Question 1

If wage rates are lower in Mexico than in Germany, labor costs per unit of output can still be higher in Mexico.

Accepted Answer

A) True 
 B)False

Question 2

When a country imposes trade restrictions, the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.

Accepted Answer

A) True 
 B)False

Question 3

In the United States, dumping _____

Accepted Answer

A)  is encouraged because it increases prices for producers. 
B)  is prohibited by the Trade Agreements Act of 1979. 
C)  is encouraged by domestic consumers who benefit from lower prices. 
D)  is encouraged by the government because it increases competition. 
E)  was prohibited in 1947 by the provisions of General Agreement on Tariffs and Trade (GATT). 
A)  is encouraged because it increases prices for producers. 
B)  is prohibited by the Trade Agreements Act of 1979. 
C)  is encouraged by domestic consumers who benefit from lower prices. 
D)  is encouraged by the government because it increases competition. 
E)  was prohibited in 1947 by the provisions of General Agreement on Tariffs and Trade (GATT).

Question 4

One of the main motives for the United States to negotiate a free trade agreement with Mexico was to _____

Accepted Answer

A)  increase immigration into the United States. 
B)  encourage Mexico's recent drive to achieve a more market-oriented economy. 
C)  attract more Mexican investment. 
D)  achieve political union with Mexico. 
E)  help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries. 
A)  increase immigration into the United States. 
B)  encourage Mexico's recent drive to achieve a more market-oriented economy. 
C)  attract more Mexican investment. 
D)  achieve political union with Mexico. 
E)  help foster the study of the Spanish language in the United States as a means to trading with all Spanish-speaking countries.

Question 5

Ad valorem tariffs on imports are based on a percentage of an import's value, while specific tariffs are based on a lump sum per physical unit imported.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following factors is most significant in determining the pattern of international trade?

Accepted Answer

A)  absolute advantage 
B)  diplomatic expertise 
C)  comparative advantage 
D)  overpowering military strength 
E)  the size of a nation 
A)  absolute advantage 
B)  diplomatic expertise 
C)  comparative advantage 
D)  overpowering military strength 
E)  the size of a nation

Question 7

If production is subject to economies of scale, countries can gain from trade if each nation specializes in the production of a good.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 17.b
  
-Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, then the quantity demanded is _____

Accepted Answer

A)  Q. 
B)  Q' 
C)  Q" 
D)  0.5 x (Q'-Q) 
E)  0.5 x (Q"-Q') 
A)  Q. 
B)  Q' 
C)  Q" 
D)  0.5 x (Q'-Q) 
E)  0.5 x (Q"-Q')

Question 9

The World Trade Organization (WTO) _____

Accepted Answer

A)  became, in 1995, the institutionalized and more comprehensive successor to the General Agreement on Tariffs and Trade (GATT). 
B)  was established in 1947 by 23 member countries to reduce trade restrictions. 
C)  was established in 1980 to oppose and counteract the policies of the General Agreement on Tariffs and Trade (GATT). 
D)  meets in different countries every few years to analyze each country's trade policies and restrictions. 
E)  was based on an international treaty that expired in 1990. 
A)  became, in 1995, the institutionalized and more comprehensive successor to the General Agreement on Tariffs and Trade (GATT). 
B)  was established in 1947 by 23 member countries to reduce trade restrictions. 
C)  was established in 1980 to oppose and counteract the policies of the General Agreement on Tariffs and Trade (GATT). 
D)  meets in different countries every few years to analyze each country's trade policies and restrictions. 
E)  was based on an international treaty that expired in 1990.

Question 10

One reason for international specialization is _____

Accepted Answer

A)  a high world price for a good. 
B)  higher trade restrictions imposed by a national government. 
C)  diminishing returns to a variable factor of production. 
D)  the difference in resource endowments throughout the world. 
E)  the difference in benefits that consumers and producers get from the domestic market. 
A)  a high world price for a good. 
B)  higher trade restrictions imposed by a national government. 
C)  diminishing returns to a variable factor of production. 
D)  the difference in resource endowments throughout the world. 
E)  the difference in benefits that consumers and producers get from the domestic market.

Question 11

Tariffs and quotas _____

Accepted Answer

A)  reduce consumer surplus and increase producer surplus in the importing country. 
B)  increase consumer surplus and reduce producer surplus in the importing country. 
C)  reduce both consumer surplus and producer surplus in the exporting country. 
D)  are imposed when there are differences in the opportunity cost of production across countries. 
E)  are imposed when production is subject to economies of scale. 
A)  reduce consumer surplus and increase producer surplus in the importing country. 
B)  increase consumer surplus and reduce producer surplus in the importing country. 
C)  reduce both consumer surplus and producer surplus in the exporting country. 
D)  are imposed when there are differences in the opportunity cost of production across countries. 
E)  are imposed when production is subject to economies of scale.

Question 12

Which argument was formulated as a rationale for protecting emerging domestic industries from foreign competition?

Accepted Answer

A)  the national defense argument 
B)  the infant industry argument 
C)  the antidumping argument 
D)  the jobs and income argument 
E)  the declining industries argument 
A)  the national defense argument 
B)  the infant industry argument 
C)  the antidumping argument 
D)  the jobs and income argument 
E)  the declining industries argument

Question 13

Which of the following is a type of trade restriction?

Accepted Answer

A)  diseconomies of scale 
B)  autarky 
C)  diminishing marginal returns 
D)  export subsidies to encourage exports 
E)  increasing the opportunity cost of production 
A)  diseconomies of scale 
B)  autarky 
C)  diminishing marginal returns 
D)  export subsidies to encourage exports 
E)  increasing the opportunity cost of production

Question 14

The General Agreement on Tariffs and Trade (GATT) was established in _____

Accepted Answer

A)  1870 to protect U.S. industries and decrease world trade. 
B)  1921 to manage legal and accounting requirements for U.S. tariffs and quotas. 
C)  1947 to reduce trade restrictions. 
D)  1973 to increase trade restrictions, after OPEC significantly raised oil prices. 
E)  1990 to develop a free trade zone across 50 states. 
A)  1870 to protect U.S. industries and decrease world trade. 
B)  1921 to manage legal and accounting requirements for U.S. tariffs and quotas. 
C)  1947 to reduce trade restrictions. 
D)  1973 to increase trade restrictions, after OPEC significantly raised oil prices. 
E)  1990 to develop a free trade zone across 50 states.

Question 15

Which rationale for trade restrictions is commonly heard in the United States, is voiced by WTO protesters and labor unions?

Accepted Answer

A)  the national defense argument 
B)  the infant industry argument 
C)  the antidumping argument 
D)  the jobs and income argument 
E)  the declining industries argument 
A)  the national defense argument 
B)  the infant industry argument 
C)  the antidumping argument 
D)  the jobs and income argument 
E)  the declining industries argument

Question 16

The temporary sale abroad at prices below cost to eliminate competitors in that target market is called _____

Accepted Answer

A)  cream skimming. 
B)  import substitution. 
C)  monopoly pricing. 
D)  predatory dumping. 
E)  arbitrage. 
A)  cream skimming. 
B)  import substitution. 
C)  monopoly pricing. 
D)  predatory dumping. 
E)  arbitrage.

Question 17

If the United States has an absolute advantage in producing computer components, it should export them worldwide.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 17.1
  
-Refer to Exhibit 17.1, which shows the market equilibrium for corn in the United States. If the world price of corn is $2 and there are no trade restrictions, the United States will:

Accepted Answer

A)  produce 3,000 bushels of corn, consume 7,000 bushels of corn, and import 4,000 bushels of corn. 
B)  produce 3,000 bushels of corn, consume 7,000 bushels of corn, and export 4,000 bushels of corn. 
C)  have an excess supply of corn. 
D)  produce 7,000 bushels of corn. 
E)  produce 5,000 bushels of corn, consume 7,000 bushels of corn, and import 2,000 bushels of corn. 
A)  produce 3,000 bushels of corn, consume 7,000 bushels of corn, and import 4,000 bushels of corn. 
B)  produce 3,000 bushels of corn, consume 7,000 bushels of corn, and export 4,000 bushels of corn. 
C)  have an excess supply of corn. 
D)  produce 7,000 bushels of corn. 
E)  produce 5,000 bushels of corn, consume 7,000 bushels of corn, and import 2,000 bushels of corn.

Question 19

Which of the following results in international specialization?

Accepted Answer

A)  differing consumer tastes 
B)  diseconomies of scale in production 
C)  a high world price for a good 
D)  diminishing returns to a variable factor of production 
E)  differences in the benefits that consumers and producers get from the exchange of goods and services 
A)  differing consumer tastes 
B)  diseconomies of scale in production 
C)  a high world price for a good 
D)  diminishing returns to a variable factor of production 
E)  differences in the benefits that consumers and producers get from the exchange of goods and services

Question 20

Regional trading bloc agreements _____

Accepted Answer

A)  are not considered trade restrictions. 
B)  are required by World Trade Organization rules. 
C)  exist primarily in Russia, Africa, and South America. 
D)  require all nations in a specified region to trade only with other countries in the same geographic area. 
E)  make special trade deals between countries in that region and discriminate against countries outside the region. 
A)  are not considered trade restrictions. 
B)  are required by World Trade Organization rules. 
C)  exist primarily in Russia, Africa, and South America. 
D)  require all nations in a specified region to trade only with other countries in the same geographic area. 
E)  make special trade deals between countries in that region and discriminate against countries outside the region.

If wage rates are lower in Mexico than in Germany, labor costs per unit of output can still be higher in Mexico.

When a country imposes trade restrictions, the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.

In the United States, dumping _____

One of the main motives for the United States to negotiate a free trade agreement with Mexico was to _____

Ad valorem tariffs on imports are based on a percentage of an import's value, while specific tariffs are based on a lump sum per physical unit imported.

Which of the following factors is most significant in determining the pattern of international trade?

If production is subject to economies of scale, countries can gain from trade if each nation specializes in the production of a good.

Exhibit 17.b -Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, then the quantity demanded is _____

The World Trade Organization (WTO) _____

One reason for international specialization is _____

Tariffs and quotas _____

Which argument was formulated as a rationale for protecting emerging domestic industries from foreign competition?

Which of the following is a type of trade restriction?

The General Agreement on Tariffs and Trade (GATT) was established in _____

Which rationale for trade restrictions is commonly heard in the United States, is voiced by WTO protesters and labor unions?

The temporary sale abroad at prices below cost to eliminate competitors in that target market is called _____

If the United States has an absolute advantage in producing computer components, it should export them worldwide.

Exhibit 17.1 -Refer to Exhibit 17.1, which shows the market equilibrium for corn in the United States. If the world price of corn is $2 and there are no trade restrictions, the United States will:

Which of the following results in international specialization?

Regional trading bloc agreements _____

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.

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Exam 17: International Trade.

If wage rates are lower in Mexico than in Germany, labor costs per unit of output can still be higher in Mexico.

When a country imposes trade restrictions, the domestic producers who compete with imports may lose in the long run if protection stifles innovation and leaves the industry vulnerable.

In the United States, dumping _____

One of the main motives for the United States to negotiate a free trade agreement with Mexico was to _____

Ad valorem tariffs on imports are based on a percentage of an import's value, while specific tariffs are based on a lump sum per physical unit imported.

Which of the following factors is most significant in determining the pattern of international trade?

If production is subject to economies of scale, countries can gain from trade if each nation specializes in the production of a good.

Exhibit 17.b -Refer to Exhibit 17.b, which shows the supply of a product in the United States. If the world price is P, then the quantity demanded is _____

The World Trade Organization (WTO) _____

One reason for international specialization is _____

Tariffs and quotas _____

Which argument was formulated as a rationale for protecting emerging domestic industries from foreign competition?

Which of the following is a type of trade restriction?

The General Agreement on Tariffs and Trade (GATT) was established in _____

Which rationale for trade restrictions is commonly heard in the United States, is voiced by WTO protesters and labor unions?

The temporary sale abroad at prices below cost to eliminate competitors in that target market is called _____

If the United States has an absolute advantage in producing computer components, it should export them worldwide.

Exhibit 17.1 -Refer to Exhibit 17.1, which shows the market equilibrium for corn in the United States. If the world price of corn is $2 and there are no trade restrictions, the United States will:

Which of the following results in international specialization?

Regional trading bloc agreements _____

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