Question 1

A country should export only those goods _____

Accepted Answer

A)  in which it has an absolute advantage. 
B)  for which it has favorable terms of trade. 
C)  that have higher consumption possibilities. 
D)  that have a strong domestic demand. 
E)  that have a lower opportunity cost. 
A)  in which it has an absolute advantage. 
B)  for which it has favorable terms of trade. 
C)  that have higher consumption possibilities. 
D)  that have a strong domestic demand. 
E)  that have a lower opportunity cost.

Question 2

A trade agreement reached among more than two countries is _____

Accepted Answer

A)  a bilateral agreement. 
B)  a multilateral agreement. 
C)  the General Agreement on Tariffs and Trade (GATT). 
D)  Countries United for Free Trade (CUFT). 
E)  the International Development Fund. 
A)  a bilateral agreement. 
B)  a multilateral agreement. 
C)  the General Agreement on Tariffs and Trade (GATT). 
D)  Countries United for Free Trade (CUFT). 
E)  the International Development Fund.

Question 3

Which of the following does not result in a mutually beneficial trade between two countries?

Accepted Answer

A)  one country having a higher opportunity cost of production of a good than the other 
B)  one country having an abundant supply of natural resources than the other 
C)  one country's production being more efficient than the other 
D)  one country having an absolute advantage over the other 
E)  one country having a comparative advantage in producing a good than the other 
A)  one country having a higher opportunity cost of production of a good than the other 
B)  one country having an abundant supply of natural resources than the other 
C)  one country's production being more efficient than the other 
D)  one country having an absolute advantage over the other 
E)  one country having a comparative advantage in producing a good than the other

Question 4

If a country has an absolute advantage in producing a good, _____

Accepted Answer

A)  the country is able to produce that good using fewer resources than other countries. 
B)  the opportunity cost of producing the good is the lowest in that country. 
C)  the productivity of workers in that country is lower than that in all countries. 
D)  the country produces as many units of the good as demanded domestically. 
E)  countries of the same size have the same opportunity cost of producing both goods. 
A)  the country is able to produce that good using fewer resources than other countries. 
B)  the opportunity cost of producing the good is the lowest in that country. 
C)  the productivity of workers in that country is lower than that in all countries. 
D)  the country produces as many units of the good as demanded domestically. 
E)  countries of the same size have the same opportunity cost of producing both goods.

Question 5

A downside to economic integration is that member countries _____

Accepted Answer

A)  become more vulnerable to fiscal problems of other member countries. 
B)  are immune to fiscal problems of other member countries. 
C)  go to war with each other more often. 
D)  have more trade restrictions. 
E)  have separate national currencies. 
A)  become more vulnerable to fiscal problems of other member countries. 
B)  are immune to fiscal problems of other member countries. 
C)  go to war with each other more often. 
D)  have more trade restrictions. 
E)  have separate national currencies.

Question 6

During a year, the government of a country imposed a tariff on imported steel. The rationale behind this policy was that lower-priced imports had put the country's established steel industries in jeopardy of closing. This government policy was based on _____

Accepted Answer

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

Question 7

Which of the following is true of predatory dumping?

Accepted Answer

A)  It may be a way to encourage the domestic production of a good. 
B)  It may drive out established firms. 
C)  There are a great number of documented cases of predatory dumping. 
D)  Once the competition is gone, the exporting firm lowers the price in the foreign market. 
E)  It is practiced by firms that experience economies of scale in production. 
A)  It may be a way to encourage the domestic production of a good. 
B)  It may drive out established firms. 
C)  There are a great number of documented cases of predatory dumping. 
D)  Once the competition is gone, the exporting firm lowers the price in the foreign market. 
E)  It is practiced by firms that experience economies of scale in production.

Question 8

If a tariff increases, everybody loses except the government imposing the tariff.

Accepted Answer

A) True 
 B)False

Question 9

Autarky is _____

Accepted Answer

A)  the situation of national self-sufficiency, in which there is no economic interaction with foreign producers or consumers. 
B)  the situation in which there is no legal limit on the amount of a commodity that can be imported. 
C)  the situation in which countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere. 
D)  the situation in which world price is determined by the world supply and demand for a product. 
E)  the situation in which each country specializes in making goods with the lowest opportunity cost. 
A)  the situation of national self-sufficiency, in which there is no economic interaction with foreign producers or consumers. 
B)  the situation in which there is no legal limit on the amount of a commodity that can be imported. 
C)  the situation in which countries export products they can produce more cheaply in return for products that are unavailable domestically or are cheaper elsewhere. 
D)  the situation in which world price is determined by the world supply and demand for a product. 
E)  the situation in which each country specializes in making goods with the lowest opportunity cost.

Question 10

Exhibit 17.2
  
-Refer to Exhibit 17.2, which shows the demand for and domestic supply of a good in a country. If the country decides to trade, then at a world price of $1.00, _____

Accepted Answer

A)  20 units will be exported. 
B)  20 units will be imported. 
C)  50 units will be exported. 
D)  50 units will be imported. 
E)  10 units will be exported. 
A)  20 units will be exported. 
B)  20 units will be imported. 
C)  50 units will be exported. 
D)  50 units will be imported. 
E)  10 units will be exported.

Question 11

Some countries export products at prices below the cost of production or the price charged in the domestic market. This practice is called _____

Accepted Answer

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

Question 12

Differences in resource endowments refer to differences in _____

Accepted Answer

A)  the tariffs charged by each country. 
B)  consumption patterns across nations. 
C)  production patterns across nations. 
D)  the quantity, but not the quality, of resources available in different nations. 
E)  the quality of resources available in different nations. 
A)  the tariffs charged by each country. 
B)  consumption patterns across nations. 
C)  production patterns across nations. 
D)  the quantity, but not the quality, of resources available in different nations. 
E)  the quality of resources available in different nations.

Question 13

Quotas are favored over free international trade by _____

Accepted Answer

A)  consumers in the importing country and consumers in the exporting country. 
B)  domestic producers in the importing country and foreign producers with quota rights. 
C)  domestic producers and domestic consumers in the exporting country. 
D)  foreign producers without quota rights and consumers in the importing country. 
E)  foreign consumers and domestic producers in the exporting country. 
A)  consumers in the importing country and consumers in the exporting country. 
B)  domestic producers in the importing country and foreign producers with quota rights. 
C)  domestic producers and domestic consumers in the exporting country. 
D)  foreign producers without quota rights and consumers in the importing country. 
E)  foreign consumers and domestic producers in the exporting country.

Question 14

The Uruguay Round created _____

Accepted Answer

A)  the International Development Fund. 
B)  the World Trade Organization (WTO). 
C)  the General Agreement on Tariffs and Trade (GATT). 
D)  Countries United for Free Trade (CUFT). 
A)  the International Development Fund. 
B)  the World Trade Organization (WTO). 
C)  the General Agreement on Tariffs and Trade (GATT). 
D)  Countries United for Free Trade (CUFT).

Question 15

Which of the following is true of international trade?

Accepted Answer

A)  It allows a country to specialize in the production of certain goods and services. 
B)  It leads to a reduction in the world production of goods and services. 
C)  It allows a country to move to a lower consumption possibilities frontier. 
D)  It allows a country's consumption possibilities frontier to lie inside its production possibilities frontier. 
E)  It makes a country's production possibilities frontier a downward-sloping straight line. 
A)  It allows a country to specialize in the production of certain goods and services. 
B)  It leads to a reduction in the world production of goods and services. 
C)  It allows a country to move to a lower consumption possibilities frontier. 
D)  It allows a country's consumption possibilities frontier to lie inside its production possibilities frontier. 
E)  It makes a country's production possibilities frontier a downward-sloping straight line.

Question 16

A tariff is a tax on either imports or exports.

Accepted Answer

A) True 
 B)False

Question 17

The largest categories of U.S. imports in 2016 were _____, which accounted for _____ each of total imports.

Accepted Answer

A)  capital goods and industrial supplies; 22 percent 
B)  capital goods and services; 19 percent 
C)  industrial supplies and consumer goods; 16 percent 
D)  consumer goods and services; 22 percent 
E)  consumer goods and food; 5 percent 
A)  capital goods and industrial supplies; 22 percent 
B)  capital goods and services; 19 percent 
C)  industrial supplies and consumer goods; 16 percent 
D)  consumer goods and services; 22 percent 
E)  consumer goods and food; 5 percent

Question 18

Exhibit 17.5
  
-Refer to Exhibit 17.5, 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, the import quota that would least affect the level of imports in this country is _____

Accepted Answer

A)  more than 200 units per month. 
B)  between 150 units and 200 units per month. 
C)  50 units per month. 
D)  100 units per month. 
E)  150 units per month. 
A)  more than 200 units per month. 
B)  between 150 units and 200 units per month. 
C)  50 units per month. 
D)  100 units per month. 
E)  150 units per month.

Question 19

Table 17.2
  
-Refer to Table 17.2, which shows the demand for, supply of, 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, consume 4,000, and export 6,000 tulips. 
C)  produce 4,000, consume 10,000, and import 6,000 tulips. 
D)  produce 9,000, consume 6,000, and export 6,000 tulips. 
E)  import all of the tulips that it consumes. 
A)  produce 10,000, consume 4,000, and import 6,000 tulips. 
B)  produce 10,000, consume 4,000, and export 6,000 tulips. 
C)  produce 4,000, consume 10,000, and import 6,000 tulips. 
D)  produce 9,000, consume 6,000, and export 6,000 tulips. 
E)  import all of the tulips that it consumes.

Question 20

Products such as strategic metals and military hardware are often insulated from foreign competition by trade restrictions because their output _____

Accepted Answer

A)  is vital for national defense. 
B)  is more vulnerable to fiscal deficits. 
C)  protects domestic jobs and wage levels. 
D)  is based on absolute advantage. 
E)  is based on opportunity costs. 
A)  is vital for national defense. 
B)  is more vulnerable to fiscal deficits. 
C)  protects domestic jobs and wage levels. 
D)  is based on absolute advantage. 
E)  is based on opportunity costs.

A country should export only those goods _____

A trade agreement reached among more than two countries is _____

Which of the following does not result in a mutually beneficial trade between two countries?

If a country has an absolute advantage in producing a good, _____

A downside to economic integration is that member countries _____

During a year, the government of a country imposed a tariff on imported steel. The rationale behind this policy was that lower-priced imports had put the country's established steel industries in jeopardy of closing. This government policy was based on _____

Which of the following is true of predatory dumping?

If a tariff increases, everybody loses except the government imposing the tariff.

Autarky is _____

Exhibit 17.2 -Refer to Exhibit 17.2, which shows the demand for and domestic supply of a good in a country. If the country decides to trade, then at a world price of $1.00, _____

Some countries export products at prices below the cost of production or the price charged in the domestic market. This practice is called _____

Differences in resource endowments refer to differences in _____

Quotas are favored over free international trade by _____

The Uruguay Round created _____

Which of the following is true of international trade?

A tariff is a tax on either imports or exports.

The largest categories of U.S. imports in 2016 were _, which accounted for _ each of total imports.

Exhibit 17.5 -Refer to Exhibit 17.5, 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, the import quota that would least affect the level of imports in this country is _____

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

Products such as strategic metals and military hardware are often insulated from foreign competition by trade restrictions because their output _____

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.

A country should export only those goods _____

A trade agreement reached among more than two countries is _____

Which of the following does not result in a mutually beneficial trade between two countries?

If a country has an absolute advantage in producing a good, _____

A downside to economic integration is that member countries _____

During a year, the government of a country imposed a tariff on imported steel. The rationale behind this policy was that lower-priced imports had put the country's established steel industries in jeopardy of closing. This government policy was based on _____

Which of the following is true of predatory dumping?

If a tariff increases, everybody loses except the government imposing the tariff.

Autarky is _____

Exhibit 17.2 -Refer to Exhibit 17.2, which shows the demand for and domestic supply of a good in a country. If the country decides to trade, then at a world price of $1.00, _____

Some countries export products at prices below the cost of production or the price charged in the domestic market. This practice is called _____

Differences in resource endowments refer to differences in _____

Quotas are favored over free international trade by _____

The Uruguay Round created _____

Which of the following is true of international trade?

A tariff is a tax on either imports or exports.

The largest categories of U.S. imports in 2016 were _____, which accounted for _____ each of total imports.

Exhibit 17.5 -Refer to Exhibit 17.5, 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, the import quota that would least affect the level of imports in this country is _____

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

Products such as strategic metals and military hardware are often insulated from foreign competition by trade restrictions because their output _____

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

The largest categories of U.S. imports in 2016 were _, which accounted for _ each of total imports.