Question 1

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

Accepted Answer

A) steel producers,who supply steel to the domestic automobile industry. 
B) foreign producers of automobiles. 
C) importers of automobiles. 
D) domestic distributors of foreign automobiles. 
A) steel producers,who supply steel to the domestic automobile industry. 
B) foreign producers of automobiles. 
C) importers of automobiles. 
D) domestic distributors of foreign automobiles.

Question 2

As a result of a tariff on an imported good,

Accepted Answer

A) domestic producers are better off because they sell more goods at the same price. 
B) domestic producers are better off because they sell more goods at a higher price. 
C) domestic producers are better off because they sell the same quantity of goods at a higher price. 
D) domestic consumers are better off because there are more domestically produced goods available. 
E) domestic consumers are neither better off nor worse off because imports do not change. 
A) domestic producers are better off because they sell more goods at the same price. 
B) domestic producers are better off because they sell more goods at a higher price. 
C) domestic producers are better off because they sell the same quantity of goods at a higher price. 
D) domestic consumers are better off because there are more domestically produced goods available. 
E) domestic consumers are neither better off nor worse off because imports do not change.

Question 3

Suppose the United States reduced the tariff on television sets,allowing foreign-produced televisions to more freely enter the U.S.market.Which of the following would most likely occur?

Accepted Answer

A) The price of televisions to U.S.consumers would increase,and the demand for U.S.export products would rise. 
B) The price of televisions to U.S.consumers would fall,and the demand for U.S.export products would fall. 
C) The price of televisions to U.S.consumers would increase,and the demand for U.S.export products would fall. 
D) The price of televisions to U.S.consumers would fall,and the demand for U.S.export products would rise. 
A) The price of televisions to U.S.consumers would increase,and the demand for U.S.export products would rise. 
B) The price of televisions to U.S.consumers would fall,and the demand for U.S.export products would fall. 
C) The price of televisions to U.S.consumers would increase,and the demand for U.S.export products would fall. 
D) The price of televisions to U.S.consumers would fall,and the demand for U.S.export products would rise.

Question 4

If the United States imports low-cost goods produced in low-wage countries instead of producing the goods domestically,

Accepted Answer

A) the United States will incur a net loss of total jobs. 
B) the United States will gain,and domestic resources will be employed more productively. 
C) dollars that leave the United States will not return to buy goods produced by high-wage American workers. 
D) the availability of consumption goods in the United States will be reduced. 
A) the United States will incur a net loss of total jobs. 
B) the United States will gain,and domestic resources will be employed more productively. 
C) dollars that leave the United States will not return to buy goods produced by high-wage American workers. 
D) the availability of consumption goods in the United States will be reduced.

Question 5

Figure 17-12
  
-If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00,the government revenue from a tariff of $0.50 per unit is represented by area

Accepted Answer

A) c 
B) e + g 
C) i + e + f 
D) d + e 
E) e 
A) c 
B) e + g 
C) i + e + f 
D) d + e 
E) e

Question 6

Assume,for Canada,that the domestic price of steel without international trade is higher than the world price of steel.This suggests that with trade,

Accepted Answer

A) Canada has a comparative advantage in the production of steel over other countries and Canada will import steel. 
B) Canada has a comparative advantage in the production of steel over other countries and Canada will export steel. 
C) other countries have a comparative advantage over Canada in the production of steel and Canada will import steel. 
D) other countries have a comparative advantage over Canada in the production of steel and Canada will export steel. 
A) Canada has a comparative advantage in the production of steel over other countries and Canada will import steel. 
B) Canada has a comparative advantage in the production of steel over other countries and Canada will export steel. 
C) other countries have a comparative advantage over Canada in the production of steel and Canada will import steel. 
D) other countries have a comparative advantage over Canada in the production of steel and Canada will export steel.

Question 7

Which of the following is most likely to increase U.S.exports?

Accepted Answer

A) The government gives subsidies to U.S.firms that export goods or services. 
B) The government reduces the size of the budget surplus. 
C) The United States unilaterally reduces its restrictions on foreign imports. 
D) Taxes on domestic saving rise. 
A) The government gives subsidies to U.S.firms that export goods or services. 
B) The government reduces the size of the budget surplus. 
C) The United States unilaterally reduces its restrictions on foreign imports. 
D) Taxes on domestic saving rise.

Question 8

When foreigners export goods to the United States

Accepted Answer

A) they reduce the ability of the U.S.to export products abroad. 
B) they acquire the dollars that are necessary to purchase goods,services,and assets from Americans. 
C) they reduce the living standards of Americans. 
D) they cause the dollar to depreciate. 
A) they reduce the ability of the U.S.to export products abroad. 
B) they acquire the dollars that are necessary to purchase goods,services,and assets from Americans. 
C) they reduce the living standards of Americans. 
D) they cause the dollar to depreciate.

Question 9

Imposing a restrictive quota on the import of spiked track shoes will likely

Accepted Answer

A) increase the price of the shoes but decrease the quantity consumed. 
B) increase both the price of the shoes and the quantity consumed. 
C) leave the price of the shoes unchanged but decrease the quantity consumed. 
D) leave the price of the shoes unchanged and also leave the quantity consumed unchanged. 
A) increase the price of the shoes but decrease the quantity consumed. 
B) increase both the price of the shoes and the quantity consumed. 
C) leave the price of the shoes unchanged but decrease the quantity consumed. 
D) leave the price of the shoes unchanged and also leave the quantity consumed unchanged.

Question 10

The political popularity of a tariff on imported goods that compete with products of a well-established domestic industry is

Accepted Answer

A) surprising since one would expect the political power of consumers to override the interests of even a well-established domestic industry. 
B) surprising since one would expect the economic harm resulting from tariffs to be well understood by voters. 
C) not surprising since such a tariff would generally benefit an easily recognized interest group at the expense of uninformed,uninterested consumers. 
D) not surprising since the tariff enables domestic producers and consumers to gain at the expense of foreigners. 
A) surprising since one would expect the political power of consumers to override the interests of even a well-established domestic industry. 
B) surprising since one would expect the economic harm resulting from tariffs to be well understood by voters. 
C) not surprising since such a tariff would generally benefit an easily recognized interest group at the expense of uninformed,uninterested consumers. 
D) not surprising since the tariff enables domestic producers and consumers to gain at the expense of foreigners.

Question 11

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

Accepted Answer

A) Mutual gains could be realized if the United States specialized in producing food and South Korea in producing clothing. 
B) Mutual gains could be realized if the United States specialized in clothing production and South Korea in food production. 
C) South Korean workers are the high-cost producers of clothing. 
D) None of the above are true. 
A) Mutual gains could be realized if the United States specialized in producing food and South Korea in producing clothing. 
B) Mutual gains could be realized if the United States specialized in clothing production and South Korea in food production. 
C) South Korean workers are the high-cost producers of clothing. 
D) None of the above are true.

Question 12

If the United States were to adopt a policy of free trade with European countries and Japan,this policy would

Accepted Answer

A) help the United States and hurt the other countries because the United States has a larger population. 
B) help all of the countries involved because every country would have a comparative advantage in the production of some good. 
C) hurt the United States and help the other countries involved because job opportunities in the United States would fall while they rose in other countries. 
D) help the United States and hurt the other countries because the United States has more natural resources than the other countries. 
A) help the United States and hurt the other countries because the United States has a larger population. 
B) help all of the countries involved because every country would have a comparative advantage in the production of some good. 
C) hurt the United States and help the other countries involved because job opportunities in the United States would fall while they rose in other countries. 
D) help the United States and hurt the other countries because the United States has more natural resources than the other countries.

Question 13

International trade is advantageous because trade makes it possible for people in each country to

Accepted Answer

A) import more than they export. 
B) export more than they import. 
C) employ more of their domestic resources producing things that are costly for them to produce domestically. 
D) acquire goods from foreigners more economically than they could be produced domestically. 
E) do all of the above. 
A) import more than they export. 
B) export more than they import. 
C) employ more of their domestic resources producing things that are costly for them to produce domestically. 
D) acquire goods from foreigners more economically than they could be produced domestically. 
E) do all of the above.

Question 14

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) Since U.S.workers produce more of both food and clothing than Japanese workers,no gains from trade are possible. 
B) Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production. 
C) The Japanese are the low-cost producers of both food and clothing. 
D) Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food. 
A) Since U.S.workers produce more of both food and clothing than Japanese workers,no gains from trade are possible. 
B) Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production. 
C) The Japanese are the low-cost producers of both food and clothing. 
D) Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food.

Question 15

If Country A has an absolute advantage over Country B in the production of every commodity,

Accepted Answer

A) mutual gains from trade between Country A and Country B would be impossible. 
B) Country B would be able to gain from trade but not country A. 
C) the joint output of the two countries could not be increased through specialization and exchange. 
D) mutual gains from trade would still be possible. 
A) mutual gains from trade between Country A and Country B would be impossible. 
B) Country B would be able to gain from trade but not country A. 
C) the joint output of the two countries could not be increased through specialization and exchange. 
D) mutual gains from trade would still be possible.

Question 16

Compared to the no-trade situation,when a country imports a good,

Accepted Answer

A) domestic consumers gain,domestic producers lose,and the gains outweigh the losses. 
B) domestic consumers lose,domestic producers gain,and the gains outweigh the losses. 
C) domestic consumers gain,domestic producers lose,and the losses outweigh the gains. 
D) domestic consumers gain,but domestic producers lose an equal amount. 
A) domestic consumers gain,domestic producers lose,and the gains outweigh the losses. 
B) domestic consumers lose,domestic producers gain,and the gains outweigh the losses. 
C) domestic consumers gain,domestic producers lose,and the losses outweigh the gains. 
D) domestic consumers gain,but domestic producers lose an equal amount.

Question 17

The law of comparative advantage explains why a nation will benefit from trade when

Accepted Answer

A) it exports more than it imports. 
B) its trading partners are experiencing offsetting losses. 
C) it exports goods for which it is a high-opportunity cost producer,while importing those for which it is a low-opportunity cost producer. 
D) it exports goods for which it is a low-opportunity cost producer,while importing those for which it is a high-opportunity cost producer. 
A) it exports more than it imports. 
B) its trading partners are experiencing offsetting losses. 
C) it exports goods for which it is a high-opportunity cost producer,while importing those for which it is a low-opportunity cost producer. 
D) it exports goods for which it is a low-opportunity cost producer,while importing those for which it is a high-opportunity cost producer.

Question 18

Is it possible for a country to have an absolute disadvantage and a comparative advantage in the production of a good?

Accepted Answer

A) No,these are incompatible on theoretical grounds. 
B) No,theory prevents it,but some economists claim it could occur. 
C) Yes,this situation can occur. 
D) Yes,in theory,although not in reality. 
A) No,these are incompatible on theoretical grounds. 
B) No,theory prevents it,but some economists claim it could occur. 
C) Yes,this situation can occur. 
D) Yes,in theory,although not in reality.

Question 19

Figure 17-9
  
-Refer to Figure 17-9.Before the tariff is imposed,this country

Accepted Answer

A) imports 200 carnations. 
B) imports 400 carnations. 
C) exports 200 carnations. 
D) exports 400 carnations. 
A) imports 200 carnations. 
B) imports 400 carnations. 
C) exports 200 carnations. 
D) exports 400 carnations.

Question 20

Figure 17-2

-In Figure 17-2,in the absence of trade,the domestic price of shoes is Pn.Since many foreign countries have a comparative advantage in the production of shoes,when the United States begins to trade,the domestic price will fall to the world price.When this happens,what does the quantity Qc through Qp represent?

Accepted Answer

A) the quantity of shoes that the United States imports 
B) an increase in the world consumption of shoes 
C) the quantity of shoes that the United States exports 
D) a reduction in the world consumption of shoes 
A) the quantity of shoes that the United States imports 
B) an increase in the world consumption of shoes 
C) the quantity of shoes that the United States exports 
D) a reduction in the world consumption of shoes

Exam 18: Gaining From International Trade

A decrease in the tariff on foreign-produced automobiles would be most likely to harm

As a result of a tariff on an imported good,

Suppose the United States reduced the tariff on television sets,allowing foreign-produced televisions to more freely enter the U.S.market.Which of the following would most likely occur?

If the United States imports low-cost goods produced in low-wage countries instead of producing the goods domestically,

Figure 17-12 -If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00,the government revenue from a tariff of $0.50 per unit is represented by area

Assume,for Canada,that the domestic price of steel without international trade is higher than the world price of steel.This suggests that with trade,

Which of the following is most likely to increase U.S.exports?

When foreigners export goods to the United States

Imposing a restrictive quota on the import of spiked track shoes will likely

The political popularity of a tariff on imported goods that compete with products of a well-established domestic industry is

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

If the United States were to adopt a policy of free trade with European countries and Japan,this policy would

International trade is advantageous because trade makes it possible for people in each country to

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?

If Country A has an absolute advantage over Country B in the production of every commodity,

Compared to the no-trade situation,when a country imports a good,

The law of comparative advantage explains why a nation will benefit from trade when

Is it possible for a country to have an absolute disadvantage and a comparative advantage in the production of a good?

Figure 17-9 -Refer to Figure 17-9.Before the tariff is imposed,this country

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

Aprice-Searcher Markets With High Entry Barriers

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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