Exam 16: The United States and the Global Economy

Through specialization and trade, the supply of goods increases, which forces prices up and makes goods less affordable.

Comparative advantage is determined by all of the following except

When the North American Free Trade Agreement was adopted, it was predicted that higher-skill and higher-tech businesses in the U.S. would benefit from the elimination of trade barriers with Mexico.

In the U.S., sheep producers

According to the principle of comparative advantage, a country is realizing gains from trade when it achieves a level of consumption that lies outside of its production possibilities curve.

An import quota provides a minimum threshold on the amount of a good that is allowed into the country.

Import tariffs tend to increase jobs for workers in import-competing industries, but reduce their ability to bargain for higher wages.

Comparative advantage depends on a variety of factors including technology, the amount of capital per worker, and the productivity of the labor force.

Import restrictions tend to improve the welfare of producers in the import-competing industry, but worsen the welfare of domestic consumers.

NAFTA is an example of a regional trading arrangement.

Table 16.1 Production Possibilities Tables for Germany and Canada Germany's Production Possibilities Table Canada's Production Possibilities Table -Refer to Table 16.1. The opportunity cost of producing an auto in Germany is

All of the following are arguments for protectionism except

A disadvantage of increased globalization and free trade is

Comparative advantage underlies the gains from trade among countries whose opportunity costs are identical.

Although the nation as a whole benefits from free trade, inevitably some firms and workers are harmed by trade.

In terms of production of output, having international specialization and trade is equivalent to

Countries that trade on the basis of comparative advantage have ______ than countries that do not.

U.S. tariffs tend to be progressive taxes, which predominately affect wealthy consumers.

The imposition of a tariff on imports tends to promote gains for all of the following groups except

CAFTA refers to the trade agreement that the U.S. signed in 2005 with