Question 1

Which of the following is not a provision of the North American Free Trade Agreement (NAFTA)?

Accepted Answer

A) the elimination of tariffs on the shipment of most products among Canada,the United States,and Mexico 
B) the elimination of immigration restrictions among Canada,the United States,and Mexico 
C) the removal of limits on financial investments and banking among the three countries 
D) the establishment of uniform legal regulations by all three countries for the protection of intellectual property 
A) the elimination of tariffs on the shipment of most products among Canada,the United States,and Mexico 
B) the elimination of immigration restrictions among Canada,the United States,and Mexico 
C) the removal of limits on financial investments and banking among the three countries 
D) the establishment of uniform legal regulations by all three countries for the protection of intellectual property

Question 2

Figure 17-3

-In Figure 17-3,in the absence of trade,the domestic price of soybeans is Pn.If the world price of soybeans is Pw,which of the following will occur when the United States begins to trade internationally?

Accepted Answer

A) The domestic price of soybeans will rise,and domestic consumption will fall. 
B) Both the domestic price of soybeans and domestic consumption will rise. 
C) Both the domestic price of soybeans and domestic consumption will fall. 
D) The domestic price of soybeans will fall,and domestic consumption will rise. 
A) The domestic price of soybeans will rise,and domestic consumption will fall. 
B) Both the domestic price of soybeans and domestic consumption will rise. 
C) Both the domestic price of soybeans and domestic consumption will fall. 
D) The domestic price of soybeans will fall,and domestic consumption will rise.

Question 3

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

Accepted Answer

A) a decrease in both U.S.imports and exports 
B) an increase in both U.S.imports and exports 
C) a decrease in U.S.imports and an increase in U.S.exports 
D) an increase in U.S.imports and a decrease in U.S.exports 
A) a decrease in both U.S.imports and exports 
B) an increase in both U.S.imports and exports 
C) a decrease in U.S.imports and an increase in U.S.exports 
D) an increase in U.S.imports and a decrease in U.S.exports

Question 4

Relative to a no-trade situation,if the United States imported wine,the U.S.domestic price of wine would

Accepted Answer

A) rise,but domestic output would fall. 
B) decline,but domestic output would rise. 
C) decline as would domestic output. 
D) rise as would domestic output. 
A) rise,but domestic output would fall. 
B) decline,but domestic output would rise. 
C) decline as would domestic output. 
D) rise as would domestic output.

Question 5

A tax levied on imported goods is called

Accepted Answer

A) an excise tax. 
B) a quota. 
C) a foreign profits tax. 
D) a tariff. 
A) an excise tax. 
B) a quota. 
C) a foreign profits tax. 
D) a tariff.

Question 6

Figure 17-10
  
-Refer to Figure 17-10.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by

Accepted Answer

A) Q₂ - Q₁. 
B) Q₃ - Q₂. 
C) Q₄ - Q₃. 
D) Q₄ - Q₃ + Q₂ - Q₁. 
A) Q₂ - Q₁. 
B) Q₃ - Q₂. 
C) Q₄ - Q₃. 
D) Q₄ - Q₃ + Q₂ - Q₁.

Question 7

Measured as a share of GDP,the United States

Accepted Answer

A) trades more with Canada than with Mexico. 
B) has seen a recent decrease in trade with Canada. 
C) has seen a recent decrease in trade with Mexico. 
D) has experienced a decrease in output as a result of the NAFTA agreement. 
A) trades more with Canada than with Mexico. 
B) has seen a recent decrease in trade with Canada. 
C) has seen a recent decrease in trade with Mexico. 
D) has experienced a decrease in output as a result of the NAFTA agreement.

Question 8

Which of the following restricts the volume of international trade?

Accepted Answer

A) stable prices 
B) tariffs 
C) the law of comparative advantage 
D) stable international monetary system 
A) stable prices 
B) tariffs 
C) the law of comparative advantage 
D) stable international monetary system

Question 9

The infant-industry argument about tariffs implies that

Accepted Answer

A) it is unfair to levy tariffs on items intended for use by infants. 
B) tariffs should be levied on foreign products that compete with new domestic industries only in the short run. 
C) if a newly established domestic industry can survive in the short run,a tariff should be levied to protect it from foreign competition in the long run. 
D) permanent tariffs should be levied on foreign products that compete with those produced by newly established domestic industries. 
A) it is unfair to levy tariffs on items intended for use by infants. 
B) tariffs should be levied on foreign products that compete with new domestic industries only in the short run. 
C) if a newly established domestic industry can survive in the short run,a tariff should be levied to protect it from foreign competition in the long run. 
D) permanent tariffs should be levied on foreign products that compete with those produced by newly established domestic industries.

Question 10

Countries that impose high tariffs,exchange rate controls,and other barriers that restrict international trade have,on average,

Accepted Answer

A) high rates of economic growth. 
B) low rates of economic growth. 
C) a large export sector. 
D) a large import sector. 
A) high rates of economic growth. 
B) low rates of economic growth. 
C) a large export sector. 
D) a large import sector.

Question 11

Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer.This statement best describes the implications of the

Accepted Answer

A) free rider problem. 
B) law of comparative advantage. 
C) infant-industry argument. 
D) law of diminishing marginal returns. 
A) free rider problem. 
B) law of comparative advantage. 
C) infant-industry argument. 
D) law of diminishing marginal returns.

Question 12

International trade and competition from abroad

Accepted Answer

A) provide domestic producers with a strong incentive to improve the quality of their products and keep their costs low. 
B) will make it more difficult for domestic producers to realize fully the potential gains from economies of scale in production. 
C) will make it more difficult for domestic consumers in small countries to purchase from large scale producers. 
D) do all of the above. 
E) do none of the above. 
A) provide domestic producers with a strong incentive to improve the quality of their products and keep their costs low. 
B) will make it more difficult for domestic producers to realize fully the potential gains from economies of scale in production. 
C) will make it more difficult for domestic consumers in small countries to purchase from large scale producers. 
D) do all of the above. 
E) do none of the above.

Question 13

Figure 17-5
  
-Refer to Figure 17-5.If this country chooses to trade,the price of baskets in this country will be

Accepted Answer

A) $10 and 40 baskets will be sold domestically. 
B) $10 and 105 baskets will be domestically. 
C) $7 and 70 baskets will be sold domestically. 
D) $7 and 40 baskets will be sold domestically. 
A) $10 and 40 baskets will be sold domestically. 
B) $10 and 105 baskets will be domestically. 
C) $7 and 70 baskets will be sold domestically. 
D) $7 and 40 baskets will be sold domestically.

Question 14

What is the difference between a tariff and a quota?

Accepted Answer

A tariff is a tax imposed by a

Question 15

Figure 17-8
  
-Refer to Figure 17-8.With trade,this country

Accepted Answer

A) exports 20 wagons. 
B) exports 50 wagons. 
C) imports 30 wagons. 
D) imports 50 wagons. 
A) exports 20 wagons. 
B) exports 50 wagons. 
C) imports 30 wagons. 
D) imports 50 wagons.

Question 16

Figure 17-9
  
-Refer to Figure 17-9.The size of the tariff on carnations is

Accepted Answer

A) $8 per dozen. 
B) $6 per dozen. 
C) $4 per dozen. 
D) $2 per dozen. 
A) $8 per dozen. 
B) $6 per dozen. 
C) $4 per dozen. 
D) $2 per dozen.

Question 17

The following table indicates the production possibilities of food and clothing per worker day in the United States and Japan.
 
Which of the following is true?

Accepted Answer

A) No gains from trade are possible. 
B) Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food. 
C) Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production. 
D) The Japanese are the high-cost producers of both food and clothing. 
A) No gains from trade are possible. 
B) Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food. 
C) Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production. 
D) The Japanese are the high-cost producers of both food and clothing.

Question 18

A U.S.trade policy that restricts the sale of foreign goods in the U.S.market will

Accepted Answer

A) reduce the demand for U.S.export goods since foreigners will be less able to buy our goods if they cannot sell to us. 
B) benefit producers in industries that export goods. 
C) increase the nation's income since it protects domestic jobs. 
D) enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage. 
A) reduce the demand for U.S.export goods since foreigners will be less able to buy our goods if they cannot sell to us. 
B) benefit producers in industries that export goods. 
C) increase the nation's income since it protects domestic jobs. 
D) enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage.

Question 19

A tariff differs from a quota in that a tariff is

Accepted Answer

A) levied on imports,whereas a quota is imposed on exports. 
B) levied on exports,whereas a quota is imposed on imports. 
C) a tax levied on exports,whereas a quota is a limit on the number of units of a good that can be exported. 
D) a tax imposed on imports,whereas a quota is an absolute limit to the number of units of a good that can be imported. 
A) levied on imports,whereas a quota is imposed on exports. 
B) levied on exports,whereas a quota is imposed on imports. 
C) a tax levied on exports,whereas a quota is a limit on the number of units of a good that can be exported. 
D) a tax imposed on imports,whereas a quota is an absolute limit to the number of units of a good that can be imported.

Question 20

Figure 17-13
  
-In Figure 17-13,if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States,how many baseballs will be purchased in the United States?

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

Exam 18: Gaining From International Trade

Which of the following is not a provision of the North American Free Trade Agreement (NAFTA)?

Figure 17-3 -In Figure 17-3,in the absence of trade,the domestic price of soybeans is Pn.If the world price of soybeans is Pw,which of the following will occur when the United States begins to trade internationally?

Which of the following would be the most likely long-run effect if the United States increased its tariff rates and adopted stricter import quotas?

Relative to a no-trade situation,if the United States imported wine,the U.S.domestic price of wine would

A tax levied on imported goods is called

Figure 17-10 -Refer to Figure 17-10.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by

Measured as a share of GDP,the United States

Which of the following restricts the volume of international trade?

The infant-industry argument about tariffs implies that

Countries that impose high tariffs,exchange rate controls,and other barriers that restrict international trade have,on average,

Each trading nation can gain by specializing in producing those things for which it is a low-opportunity cost producer.This statement best describes the implications of the

International trade and competition from abroad

Figure 17-5 -Refer to Figure 17-5.If this country chooses to trade,the price of baskets in this country will be

What is the difference between a tariff and a quota?

Figure 17-8 -Refer to Figure 17-8.With trade,this country

Figure 17-9 -Refer to Figure 17-9.The size of the tariff on carnations is

The following table indicates the production possibilities of food and clothing per worker day in the United States and Japan. Which of the following is true?

A U.S.trade policy that restricts the sale of foreign goods in the U.S.market will

A tariff differs from a quota in that a tariff is

Figure 17-13 -In Figure 17-13,if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States,how many baseballs will be purchased in the United States?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

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The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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