Question 1

The second largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

Accepted Answer

A)  capital goods; 24 percent 
B)  services; 31 percent 
C)  industrial supplies; 18 percent 
D)  consumer goods; 9 percent 
E)  food; 31 percent 
A)  capital goods; 24 percent 
B)  services; 31 percent 
C)  industrial supplies; 18 percent 
D)  consumer goods; 9 percent 
E)  food; 31 percent

Question 2

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, then _____

Accepted Answer

A)  domestic production will increase from 100 to 200 units per month. 
B)  imports will increase from 25 to 50 units per month. 
C)  domestic production will increase from 100 to 175 units per month. 
D)  domestic production will increase from 100 to 125 units per month. 
E)  the total supply in the domestic market will increase from 100 to 150 units per month. 
A)  domestic production will increase from 100 to 200 units per month. 
B)  imports will increase from 25 to 50 units per month. 
C)  domestic production will increase from 100 to 175 units per month. 
D)  domestic production will increase from 100 to 125 units per month. 
E)  the total supply in the domestic market will increase from 100 to 150 units per month.

Question 3

The production possibilities curve of a country will be a straight line if _____

Accepted Answer

A)  the production of each commodity is subject to economies of scale. 
B)  the country completely specializes in the production of the good with the highest opportunity cost. 
C)  the country has an absolute advantage in the production of each commodity. 
D)  the resources in the country are equally adaptable to the production of each commodity. 
E)  the country completely specializes in the production of the good with the lowest opportunity cost. 
A)  the production of each commodity is subject to economies of scale. 
B)  the country completely specializes in the production of the good with the highest opportunity cost. 
C)  the country has an absolute advantage in the production of each commodity. 
D)  the resources in the country are equally adaptable to the production of each commodity. 
E)  the country completely specializes in the production of the good with the lowest opportunity cost.

Question 4

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

Accepted Answer

A) True 
 B)False

Question 5

The source of gains from trade is _____

Accepted Answer

A)  tariff revenue. 
B)  self-sufficiency. 
C)  terms of trade. 
D)  absolute advantage. 
E)  comparative advantage. 
A)  tariff revenue. 
B)  self-sufficiency. 
C)  terms of trade. 
D)  absolute advantage. 
E)  comparative advantage.

Question 6

In the case of declining industries, wage subsidies or special tax breaks that decline over time _____

Accepted Answer

A)  can be more efficient than tariffs. 
B)  are permanent import restrictions. 
C)  can result in increasing shocks in the economy. 
D)  equal or exceed the direct welfare loss from tariffs. 
E)  result from diseconomies of scale. 
A)  can be more efficient than tariffs. 
B)  are permanent import restrictions. 
C)  can result in increasing shocks in the economy. 
D)  equal or exceed the direct welfare loss from tariffs. 
E)  result from diseconomies of scale.

Question 7

Economies of scale in the production of a good imply that _____

Accepted Answer

A)  the long-run average cost of production rises as the scale of operation expands. 
B)  the marginal cost of production falls below zero as the scale of operation contracts. 
C)  the long-run average cost of production falls as the scale of operation expands. 
D)  the long-run average cost of production remains the same as the scale of operation increases. 
E)  marginal output decreases as the amount of a factor of production is incrementally increased. 
A)  the long-run average cost of production rises as the scale of operation expands. 
B)  the marginal cost of production falls below zero as the scale of operation contracts. 
C)  the long-run average cost of production falls as the scale of operation expands. 
D)  the long-run average cost of production remains the same as the scale of operation increases. 
E)  marginal output decreases as the amount of a factor of production is incrementally increased.

Question 8

The consumption possibilities frontier shows _____

Accepted Answer

A)  a nation's possible combinations of goods available as a result of specialization and exchange. 
B)  a nation's opportunity cost of producing different goods for consumption. 
C)  possible combinations of goods that residents of a nation consume at different income levels. 
D)  the difference between the most that consumers would pay for a good and the actual amount they pay. 
E)  a nation's possible combinations of how much of one good exchanges for another. 
A)  a nation's possible combinations of goods available as a result of specialization and exchange. 
B)  a nation's opportunity cost of producing different goods for consumption. 
C)  possible combinations of goods that residents of a nation consume at different income levels. 
D)  the difference between the most that consumers would pay for a good and the actual amount they pay. 
E)  a nation's possible combinations of how much of one good exchanges for another.

Question 9

International trade between countries typically produces a winner and a loser. Generally, it is the more economically advanced country that gains at the expense of the less developed nation.

Accepted Answer

A) True 
 B)False

Question 10

The world price of a good refers to the quantity of one good exchanged for a unit of another good.

Accepted Answer

A) True 
 B)False

Question 11

Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.

Accepted Answer

A) True 
 B)False

Question 12

Some industries have argued that since their output is vital for national defense, _____

Accepted Answer

A)  they should be entitled to additional trade protection. 
B)  they should make special deals among themselves and discriminate against outsiders. 
C)  they are more vulnerable to fiscal deficits. 
D)  they should be given more time to grow to become competitive. 
E)  they protect domestic jobs and wage levels. 
A)  they should be entitled to additional trade protection. 
B)  they should make special deals among themselves and discriminate against outsiders. 
C)  they are more vulnerable to fiscal deficits. 
D)  they should be given more time to grow to become competitive. 
E)  they protect domestic jobs and wage levels.

Question 13

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, U.S. producers would supply _____

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 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 gain in producer surplus as a result of a tariff of $0.50 per unit is represented by the area _____

Accepted Answer

A)  c + h. 
B)  h. 
C)  c. 
D)  c + g. 
E)  g. 
A)  c + h. 
B)  h. 
C)  c. 
D)  c + g. 
E)  g.

Question 15

The World Trade Organization (WTO) _____

Accepted Answer

A)  requires members to eliminate only quotas. 
B)  supervises trade in merchandise and services. 
C)  exists primarily in Russia, Africa, and South America. 
D)  requires members 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)  requires members to eliminate only quotas. 
B)  supervises trade in merchandise and services. 
C)  exists primarily in Russia, Africa, and South America. 
D)  requires members 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.

Question 16

Exhibit 17.4
  
-Refer to Exhibit 17.4, which shows the market for wheat for the country of Palatino. SD is the domestic supply of wheat, and DD is the domestic demand for wheat. Suppose the world price of wheat is $9 per bushel of wheat and a specific tariff of $6 is imposed on each bushel of wheat imported. Government revenue from the tariff equals _____

Accepted Answer

A)  $45,000. 
B)  $3,000,000. 
C)  $1,800,000. 
D)  $900,000. 
E)  $50,000. 
A)  $45,000. 
B)  $3,000,000. 
C)  $1,800,000. 
D)  $900,000. 
E)  $50,000.

Question 17

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 and a tariff of $1 per baseball is imposed, the net welfare loss of the tariff is shown by area(s) _____

Accepted Answer

A)  g. 
B)  c. 
C)  a. 
D)  c and g. 
E)  b and f. 
A)  g. 
B)  c. 
C)  a. 
D)  c and g. 
E)  b and f.

Question 18

World output will be maximized if each country _____

Accepted Answer

A)  attempts to be self-sufficient. 
B)  specializes in producing those goods in which it has a comparative advantage. 
C)  specializes in producing those goods in which it has an absolute advantage. 
D)  reduces its consumption possibilities. 
E)  equals its consumption possibilities. 
A)  attempts to be self-sufficient. 
B)  specializes in producing those goods in which it has a comparative advantage. 
C)  specializes in producing those goods in which it has an absolute advantage. 
D)  reduces its consumption possibilities. 
E)  equals its consumption possibilities.

Question 19

Exports account for _____ of the gross domestic product (GDP) in the Netherlands.

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

Question 20

Which of the following is true of the terms of trade?

Accepted Answer

A)  It is determined by supply and demand factors. 
B)  It is a legal limit on the amount of a commodity that can be imported. 
C)  It is determined by the General Agreement on Tariffs and Trade. 
D)  It is independent of the negotiations between trading partners. 
E)  It is identical for all trading partners with differences in tastes. 
A)  It is determined by supply and demand factors. 
B)  It is a legal limit on the amount of a commodity that can be imported. 
C)  It is determined by the General Agreement on Tariffs and Trade. 
D)  It is independent of the negotiations between trading partners. 
E)  It is identical for all trading partners with differences in tastes.

The second largest category of U.S. exports in 2016 was _, which accounted for _ of total exports.

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, then _____

The production possibilities curve of a country will be a straight line if _____

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

The source of gains from trade is _____

In the case of declining industries, wage subsidies or special tax breaks that decline over time _____

Economies of scale in the production of a good imply that _____

The consumption possibilities frontier shows _____

International trade between countries typically produces a winner and a loser. Generally, it is the more economically advanced country that gains at the expense of the less developed nation.

The world price of a good refers to the quantity of one good exchanged for a unit of another good.

Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.

Some industries have argued that since their output is vital for national defense, _____

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, U.S. producers would supply _____

The World Trade Organization (WTO) _____

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 and a tariff of $1 per baseball is imposed, the net welfare loss of the tariff is shown by area(s) _____

World output will be maximized if each country _____

Exports account for _____ of the gross domestic product (GDP) in the Netherlands.

Which of the following is true of the terms of trade?

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 second largest category of U.S. exports in 2016 was _____, which accounted for _____ of total exports.

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, then _____

The production possibilities curve of a country will be a straight line if _____

Quotas and tariffs discourage foreign governments from retaliating with quotas and tariffs of their own.

The source of gains from trade is _____

In the case of declining industries, wage subsidies or special tax breaks that decline over time _____

Economies of scale in the production of a good imply that _____

The consumption possibilities frontier shows _____

International trade between countries typically produces a winner and a loser. Generally, it is the more economically advanced country that gains at the expense of the less developed nation.

The world price of a good refers to the quantity of one good exchanged for a unit of another good.

Domestic producers of goods who compete with cheaper imports benefit from protectionism in the short run.

Some industries have argued that since their output is vital for national defense, _____

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, U.S. producers would supply _____

The World Trade Organization (WTO) _____

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 and a tariff of $1 per baseball is imposed, the net welfare loss of the tariff is shown by area(s) _____

World output will be maximized if each country _____

Exports account for _____ of the gross domestic product (GDP) in the Netherlands.

Which of the following is true of the terms of trade?

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 second largest category of U.S. exports in 2016 was _, which accounted for _ of total exports.