the United States. The exchange rate is 1,200 won equals $1.00.
  
-Under free trade,the price of men's shirts in South Korea tends toward ________ won.

Accepted Answer

A)  12,000 
B)  24,000 
C)  36,000 
D)  48,000 
E)  60,000 
A)  12,000 
B)  24,000 
C)  36,000 
D)  48,000 
E)  60,000

Question 8

In general,individuals and countries that attempt to be completely self-sufficient tend to

Accepted Answer

A)  grow faster in the long run. 
B)  have a more equal distribution of income. 
C)  be assured of ongoing full employment. 
D)  experience a lower standard of living from the use of their resources. 
E)  be more productive and technically capable. 
A)  grow faster in the long run. 
B)  have a more equal distribution of income. 
C)  be assured of ongoing full employment. 
D)  experience a lower standard of living from the use of their resources. 
E)  be more productive and technically capable.

Question 9

If all tariffs were prohibitive

Accepted Answer

A)  all domestic industries would prosper and therefore the general public welfare would increase. 
B)  the government would receive no revenue from tariffs. 
C)  the quantity of imports of the affected goods would increase. 
D)  exports would increase. 
E)  government revenues would increase. 
A)  all domestic industries would prosper and therefore the general public welfare would increase. 
B)  the government would receive no revenue from tariffs. 
C)  the quantity of imports of the affected goods would increase. 
D)  exports would increase. 
E)  government revenues would increase.

Question 10

Exports from the United States are the goods and services

Accepted Answer

A)  it buys from other countries. 
B)  that use up its holdings of foreign currencies. 
C)  produced here and consumed by foreigners. 
D)  whose dollar value is subtracted from its GDP. 
E)  produced here and consumed by U.S. residents. 
A)  it buys from other countries. 
B)  that use up its holdings of foreign currencies. 
C)  produced here and consumed by foreigners. 
D)  whose dollar value is subtracted from its GDP. 
E)  produced here and consumed by U.S. residents.

Question 11

This table shows the hypothetical effect of a redeployment of resources within the United States and the Arab countries for the production of oil and wheat.
  
-Which of the following can be inferred from the table?

Accepted Answer

A)  It costs the United States 5 billion barrels of oil for every 1 billion bushels of wheat. 
B)  The Arab countries have an absolute advantage in both oil and wheat. 
C)  It cost the Arabs 1 barrel of oil for every 0.10 bushel of wheat. 
D)  The United States has a comparative advantage in both oil and wheat. 
E)  It costs the United States 1 barrel of oil for every 1.25 bushels of wheat. 
A)  It costs the United States 5 billion barrels of oil for every 1 billion bushels of wheat. 
B)  The Arab countries have an absolute advantage in both oil and wheat. 
C)  It cost the Arabs 1 barrel of oil for every 0.10 bushel of wheat. 
D)  The United States has a comparative advantage in both oil and wheat. 
E)  It costs the United States 1 barrel of oil for every 1.25 bushels of wheat.

Question 12

Goods and services produced in the United States and sold to other countries are called

Accepted Answer

A)  extracts. 
B)  implants. 
C)  exurbs. 
D)  imports. 
E)  exports. 
A)  extracts. 
B)  implants. 
C)  exurbs. 
D)  imports. 
E)  exports.

Question 13

For trade to benefit a nation,its consumption possibilities curve must

Accepted Answer

A)  lie above and to the right of its production possibilities curve. 
B)  equal its production possibilities curve. 
C)  lie below and to the left of its production possibilities curve. 
D)  slope upward and intersect the production possibilities curve below its midpoint. 
E)  be either vertical or horizontal. 
A)  lie above and to the right of its production possibilities curve. 
B)  equal its production possibilities curve. 
C)  lie below and to the left of its production possibilities curve. 
D)  slope upward and intersect the production possibilities curve below its midpoint. 
E)  be either vertical or horizontal.

Question 14

The goals of those who offer infant industry and national defense as arguments for tariffs and quota protection might be more efficiently achieved through the use of

Accepted Answer

A)  direct subsidies. 
B)  moral suasion. 
C)  wage and price controls. 
D)  a gold standard. 
E)  excess profits taxes on importers. 
A)  direct subsidies. 
B)  moral suasion. 
C)  wage and price controls. 
D)  a gold standard. 
E)  excess profits taxes on importers.

Question 15

Which of the following best summarizes the short-term outcome of the restrictions on Japanese imported cars during the 1980s?

Accepted Answer

A)  Many jobs were saved, but consumers paid for them in higher foreign and domestic auto prices. 
B)  Despite higher prices on both domestic and imported cars, few jobs could be saved. 
C)  Ultimately, additional jobs were lost, but prices were held constant for over a year. 
D)  The restrictions had little effect on the job market, but domestic car costs fell substantially. 
E)  They were ineffective in both reducing the imports of Japanese cars and saving U.S. jobs. 
A)  Many jobs were saved, but consumers paid for them in higher foreign and domestic auto prices. 
B)  Despite higher prices on both domestic and imported cars, few jobs could be saved. 
C)  Ultimately, additional jobs were lost, but prices were held constant for over a year. 
D)  The restrictions had little effect on the job market, but domestic car costs fell substantially. 
E)  They were ineffective in both reducing the imports of Japanese cars and saving U.S. jobs.

Question 16

The price of domestically produced wine in the United States is $15 per liter and the price of the same wine produced in Italy is 12 euros per liter.If the exchange rate is $.96 to the euro and no tariffs or quotas affect the good

Accepted Answer

A)  the United States will export wine and the U.S. price of wine will rise. 
B)  the United States will import wine and the U.S. price of wine will rise. 
C)  Italy will export wine and the Italian price of wine will rise. 
D)  Italy will import wine and the Italian price of wine will rise. 
E)  both countries will produce their own wine and no trade will occur. 
A)  the United States will export wine and the U.S. price of wine will rise. 
B)  the United States will import wine and the U.S. price of wine will rise. 
C)  Italy will export wine and the Italian price of wine will rise. 
D)  Italy will import wine and the Italian price of wine will rise. 
E)  both countries will produce their own wine and no trade will occur.

Question 17

If the U.S.government were to impose a quota on shoes imported from Italy,the

Accepted Answer

A)  price of shoes in the United States would remain the same but the quantity bought would rise. 
B)  United States would reduce its export of shoes. 
C)  price of shoes in Italy would rise. 
D)  total quantity of shoes purchased (both domestically produced and imported) would decline in the United States. 
E)  revenue raised would exceed that from a tariff (which would have had the same effect on the shoe market). 
A)  price of shoes in the United States would remain the same but the quantity bought would rise. 
B)  United States would reduce its export of shoes. 
C)  price of shoes in Italy would rise. 
D)  total quantity of shoes purchased (both domestically produced and imported) would decline in the United States. 
E)  revenue raised would exceed that from a tariff (which would have had the same effect on the shoe market).

Question 18

Under which of the following conditions will the principle of comparative advantage be most likely to produce a situation where the price of a good is equalized among all countries?

Accepted Answer

A)  export subsidies 
B)  free trade and competition 
C)  quotas 
D)  tariffs 
E)  high transportation costs 
A)  export subsidies 
B)  free trade and competition 
C)  quotas 
D)  tariffs 
E)  high transportation costs

Question 19

Exports from the United States

Accepted Answer

A)  represent about one-half of world trade. 
B)  amount to about 10 percent of GDP. 
C)  amount to about 13 percent of GDP. 
D)  are primarily raw materials. 
E)  go mainly to third world countries. 
A)  represent about one-half of world trade. 
B)  amount to about 10 percent of GDP. 
C)  amount to about 13 percent of GDP. 
D)  are primarily raw materials. 
E)  go mainly to third world countries.

Question 20

If a country is absolutely more efficient than any other country in producing everything,then it would

Accepted Answer

A)  simply export goods and services and import money. 
B)  not trade with others because there would be no benefit in doing so. 
C)  still benefit that nation to specialize and trade those goods in which it possesses a comparative advantage. 
D)  make it unnecessary for other nations to produce anything for themselves. 
E)  represent a refutation of the concept of comparative advantage. 
A)  simply export goods and services and import money. 
B)  not trade with others because there would be no benefit in doing so. 
C)  still benefit that nation to specialize and trade those goods in which it possesses a comparative advantage. 
D)  make it unnecessary for other nations to produce anything for themselves. 
E)  represent a refutation of the concept of comparative advantage.

Exam 27: International Trade

For a country that uses them,the general result of tariffs and quotas is an increase in

Excluded from among the important bases for specialization is the existence of

The following question are based on the following diagrams: -From the diagrams,it can be seen that

When foreign trade is permitted,the eventual price of a given item will reflect the level where

The following question are based on the following graphs for men's shirts in South Korea and the United States. The exchange rate is 1,200 won equals $1.00. -Under free trade,the price of men's shirts in South Korea tends toward ________ won.

In general,individuals and countries that attempt to be completely self-sufficient tend to

If all tariffs were prohibitive

Exports from the United States are the goods and services

This table shows the hypothetical effect of a redeployment of resources within the United States and the Arab countries for the production of oil and wheat. -Which of the following can be inferred from the table?

Goods and services produced in the United States and sold to other countries are called

For trade to benefit a nation,its consumption possibilities curve must

The goals of those who offer infant industry and national defense as arguments for tariffs and quota protection might be more efficiently achieved through the use of

Which of the following best summarizes the short-term outcome of the restrictions on Japanese imported cars during the 1980s?

The price of domestically produced wine in the United States is $15 per liter and the price of the same wine produced in Italy is 12 euros per liter.If the exchange rate is $.96 to the euro and no tariffs or quotas affect the good

If the U.S.government were to impose a quota on shoes imported from Italy,the

Under which of the following conditions will the principle of comparative advantage be most likely to produce a situation where the price of a good is equalized among all countries?

Exports from the United States

If a country is absolutely more efficient than any other country in producing everything,then it would

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

Exchange Rates and the Balance of Payments

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