Question 1

The Trigger Price Mechanism

Accepted Answer

A)  raised tariffs on imported steel. 
B)  was used by U.S. steel makers as a noncollusive way to set their prices. 
C)  is used to establish currency prices in foreign exchange markets. 
D)  tied imported steel prices to U.S. unemployment rates in the steel industry. 
E)  used the Japanese costs of producing steel as the guide for starting dumping investigations. 
A)  raised tariffs on imported steel. 
B)  was used by U.S. steel makers as a noncollusive way to set their prices. 
C)  is used to establish currency prices in foreign exchange markets. 
D)  tied imported steel prices to U.S. unemployment rates in the steel industry. 
E)  used the Japanese costs of producing steel as the guide for starting dumping investigations.

Question 2

Taxes imposed on imports are called

Accepted Answer

A)  depreciation. 
B)  special drawing rights. 
C)  quotas. 
D)  cartels. 
E)  tariffs. 
A)  depreciation. 
B)  special drawing rights. 
C)  quotas. 
D)  cartels. 
E)  tariffs.

Question 3

In which of the following situations describing the coffee-versus-computer production possibilities potential does country A have a comparative advantage in coffee? Country A: 1,000 bushels of coffee or 10 computers; country B:

Accepted Answer

A)  500 bushels of coffee or 5 computers. 
B)  1,200 bushels of coffee or 12 computers. 
C)  1,500 bushels of coffee or 12 computers. 
D)  1,300 bushels of coffee or 15 computers. 
E)  1,600 bushels of coffee or 15 computers. 
A)  500 bushels of coffee or 5 computers. 
B)  1,200 bushels of coffee or 12 computers. 
C)  1,500 bushels of coffee or 12 computers. 
D)  1,300 bushels of coffee or 15 computers. 
E)  1,600 bushels of coffee or 15 computers.

Question 4

The basis for specialization and trade,both within a nation and among nations,is ________ advantage.

Accepted Answer

A)  specialized 
B)  dominant 
C)  academic 
D)  absolute 
E)  comparative 
A)  specialized 
B)  dominant 
C)  academic 
D)  absolute 
E)  comparative

Question 5

Tariff protection to limit the degree to which we are dependent on foreign sources of a critical material is often justified on the grounds of

Accepted Answer

A)  the infant industry argument. 
B)  protecting our workers from low-wage competition. 
C)  national defense. 
D)  keeping both the goods and the money from hostile nations. 
E)  the terms of trade argument. 
A)  the infant industry argument. 
B)  protecting our workers from low-wage competition. 
C)  national defense. 
D)  keeping both the goods and the money from hostile nations. 
E)  the terms of trade argument.

Question 6

One of the first economists to understand and explain the notion that specialization and trade depend on comparative and NOT absolute advantage was

Accepted Answer

A)  Adam Smith. 
B)  Edwin Mansfield. 
C)  John Maynard Keynes. 
D)  Thomas Malthus. 
E)  David Ricardo. 
A)  Adam Smith. 
B)  Edwin Mansfield. 
C)  John Maynard Keynes. 
D)  Thomas Malthus. 
E)  David Ricardo.

Question 7

If country A can produce 200 bicycles or 500 wheelbarrows with 1 unit of resources while country B can produce 150 bicycles or 400 wheelbarrows with 1 unit of resources,then with respect to the production of bicycles,country A is ________ efficient than country B.

Accepted Answer

A)  94 percent more 
B)  75 percent more 
C)  33 percent more 
D)  25 percent more 
E)  relatively less 
A)  94 percent more 
B)  75 percent more 
C)  33 percent more 
D)  25 percent more 
E)  relatively less

Question 8

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.
-If each country shifts one unit of resources into the production of the good in which it is relatively more efficient,world output would rise by

Accepted Answer

A)  10,000 bushels of wheat. 
B)  17,000 barrels of petroleum. 
C)  10,000 barrels of petroleum and 15,000 bushels of wheat. 
D)  3,000 barrels of petroleum and 3,000 bushels of wheat. 
E)  8,000 bushels of wheat and fall by 2,000 barrels of petroleum. 
A)  10,000 bushels of wheat. 
B)  17,000 barrels of petroleum. 
C)  10,000 barrels of petroleum and 15,000 bushels of wheat. 
D)  3,000 barrels of petroleum and 3,000 bushels of wheat. 
E)  8,000 bushels of wheat and fall by 2,000 barrels of petroleum.

Question 9

When a government puts a tax on an imported good that effectively stops all imports of that good,it is a(n)

Accepted Answer

A)  prohibitive tariff. 
B)  export subsidy. 
C)  quota. 
D)  special drawing right. 
E)  negative import tax. 
A)  prohibitive tariff. 
B)  export subsidy. 
C)  quota. 
D)  special drawing right. 
E)  negative import tax.

Question 10

Evidence to date suggests that the North American Free Trade Agreement

Accepted Answer

A)  produced enormous job losses in the United States as firms relocated production to Mexico. 
B)  was responsible for the Mexican financial crises in 1995 and 1996. 
C)  caused U.S. exports to Mexico to fall to record lows. 
D)  had a bigger positive impact on the Mexican economy than on the U.S. economy. 
E)  made Mexico and Canada more susceptible to damage from the 1997 Asian crisis. 
A)  produced enormous job losses in the United States as firms relocated production to Mexico. 
B)  was responsible for the Mexican financial crises in 1995 and 1996. 
C)  caused U.S. exports to Mexico to fall to record lows. 
D)  had a bigger positive impact on the Mexican economy than on the U.S. economy. 
E)  made Mexico and Canada more susceptible to damage from the 1997 Asian crisis.

Question 11

Maquiladoras are

Accepted Answer

A)  Mexicans who illegally cross the U.S. border in search of employment. 
B)  programs designed to encourage Mexican investment in the United States. 
C)  Mexican border factories where U.S.-made components are assembled for export with reduced tariffs to the U.S. market. 
D)  Mexican agricultural cooperatives that produce food products for sale in the United States. 
E)  Mexican truck drivers who, under the North American Free Trade Agreement, are allowed to transport goods into the United States. 
A)  Mexicans who illegally cross the U.S. border in search of employment. 
B)  programs designed to encourage Mexican investment in the United States. 
C)  Mexican border factories where U.S.-made components are assembled for export with reduced tariffs to the U.S. market. 
D)  Mexican agricultural cooperatives that produce food products for sale in the United States. 
E)  Mexican truck drivers who, under the North American Free Trade Agreement, are allowed to transport goods into the United States.

Question 12

Country A must have an absolute advantage over country B in the production of a good when it

Accepted Answer

A)  is able to produce the good for itself. 
B)  imports the good from country B. 
C)  imports inputs to produce the good from country B. 
D)  decides to export the good to country B. 
E)  can produce a unit of the good with less resources than country B. 
A)  is able to produce the good for itself. 
B)  imports the good from country B. 
C)  imports inputs to produce the good from country B. 
D)  decides to export the good to country B. 
E)  can produce a unit of the good with less resources than country B.

Question 13

Which of the following was an important factor in boosting sales of Japanese cars during the 1970s?

Accepted Answer

A)  the United States' comparative advantage in auto production 
B)  a shortage of U.S. cars at dealerships 
C)  the higher prices of Japanese cars compared to U.S. autos 
D)  the U.S. manufacturers' slow response to pressures to produce smaller cars 
E)  Japanese agreements to voluntary restrictions rather than quotas on their auto exports to the United States 
A)  the United States' comparative advantage in auto production 
B)  a shortage of U.S. cars at dealerships 
C)  the higher prices of Japanese cars compared to U.S. autos 
D)  the U.S. manufacturers' slow response to pressures to produce smaller cars 
E)  Japanese agreements to voluntary restrictions rather than quotas on their auto exports to the United States

Question 14

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 the market conditions shown in the graphs

Accepted Answer

A)  the United States tends to export men's shirts to South Korea. The price falls in the United States but rises in South Korea. 
B)  the United States imports all of its men's shirts and curtails domestic production. 
C)  the demand curve for men's shirts in the United States and the supply curve for men's shirts in South Korea both shift to the left and prices in the two markets equalize. 
D)  the South Koreans introduce a tariff on imported men's shirts to keep out U.S. goods. 
E)  the United States tends to import men's shirts from South Korea rather than export men's shirts to it. 
A)  the United States tends to export men's shirts to South Korea. The price falls in the United States but rises in South Korea. 
B)  the United States imports all of its men's shirts and curtails domestic production. 
C)  the demand curve for men's shirts in the United States and the supply curve for men's shirts in South Korea both shift to the left and prices in the two markets equalize. 
D)  the South Koreans introduce a tariff on imported men's shirts to keep out U.S. goods. 
E)  the United States tends to import men's shirts from South Korea rather than export men's shirts to it.

Question 15

A country that is able to produce many goods should specialize in those products

Accepted Answer

A)  in which it has a comparative advantage. 
B)  in which it has an absolute advantage. 
C)  it needs most. 
D)  its citizens are most willing to pay for. 
E)  that command the highest price on the world market. 
A)  in which it has a comparative advantage. 
B)  in which it has an absolute advantage. 
C)  it needs most. 
D)  its citizens are most willing to pay for. 
E)  that command the highest price on the world market.

Question 16

A country is said to have a comparative advantage in the production of a good when

Accepted Answer

A)  it can produce more of that good with a unit of its resources than another country. 
B)  specialization in the production of the good and trade enables it to consume more of all goods. 
C)  production of the good requires a greater sacrifice of other goods than in another country. 
D)  it enables the country to be self-sufficient and eliminates the need for trade. 
E)  production of the good requires complete specialization. 
A)  it can produce more of that good with a unit of its resources than another country. 
B)  specialization in the production of the good and trade enables it to consume more of all goods. 
C)  production of the good requires a greater sacrifice of other goods than in another country. 
D)  it enables the country to be self-sufficient and eliminates the need for trade. 
E)  production of the good requires complete specialization.

Question 17

If there are no barriers to trade,the current domestic price of coffee in Brazil is 8 reals per pound,the U.S.price is $4.50 per pound,and the exchange rate is 3.2 reals to the dollar

Accepted Answer

A)  Brazil is not exporting coffee to the United States. 
B)  the United States does not want to import as much coffee from Brazil as Brazil wants to import from the United States. 
C)  there is a bilateral equilibrium in the U.S.-Brazilian coffee trade. 
D)  the U.S. price of coffee falls below $4.50 per pound and the Brazilian price rises above 8 reals per pound. 
E)  the United States is exporting coffee to Brazil. 
A)  Brazil is not exporting coffee to the United States. 
B)  the United States does not want to import as much coffee from Brazil as Brazil wants to import from the United States. 
C)  there is a bilateral equilibrium in the U.S.-Brazilian coffee trade. 
D)  the U.S. price of coffee falls below $4.50 per pound and the Brazilian price rises above 8 reals per pound. 
E)  the United States is exporting coffee to Brazil.

Question 18

Economists generally dislike the restriction of trade because it

Accepted Answer

A)  encourages inefficiency. 
B)  does not really save jobs in the short run despite its costs. 
C)  is too difficult and costly to enforce. 
D)  reduces a nation's industrial diversification. 
E)  discourages the growth of infant industries. 
A)  encourages inefficiency. 
B)  does not really save jobs in the short run despite its costs. 
C)  is too difficult and costly to enforce. 
D)  reduces a nation's industrial diversification. 
E)  discourages the growth of infant industries.

Question 19

Under free trade,as long as there are international differences in the price of a good,the

Accepted Answer

A)  good will be exported by the country where its price is relatively high. 
B)  price will continue to rise in both the importing and exporting countries. 
C)  price will fall in the exporting country and rise in the importing country. 
D)  good will be imported by the country where the price is relatively high. 
E)  quantities being imported must be greater than the quantities being exported. 
A)  good will be exported by the country where its price is relatively high. 
B)  price will continue to rise in both the importing and exporting countries. 
C)  price will fall in the exporting country and rise in the importing country. 
D)  good will be imported by the country where the price is relatively high. 
E)  quantities being imported must be greater than the quantities being exported.

Question 20

A tariff is a(n)

Accepted Answer

A)  limit on exports. 
B)  form of export subsidy. 
C)  tax on imports. 
D)  interest rate on foreign exchange. 
E)  license to import. 
A)  limit on exports. 
B)  form of export subsidy. 
C)  tax on imports. 
D)  interest rate on foreign exchange. 
E)  license to import.

Exam 27: International Trade

The Trigger Price Mechanism

Taxes imposed on imports are called

In which of the following situations describing the coffee-versus-computer production possibilities potential does country A have a comparative advantage in coffee? Country A: 1,000 bushels of coffee or 10 computers; country B:

The basis for specialization and trade,both within a nation and among nations,is ________ advantage.

Tariff protection to limit the degree to which we are dependent on foreign sources of a critical material is often justified on the grounds of

One of the first economists to understand and explain the notion that specialization and trade depend on comparative and NOT absolute advantage was

If country A can produce 200 bicycles or 500 wheelbarrows with 1 unit of resources while country B can produce 150 bicycles or 400 wheelbarrows with 1 unit of resources,then with respect to the production of bicycles,country A is ________ efficient than country B.

When a government puts a tax on an imported good that effectively stops all imports of that good,it is a(n)

Evidence to date suggests that the North American Free Trade Agreement

Maquiladoras are

Country A must have an absolute advantage over country B in the production of a good when it

Which of the following was an important factor in boosting sales of Japanese cars during the 1970s?

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 the market conditions shown in the graphs

A country that is able to produce many goods should specialize in those products

A country is said to have a comparative advantage in the production of a good when

If there are no barriers to trade,the current domestic price of coffee in Brazil is 8 reals per pound,the U.S.price is $4.50 per pound,and the exchange rate is 3.2 reals to the dollar

Economists generally dislike the restriction of trade because it

Under free trade,as long as there are international differences in the price of a good,the

A tariff is a(n)

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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