Question 1

Cash rebates,tax exemptions,preferential financing,and insurance arrangements are all examples of

Accepted Answer

A)  prohibitive tariffs. 
B)  voluntary quotas. 
C)  export subsidies. 
D)  terms of trade. 
E)  bilateral accommodations. 
A)  prohibitive tariffs. 
B)  voluntary quotas. 
C)  export subsidies. 
D)  terms of trade. 
E)  bilateral accommodations.

Question 2

The following question are based on the following diagrams:
  
-If the countries should trade,which chemical/steel price ratio will most likely prevail?

Accepted Answer

A)  1 ton of chemicals/0.33 ton of steel 
B)  1 ton of chemicals/0.40 ton of steel 
C)  1 ton of chemicals/0.50 ton of steel 
D)  1 ton of chemicals/0.55 ton of steel 
E)  1 ton of chemicals/1 ton of steel 
A)  1 ton of chemicals/0.33 ton of steel 
B)  1 ton of chemicals/0.40 ton of steel 
C)  1 ton of chemicals/0.50 ton of steel 
D)  1 ton of chemicals/0.55 ton of steel 
E)  1 ton of chemicals/1 ton of steel

Question 3

Which of the following is considered the most effective barrier to trade?

Accepted Answer

A)  export subsidy 
B)  licensing requirements 
C)  tariff 
D)  quota 
E)  imposition of product quality standards 
A)  export subsidy 
B)  licensing requirements 
C)  tariff 
D)  quota 
E)  imposition of product quality standards

Question 4

Country A can produce either 1,000 tons of food or 800 tractors in a given month.Country B can produce either 1,500 tons of food or 1,000 tractors in the same time period.In this situation,it is clear that trade would occur if the terms of trade were

Accepted Answer

A)  1 unit of food equals 1 tractor. 
B)  1 unit of food equals 0.7 tractor. 
C)  0.67 unit of food equals 0.8 tractor. 
D)  0.5 unit of food equals 0.5 tractor. 
E)  0.1 unit of food equals 10 tractors. 
A)  1 unit of food equals 1 tractor. 
B)  1 unit of food equals 0.7 tractor. 
C)  0.67 unit of food equals 0.8 tractor. 
D)  0.5 unit of food equals 0.5 tractor. 
E)  0.1 unit of food equals 10 tractors.

Question 5

A country that can produce a unit of some good with less resources than another country is considered with respect to the other country to possess a(n)________ advantage.

Accepted Answer

A)  strategic 
B)  absolute 
C)  limited 
D)  bilateral 
E)  selective 
A)  strategic 
B)  absolute 
C)  limited 
D)  bilateral 
E)  selective

Question 6

The following question are based on the following diagrams:
  
-Trade between these two countries would

Accepted Answer

A)  probably result in complete specialization. 
B)  probably result in partial specialization because the costs of producing steel and chemicals are rising. 
C)  be unlikely because country B is less productive than country A. 
D)  take place only if there are qualitative differences between each country's goods. 
E)  tend to enrich country A at the expense of country B. 
A)  probably result in complete specialization. 
B)  probably result in partial specialization because the costs of producing steel and chemicals are rising. 
C)  be unlikely because country B is less productive than country A. 
D)  take place only if there are qualitative differences between each country's goods. 
E)  tend to enrich country A at the expense of country B.

Question 7

The windfall price increase of an imported good that results when a quota is imposed on that good accrues to

Accepted Answer

A)  consumers who benefit from the lower-priced domestic substitutes. 
B)  no one, since only a tariff generates an explicit revenue stream. 
C)  firms in the industry protected by the imposition of the quota. 
D)  the government because it imposes the quota. 
E)  the importer who is successful in getting a license to import the good. 
A)  consumers who benefit from the lower-priced domestic substitutes. 
B)  no one, since only a tariff generates an explicit revenue stream. 
C)  firms in the industry protected by the imposition of the quota. 
D)  the government because it imposes the quota. 
E)  the importer who is successful in getting a license to import the good.

Question 8

The price ratio of two internationally traded goods

Accepted Answer

A)  is biased in favor of the country having an absolute advantage in the production of both goods. 
B)  is established by international law in favor of the less efficient country. 
C)  is such that only one country can benefit from trade. 
D)  is somewhere between the separate domestic cost ratios of the two goods. 
E)  fluctuates randomly and has little effect on the specialization of trade of the two goods. 
A)  is biased in favor of the country having an absolute advantage in the production of both goods. 
B)  is established by international law in favor of the less efficient country. 
C)  is such that only one country can benefit from trade. 
D)  is somewhere between the separate domestic cost ratios of the two goods. 
E)  fluctuates randomly and has little effect on the specialization of trade of the two goods.

Question 9

The terms of trade reflect the

Accepted Answer

A)  equation of exchange. 
B)  gross-net export ratio. 
C)  balance of trade divided by the transactions demand for money. 
D)  difference between the trade surplus and consumer surplus. 
E)  international supply and demand curves for the traded goods. 
A)  equation of exchange. 
B)  gross-net export ratio. 
C)  balance of trade divided by the transactions demand for money. 
D)  difference between the trade surplus and consumer surplus. 
E)  international supply and demand curves for the traded goods.

Question 10

In general,tariffs,quotas,and other barriers to free trade

Accepted Answer

A)  never make sense and are difficult to justify under any circumstances. 
B)  protect specific interests at the expense of an overall loss of consumer welfare. 
C)  create incentives for protected firms and industries to become more efficient and productive. 
D)  are necessary if a country is to have a favorable balance of trade. 
E)  in the short run may hurt businesses but in the long run benefit a country as a whole. 
A)  never make sense and are difficult to justify under any circumstances. 
B)  protect specific interests at the expense of an overall loss of consumer welfare. 
C)  create incentives for protected firms and industries to become more efficient and productive. 
D)  are necessary if a country is to have a favorable balance of trade. 
E)  in the short run may hurt businesses but in the long run benefit a country as a whole.

Question 11

If country A can produce either 1,000 bushels of wheat or 500 bushels of rice with 1 unit of resources while country B can produce 600 bushels of wheat or 400 bushels of rice with 1 unit of resources,country

Accepted Answer

A)  B must give up fewer bushels of rice to get 1 unit of wheat than country A. 
B)  B must have an absolute advantage in wheat production. 
C)  A should specialize in the production of both wheat and rice because trade with B would yield no benefit. 
D)  A must sacrifice less wheat to produce 1 unit of rice than country B. 
E)  B has a comparative advantage in rice production. 
A)  B must give up fewer bushels of rice to get 1 unit of wheat than country A. 
B)  B must have an absolute advantage in wheat production. 
C)  A should specialize in the production of both wheat and rice because trade with B would yield no benefit. 
D)  A must sacrifice less wheat to produce 1 unit of rice than country B. 
E)  B has a comparative advantage in rice production.

Question 12

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.
  
-If the United States imposes a prohibitive tariff on men's shirts,the price of a man's shirt in the United States probably is

Accepted Answer

A)  below $30. 
B)  $30. 
C)  between $30 and $40. 
D)  $40. 
E)  over $40. 
A)  below $30. 
B)  $30. 
C)  between $30 and $40. 
D)  $40. 
E)  over $40.

Question 13

For a country to specialize completely in one product,it must be assumed that

Accepted Answer

A)  the country consumes all the production. 
B)  the cost of producing the product (in terms of other goods foregone) is constant. 
C)  the country has an absolute advantage in the production of that good. 
D)  sufficient technical information is available to indicate a comparative advantage in that good. 
E)  the country in question has a capitalistic system. 
A)  the country consumes all the production. 
B)  the cost of producing the product (in terms of other goods foregone) is constant. 
C)  the country has an absolute advantage in the production of that good. 
D)  sufficient technical information is available to indicate a comparative advantage in that good. 
E)  the country in question has a capitalistic system.

Question 14

An argument supporting tariff or quota protection for an industry is that such protection

Accepted Answer

A)  is necessary to lower domestic rates of inflation by reducing spending. 
B)  enables a nation to have both the goods and the money. 
C)  keeps foreigners from benefiting at our expense. 
D)  helps to equalize production costs between nations to the benefit of all countries. 
E)  can promote industrial diversification and prevent the nation from becoming too dependent on a few industries. 
A)  is necessary to lower domestic rates of inflation by reducing spending. 
B)  enables a nation to have both the goods and the money. 
C)  keeps foreigners from benefiting at our expense. 
D)  helps to equalize production costs between nations to the benefit of all countries. 
E)  can promote industrial diversification and prevent the nation from becoming too dependent on a few industries.

Question 15

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 three hours to do the yard work,and the wife can do either in two hours

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)  there would be no gain from specialization since the wife is better at both tasks. 
E)  the husband has the comparative advantage in both tasks. 
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)  there would be no gain from specialization since the wife is better at both tasks. 
E)  the husband has the comparative advantage in both tasks.

Question 16

If the United States can produce 10,000 personal computers or 20,000 TVs with 1 unit of resources and Japan can produce 12,000 personal computers and 36,000 TVs with 1 unit of resources

Accepted Answer

A)  Japan has a comparative advantage in personal computers. 
B)  the United States has a comparative advantage in personal computers. 
C)  neither country has a comparative advantage, but Japan has an absolute advantage in both personal computers and TVs. 
D)  both countries have a comparative advantage in both commodities, so trade would not be beneficial to either. 
E)  both countries would produce TVs and import personal computers from somewhere else. 
A)  Japan has a comparative advantage in personal computers. 
B)  the United States has a comparative advantage in personal computers. 
C)  neither country has a comparative advantage, but Japan has an absolute advantage in both personal computers and TVs. 
D)  both countries have a comparative advantage in both commodities, so trade would not be beneficial to either. 
E)  both countries would produce TVs and import personal computers from somewhere else.

Question 17

The effect of a tariff on a good in which the domestic industry does NOT have a comparative advantage is

Accepted Answer

A)  an increase in the exports of the good. 
B)  that the domestic industry's gain is just offset by the consuming public's loss. 
C)  a reduction in the nation's standard of living. 
D)  fewer jobs and lower wages for domestic workers in the protected industry. 
E)  nonexistent if the domestic industry has an absolute advantage. 
A)  an increase in the exports of the good. 
B)  that the domestic industry's gain is just offset by the consuming public's loss. 
C)  a reduction in the nation's standard of living. 
D)  fewer jobs and lower wages for domestic workers in the protected industry. 
E)  nonexistent if the domestic industry has an absolute advantage.

Question 18

Goods and services produced in other countries and sold to U.S.residents 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 19

If country A can produce either 10 automobiles or 200 computers with 1 unit of resources while country B can produce either 8 automobiles or 125 computers with 1 unit of resources,then with respect to the production of computers,country A is ________ country B.

Accepted Answer

A)  relatively less efficient than 
B)  28 percent more efficient than 
C)  37.5 percent more efficient than 
D)  60 percent more efficient than 
E)  4.75 times as efficient as 
A)  relatively less efficient than 
B)  28 percent more efficient than 
C)  37.5 percent more efficient than 
D)  60 percent more efficient than 
E)  4.75 times as efficient as

Question 20

Which of the following best describes the effect of the Trigger Price Mechanisms (TPM)on the U.S.steel industry?

Accepted Answer

A)  The TPM virtually eradicated foreign competition. 
B)  It gave the U.S. industry a decided international competitive edge. 
C)  Although sales of imported steel continued to rise, the TPM gave the U.S. industry a chance to adjust. 
D)  As a result of the TPM, U.S. steel producers could no longer compete successfully against European markets. 
E)  It ensured that U.S. steel firms could count on a fixed share of the U.S. steel market. 
A)  The TPM virtually eradicated foreign competition. 
B)  It gave the U.S. industry a decided international competitive edge. 
C)  Although sales of imported steel continued to rise, the TPM gave the U.S. industry a chance to adjust. 
D)  As a result of the TPM, U.S. steel producers could no longer compete successfully against European markets. 
E)  It ensured that U.S. steel firms could count on a fixed share of the U.S. steel market.

Exam 27: International Trade

Cash rebates,tax exemptions,preferential financing,and insurance arrangements are all examples of

The following question are based on the following diagrams: -If the countries should trade,which chemical/steel price ratio will most likely prevail?

Which of the following is considered the most effective barrier to trade?

Country A can produce either 1,000 tons of food or 800 tractors in a given month.Country B can produce either 1,500 tons of food or 1,000 tractors in the same time period.In this situation,it is clear that trade would occur if the terms of trade were

A country that can produce a unit of some good with less resources than another country is considered with respect to the other country to possess a(n)________ advantage.

The following question are based on the following diagrams: -Trade between these two countries would

The windfall price increase of an imported good that results when a quota is imposed on that good accrues to

The price ratio of two internationally traded goods

The terms of trade reflect the

In general,tariffs,quotas,and other barriers to free trade

If country A can produce either 1,000 bushels of wheat or 500 bushels of rice with 1 unit of resources while country B can produce 600 bushels of wheat or 400 bushels of rice with 1 unit of resources,country

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. -If the United States imposes a prohibitive tariff on men's shirts,the price of a man's shirt in the United States probably is

For a country to specialize completely in one product,it must be assumed that

An argument supporting tariff or quota protection for an industry is that such protection

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 three hours to do the yard work,and the wife can do either in two hours

If the United States can produce 10,000 personal computers or 20,000 TVs with 1 unit of resources and Japan can produce 12,000 personal computers and 36,000 TVs with 1 unit of resources

The effect of a tariff on a good in which the domestic industry does NOT have a comparative advantage is

Goods and services produced in other countries and sold to U.S.residents are called

If country A can produce either 10 automobiles or 200 computers with 1 unit of resources while country B can produce either 8 automobiles or 125 computers with 1 unit of resources,then with respect to the production of computers,country A is ________ country B.

Which of the following best describes the effect of the Trigger Price Mechanisms (TPM)on the U.S.steel industry?

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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