Question 1

Whenever the opportunity costs of goods are significantly different in different countries, there are gains from specialization and trade.

Accepted Answer

A) True 
 B)False

Question 2

Japan is generally considered a closed economy.

Accepted Answer

A) True 
 B)False

Question 3

As a result of the Uruguay Round, average tariffs fell to _____ of the value of imports.

Accepted Answer

A)  40 percent 
B)  20 percent 
C)  10 percent 
D)  6 percent 
E)  4 percent 
A)  40 percent 
B)  20 percent 
C)  10 percent 
D)  6 percent 
E)  4 percent

Question 4

An effective import quota _____

Accepted Answer

A)  lowers the price of imports. 
B)  lowers the price of domestic goods competing with imports. 
C)  increases the variety of goods available to the consumer. 
D)  increases federal revenues. 
E)  lowers the quantity of the imported good. 
A)  lowers the price of imports. 
B)  lowers the price of domestic goods competing with imports. 
C)  increases the variety of goods available to the consumer. 
D)  increases federal revenues. 
E)  lowers the quantity of the imported good.

Question 5

The Kennedy Round of GATT in the mid-1960s included new provisions against _____

Accepted Answer

A)  free trade. 
B)  tariffs. 
C)  quotas. 
D)  dumping. 
E)  common markets. 
A)  free trade. 
B)  tariffs. 
C)  quotas. 
D)  dumping. 
E)  common markets.

Question 6

According to some economists, the protection granted to infant industries should be _____

Accepted Answer

A)  terminated after one year. 
B)  to protect emerging domestic industries. 
C)  restricted to firms that face little competition. 
D)  based on absolute advantage. 
E)  based on opportunity costs. 
A)  terminated after one year. 
B)  to protect emerging domestic industries. 
C)  restricted to firms that face little competition. 
D)  based on absolute advantage. 
E)  based on opportunity costs.

Question 7

The difference between the effects of an import quota and a tariff is that _____

Accepted Answer

A)  only the tariff results in a higher domestic price. 
B)  only the quota decreases the amount of goods imported. 
C)  the decrease in producer surplus is smaller with the quota. 
D)  under a quota, part of the decrease in consumer surplus is redistributed to foreign producers; under a tariff, it is redistributed to the domestic government. 
E)  under a tariff, part of the decrease in consumer surplus is redistributed to foreign producers; under a quota, it is redistributed to the domestic government. 
A)  only the tariff results in a higher domestic price. 
B)  only the quota decreases the amount of goods imported. 
C)  the decrease in producer surplus is smaller with the quota. 
D)  under a quota, part of the decrease in consumer surplus is redistributed to foreign producers; under a tariff, it is redistributed to the domestic government. 
E)  under a tariff, part of the decrease in consumer surplus is redistributed to foreign producers; under a quota, it is redistributed to the domestic government.

Question 8

Which of the following reasons best explains U.S. imports of crude oil from Saudi Arabia and diamonds from South Africa?

Accepted Answer

A)  differences in resource endowments 
B)  economies of scale 
C)  differences in tastes 
D)  import tariffs 
E)  import quotas 
A)  differences in resource endowments 
B)  economies of scale 
C)  differences in tastes 
D)  import tariffs 
E)  import quotas

Question 9

Table 17.1
 $$\begin{array}{l}
\text { Table } 17.1\
\begin{array} { | c | c | c | c | } 
\hline{ \text { Cambria } } & & { \text { Bodoni } } \
\hline \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } & \begin{array} { c } 
\text { Tons of rice per } \
\text { day }
\end{array} & \text { T-shirts per day } \
\hline 20 & 0 & 100 & 0 \
\hline 18 & 80 & 90 & 100 \
\hline 16 & 160 & 80 & 200 \
\hline 14 & 240 & 70 & 300 \
\hline 12 & 320 & 60 & 400 \
\hline 10 & 400 & 50 & 500 \
\hline 8 & 480 & 40 & 600 \
\hline 6 & 560 & 30 & 700 \
\hline 4 & 640 & 20 & 800 \
\hline 2 & 720 & 10 & 900 \
\hline 0 & 800 & 0 & 1,000 \
\hline
\end{array}
\end{array}$$
-Refer to Table 17.1, which shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 T-shirt in Bodoni is _____

Accepted Answer

A)  0.9 tons of rice. 
B)  0.5 tons of rice. 
C)  0.75 tons of rice. 
D)  0.01 tons of rice. 
E)  0.02 tons of rice. 
A)  0.9 tons of rice. 
B)  0.5 tons of rice. 
C)  0.75 tons of rice. 
D)  0.01 tons of rice. 
E)  0.02 tons of rice.

Question 10

When a country imposes a per-unit tariff on an imported good or service, _____

Accepted Answer

A)  the price that domestic consumers pay for the import falls. 
B)  the quantity of the good or service imported into the country declines. 
C)  the quantity of the good or service imported into the country increases. 
D)  the price at which any supplier can sell output in the world market decreases. 
E)  the quantity of the good or service demanded by the consumers increases. 
A)  the price that domestic consumers pay for the import falls. 
B)  the quantity of the good or service imported into the country declines. 
C)  the quantity of the good or service imported into the country increases. 
D)  the price at which any supplier can sell output in the world market decreases. 
E)  the quantity of the good or service demanded by the consumers increases.

Question 11

For each fancy dress Cafilla produces, it gives up the opportunity to make 50 pounds of cheese. Bodoni can produce one fancy dress for every 100 pounds of cheese it produces. If specialization and trade were to occur between these two countries, which of the following would be consistent with the theory of comparative advantage?

Accepted Answer

A)  Cafilla has the comparative advantage in dresses and cheese. 
B)  Bodoni has the comparative advantage in dresses and cheese. 
C)  Bodoni has the comparative advantage in only dresses. 
D)  Cafilla has the comparative advantage in only dresses. 
E)  Cafilla has the comparative advantage in only cheese. 
A)  Cafilla has the comparative advantage in dresses and cheese. 
B)  Bodoni has the comparative advantage in dresses and cheese. 
C)  Bodoni has the comparative advantage in only dresses. 
D)  Cafilla has the comparative advantage in only dresses. 
E)  Cafilla has the comparative advantage in only cheese.

Question 12

Capital goods 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 13

Retaliation of trade restrictions can _____

Accepted Answer

A)  set off still greater trade restrictions, leading to an outright trade war. 
B)  recover the surplus lost during the period of trade barriers. 
C)  decrease rent-seeking activities in an economy. 
D)  increase the potential gains from trade through specialization. 
E)  lead to phasing out of tariffs and quotas. 
A)  set off still greater trade restrictions, leading to an outright trade war. 
B)  recover the surplus lost during the period of trade barriers. 
C)  decrease rent-seeking activities in an economy. 
D)  increase the potential gains from trade through specialization. 
E)  lead to phasing out of tariffs and quotas.

Question 14

Recent research on the cost of protectionism indicates that international trade barriers _____

Accepted Answer

A)  decrease the price of a good in the domestic market. 
B)  are the only two of many devices used to restrict foreign trade. 
C)  slow the introduction of new goods and better technologies. 
D)  give rise to unsustainable government deficits. 
E)  increase the opportunity cost of production. 
A)  decrease the price of a good in the domestic market. 
B)  are the only two of many devices used to restrict foreign trade. 
C)  slow the introduction of new goods and better technologies. 
D)  give rise to unsustainable government deficits. 
E)  increase the opportunity cost of production.

Question 15

A trade agreement between two countries is known as _____

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)  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)  International Development Fund.

Question 16

In 2012, exports amounted to about 14 percent of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 17

Trade restrictions _____

Accepted Answer

A)  lower domestic prices. 
B)  encourage economic progress. 
C)  slow economic progress. 
D)  encourage foreign trade. 
E)  increase the opportunity cost of production. 
A)  lower domestic prices. 
B)  encourage economic progress. 
C)  slow economic progress. 
D)  encourage foreign trade. 
E)  increase the opportunity cost of production.

Question 18

Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 17.3
  
-Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball, then _____ baseballs are imported.

Accepted Answer

A)  4,000 
B)  6,000 
C)  8,000 
D)  10,000 
E)  12,000 
A)  4,000 
B)  6,000 
C)  8,000 
D)  10,000 
E)  12,000

Question 20

Which of the following is not true of dumping?

Accepted Answer

A)  In the country where products are dumped, consumer surplus grows as a result of the dumping. 
B)  Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C)  Critics of dumping recommend applying a tariff as a correct antidumping measure. 
D)  A major difficulty with dumping by firms in other countries is that it drives up prices for the domestic consumer. 
E)  Predatory dumping is often aimed at driving domestic producers out of business. 
A)  In the country where products are dumped, consumer surplus grows as a result of the dumping. 
B)  Dumping involves the selling of a product by foreign producers at a price lower than that in their own countries. 
C)  Critics of dumping recommend applying a tariff as a correct antidumping measure. 
D)  A major difficulty with dumping by firms in other countries is that it drives up prices for the domestic consumer. 
E)  Predatory dumping is often aimed at driving domestic producers out of business.

Whenever the opportunity costs of goods are significantly different in different countries, there are gains from specialization and trade.

Japan is generally considered a closed economy.

As a result of the Uruguay Round, average tariffs fell to _____ of the value of imports.

An effective import quota _____

The Kennedy Round of GATT in the mid-1960s included new provisions against _____

According to some economists, the protection granted to infant industries should be _____

The difference between the effects of an import quota and a tariff is that _____

Which of the following reasons best explains U.S. imports of crude oil from Saudi Arabia and diamonds from South Africa?

When a country imposes a per-unit tariff on an imported good or service, _____

Capital goods accounted for _____ of U.S. imports in 2016.

Retaliation of trade restrictions can _____

Recent research on the cost of protectionism indicates that international trade barriers _____

A trade agreement between two countries is known as _____

In 2012, exports amounted to about 14 percent of U.S. GDP.

Trade restrictions _____

Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.

Exhibit 17.3 -Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball, then _____ baseballs are imported.

Which of the following is not true of dumping?

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.

Whenever the opportunity costs of goods are significantly different in different countries, there are gains from specialization and trade.

Japan is generally considered a closed economy.

As a result of the Uruguay Round, average tariffs fell to _____ of the value of imports.

An effective import quota _____

The Kennedy Round of GATT in the mid-1960s included new provisions against _____

According to some economists, the protection granted to infant industries should be _____

The difference between the effects of an import quota and a tariff is that _____

Which of the following reasons best explains U.S. imports of crude oil from Saudi Arabia and diamonds from South Africa?

When a country imposes a per-unit tariff on an imported good or service, _____

Capital goods accounted for _____ of U.S. imports in 2016.

Retaliation of trade restrictions can _____

Recent research on the cost of protectionism indicates that international trade barriers _____

A trade agreement between two countries is known as _____

In 2012, exports amounted to about 14 percent of U.S. GDP.

Trade restrictions _____

Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.

Exhibit 17.3 -Refer to Exhibit 17.3, which shows the supply of and the demand for baseballs in the United States. If the world price is $3 per baseball, then _____ baseballs are imported.

Which of the following is not true of dumping?

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