Question 1

The World Trade Organization (WTO) _____

Accepted Answer

A)  members are required to eliminate only quotas. 
B)  trade-related aspects of intellectual property. 
C)  exists primarily in Russia, Africa, and South America. 
D)  members are required to eliminate ad valorem tariffs but not specific tariffs. 
E)  includes all nations with populations greater than 10 million, with the exception of North Korea and Cuba. 
A)  members are required to eliminate only quotas. 
B)  trade-related aspects of intellectual property. 
C)  exists primarily in Russia, Africa, and South America. 
D)  members are required to eliminate ad valorem tariffs but not specific tariffs. 
E)  includes all nations with populations greater than 10 million, with the exception of North Korea and Cuba. B

Question 2

If resources are equally adaptable to the production of different goods, the production possibilities frontier of a country will be an upward-sloping concave curve.

Accepted Answer

A) True 
 B)False  False

Question 3

A World Trade Organization (WTO) member country must offer to all other member countries _____

Accepted Answer

A)  common market guarantees. 
B)  the same trade concessions. 
C)  the same basket of commodities. 
D)  import substitutions. 
E)  the same resources with equal efficiency. 
A)  common market guarantees. 
B)  the same trade concessions. 
C)  the same basket of commodities. 
D)  import substitutions. 
E)  the same resources with equal efficiency. B

Question 4

International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency.

Accepted Answer

A) True 
 B)False

Question 5

For each pound of blueberry cheesecake Abura produces, it gives up the opportunity to make 150 screwdrivers. Mayo can produce one pound of blueberry cheesecake for every 300 screwdrivers it produces. If specialization and trade were to occur between these two countries, which of the following is true of opportunity costs in the two countries?

Accepted Answer

A)  The opportunity cost of producing cheesecakes is lower in Abura than in Mayo. 
B)  The opportunity cost of producing screwdrivers is lower in Abura than in Mayo. 
C)  The opportunity cost of producing cheesecakes is identical in both countries. 
D)  The opportunity cost of producing screwdrivers is identical in both countries. 
E)  In Mayo, the opportunity cost of producing one unit of screwdriver is one pound of cheesecake. 
A)  The opportunity cost of producing cheesecakes is lower in Abura than in Mayo. 
B)  The opportunity cost of producing screwdrivers is lower in Abura than in Mayo. 
C)  The opportunity cost of producing cheesecakes is identical in both countries. 
D)  The opportunity cost of producing screwdrivers is identical in both countries. 
E)  In Mayo, the opportunity cost of producing one unit of screwdriver is one pound of cheesecake.

Question 6

If production is subject to economies of scale, _____

Accepted Answer

A)  countries can gain from trade if each nation specializes. 
B)  the domestic price will be above the world price and quantity produced will be below the free-trade level. 
C)  higher output levels result in higher average production costs. 
D)  every consumer gets to buy goods at their market-clearing prices. 
E)  autarky will be preferred to trade. 
A)  countries can gain from trade if each nation specializes. 
B)  the domestic price will be above the world price and quantity produced will be below the free-trade level. 
C)  higher output levels result in higher average production costs. 
D)  every consumer gets to buy goods at their market-clearing prices. 
E)  autarky will be preferred to trade.

Question 7

Which of the following is not correct about quotas?

Accepted Answer

A)  The imposition of quotas rewards domestic producers with higher prices. 
B)  The imposition of quotas creates opportunities for lobbyists to seek the perpetuation of quotas. 
C)  Quotas on steel, textiles and apparel, and sugar have been in effect in the United States for several decades. 
D)  Lobbying efforts by domestic producers and foreign exporters are vigorously fought by domestic consumers. 
E)  The auctioning off of quotas to foreign producers would increase federal revenue. 
A)  The imposition of quotas rewards domestic producers with higher prices. 
B)  The imposition of quotas creates opportunities for lobbyists to seek the perpetuation of quotas. 
C)  Quotas on steel, textiles and apparel, and sugar have been in effect in the United States for several decades. 
D)  Lobbying efforts by domestic producers and foreign exporters are vigorously fought by domestic consumers. 
E)  The auctioning off of quotas to foreign producers would increase federal revenue.

Question 8

Terms of trade refers to _____

Accepted Answer

A)  the quantity of one good exchanged for a unit of another good. 
B)  the opportunity cost of producing a good. 
C)  the quantity of a good demanded by U.S. consumers at a market-clearing price. 
D)  the price of a good in a country after the imposition of a tariff. 
E)  the maximum amount of credit that a country can borrow for a particular line of credit. 
A)  the quantity of one good exchanged for a unit of another good. 
B)  the opportunity cost of producing a good. 
C)  the quantity of a good demanded by U.S. consumers at a market-clearing price. 
D)  the price of a good in a country after the imposition of a tariff. 
E)  the maximum amount of credit that a country can borrow for a particular line of credit.

Question 9

Table 17.2
  
-Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $4 and there are no trade restrictions, the Netherlands will _____

Accepted Answer

A)  produce 10,000, consume 4,000, and import 6,000 tulips. 
B)  produce 10,000 and consume 10,000 tulips. 
C)  produce 8,000 and consume 8,000 tulips. 
D)  import all the tulips it consumes. 
E)  consume only some of the tulips it produces. 
A)  produce 10,000, consume 4,000, and import 6,000 tulips. 
B)  produce 10,000 and consume 10,000 tulips. 
C)  produce 8,000 and consume 8,000 tulips. 
D)  import all the tulips it consumes. 
E)  consume only some of the tulips it produces.

Question 10

Exhibit 17.2
  
-Refer to Exhibit 17.2, which shows U.S. demand for and supply of a good. Suppose the world price of the good is $1.00 per unit and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, net welfare loss as a result of a tariff of $0.50 per unit is represented by the area ____

Accepted Answer

A)  c + i + e + f. 
B)  i + f. 
C)  i. 
D)  f. 
E)  b + d. 
A)  c + i + e + f. 
B)  i + f. 
C)  i. 
D)  f. 
E)  b + d.

Question 11

The United States is a major exporter of _____

Accepted Answer

A)  diamonds. 
B)  bananas. 
C)  coffee. 
D)  corn. 
E)  gold. 
A)  diamonds. 
B)  bananas. 
C)  coffee. 
D)  corn. 
E)  gold.

Question 12

If there are no trade restrictions, a country will import a particular good if _____

Accepted Answer

A)  domestic quantity supplied equals domestic quantity demanded at the world price. 
B)  there is excess quantity demanded by domestic consumers at the world price. 
C)  the quantity of the good demanded by domestic consumers decreases. 
D)  the quantity of the good supplied by domestic producers increases. 
E)  the world price of the good is higher than its domestic price. 
A)  domestic quantity supplied equals domestic quantity demanded at the world price. 
B)  there is excess quantity demanded by domestic consumers at the world price. 
C)  the quantity of the good demanded by domestic consumers decreases. 
D)  the quantity of the good supplied by domestic producers increases. 
E)  the world price of the good is higher than its domestic price.

Question 13

The law of comparative advantage states that _____

Accepted Answer

A)  each country should specialize in producing the good with the lowest opportunity cost. 
B)  a country that is able to produce something using fewer resources than other countries would gain from specialization and trade. 
C)  international trade barriers slow the introduction of new goods and better technologies. 
D)  countries can gain from trade if production is subject to economies of scale. 
E)  countries must agree on how much of one good exchanges for another. 
A)  each country should specialize in producing the good with the lowest opportunity cost. 
B)  a country that is able to produce something using fewer resources than other countries would gain from specialization and trade. 
C)  international trade barriers slow the introduction of new goods and better technologies. 
D)  countries can gain from trade if production is subject to economies of scale. 
E)  countries must agree on how much of one good exchanges for another.

Question 14

Exhibit 17.2
  
-Refer to Exhibit 17.2, which shows U.S. demand for and domestic supply of a good. Suppose the world price of the good is $1.00 per unit, and a specific tariff of $0.50 per unit is imposed on each unit of the imported good. In such a case, the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area _____

Accepted Answer

A)  a. 
B)  b + d. 
C)  c + i + e + f. 
D)  c. 
E)  d. 
A)  a. 
B)  b + d. 
C)  c + i + e + f. 
D)  c. 
E)  d.

Question 15

The establishment of GATT resulted in _____

Accepted Answer

A)  lower tariff rates. 
B)  an increase in the net welfare loss of economies. 
C)  a decrease in total world trade. 
D)  increased protectionism. 
E)  a rise in the price of imports. 
A)  lower tariff rates. 
B)  an increase in the net welfare loss of economies. 
C)  a decrease in total world trade. 
D)  increased protectionism. 
E)  a rise in the price of imports.

Question 16

Services accounted for _____ of U.S. imports in 2016.

Accepted Answer

A)  22 percent 
B)  19 percent 
C)  16 percent 
D)  13 percent 
E)  5 percent 
A)  22 percent 
B)  19 percent 
C)  16 percent 
D)  13 percent 
E)  5 percent

Question 17

Which of the following is a type of trade restriction?

Accepted Answer

A)  diseconomies of scale. 
B)  autarky. 
C)  diminishing marginal returns. 
D)  low-interest loans to foreign buyers. 
E)  increasing the opportunity cost of production. 
A)  diseconomies of scale. 
B)  autarky. 
C)  diminishing marginal returns. 
D)  low-interest loans to foreign buyers. 
E)  increasing the opportunity cost of production.

Question 18

Exhibit 17.6
  
-Refer to Exhibit 17.6, which shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, the welfare loss resulting from higher domestic production costs is represented by area(s) _____

Accepted Answer

A)  a. 
B)  b. 
C)  c and d. 
D)  g and h. 
E)  e. 
A)  a. 
B)  b. 
C)  c and d. 
D)  g and h. 
E)  e.

Question 19

Which of the following was a motive of the United States to negotiate a free trade agreement with Mexico?

Accepted Answer

A)  to help foster the study of the Spanish language as a means to trade with all Spanish-speaking countries 
B)  to increase immigration into the United States 
C)  to gain increased access to Mexican consumers 
D)  to attract more Mexican investment 
E)  to achieve political union with Mexico 
A)  to help foster the study of the Spanish language as a means to trade with all Spanish-speaking countries 
B)  to increase immigration into the United States 
C)  to gain increased access to Mexican consumers 
D)  to attract more Mexican investment 
E)  to achieve political union with Mexico

Question 20

Exports account for _____ of the gross domestic product (GDP) in Germany, Sweden, and Switzerland.

Accepted Answer

A)  one-sixth 
B)  one-third 
C)  one-quarter 
D)  half 
E)  two-thirds 
A)  one-sixth 
B)  one-third 
C)  one-quarter 
D)  half 
E)  two-thirds

The World Trade Organization (WTO) _____

If resources are equally adaptable to the production of different goods, the production possibilities frontier of a country will be an upward-sloping concave curve.

A World Trade Organization (WTO) member country must offer to all other member countries _____

International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency.

If production is subject to economies of scale, _____

Which of the following is not correct about quotas?

Terms of trade refers to _____

Table 17.2 -Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $4 and there are no trade restrictions, the Netherlands will _____

The United States is a major exporter of _____

If there are no trade restrictions, a country will import a particular good if _____

The law of comparative advantage states that _____

The establishment of GATT resulted in _____

Services accounted for _____ of U.S. imports in 2016.

Which of the following is a type of trade restriction?

Which of the following was a motive of the United States to negotiate a free trade agreement with Mexico?

Exports account for _____ of the gross domestic product (GDP) in Germany, Sweden, and Switzerland.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Finance.

Economic Development.

Filters

Exam 17: International Trade.

The World Trade Organization (WTO) _____

If resources are equally adaptable to the production of different goods, the production possibilities frontier of a country will be an upward-sloping concave curve.

A World Trade Organization (WTO) member country must offer to all other member countries _____

International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency.

If production is subject to economies of scale, _____

Which of the following is not correct about quotas?

Terms of trade refers to _____

Table 17.2 -Refer to Table 17.2, which shows the demand, supply, and price of tulips in the Netherlands. If the world price of tulips is $4 and there are no trade restrictions, the Netherlands will _____

The United States is a major exporter of _____

If there are no trade restrictions, a country will import a particular good if _____

The law of comparative advantage states that _____

The establishment of GATT resulted in _____

Services accounted for _____ of U.S. imports in 2016.

Which of the following is a type of trade restriction?

Which of the following was a motive of the United States to negotiate a free trade agreement with Mexico?

Exports account for _____ of the gross domestic product (GDP) in Germany, Sweden, and Switzerland.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Finance.

Economic Development.

Filters