Question 1

The argument that import restrictions save jobs and promote prosperity fails to recognize that

Accepted Answer

A) there are no secondary effects of import restrictions. 
B) import restrictions will lower prices in the protected industries. 
C) import restrictions cannot create jobs in any industries. 
D) U.S.imports provide people in other countries with the purchasing power required for the purchase of U.S.exports. 
A) there are no secondary effects of import restrictions. 
B) import restrictions will lower prices in the protected industries. 
C) import restrictions cannot create jobs in any industries. 
D) U.S.imports provide people in other countries with the purchasing power required for the purchase of U.S.exports.

Question 2

If labor-intensive textile products could be produced more cheaply in low-wage countries than in the United States,the United States would gain if it

Accepted Answer

A) levied a tariff on the goods produced by the cheap foreign labor. 
B) subsidized the domestic textile industry so it could compete in international markets. 
C) used its resources to produce other items while importing textiles from foreigners. 
D) levied a tax on the domestic textile products to penalize the industry for inefficiency. 
A) levied a tariff on the goods produced by the cheap foreign labor. 
B) subsidized the domestic textile industry so it could compete in international markets. 
C) used its resources to produce other items while importing textiles from foreigners. 
D) levied a tax on the domestic textile products to penalize the industry for inefficiency.

Question 3

Which of the following is not an argument for adopting trade restrictions on imported goods?

Accepted Answer

A) antidumping argument 
B) national-defense argument 
C) consumer-protection argument 
D) infant-industry argument 
A) antidumping argument 
B) national-defense argument 
C) consumer-protection argument 
D) infant-industry argument

Question 4

Figure 17-10
  
-Refer to Figure 17-10.Consumer surplus with the tariff is

Accepted Answer

A) A. 
B) A + B. 
C) A + C + G. 
D) A + B + C + D +E + F. 
A) A. 
B) A + B. 
C) A + C + G. 
D) A + B + C + D +E + F.

Question 5

"Economists have demonstrated that imports benefit consumers while causing losses to producers,and exports benefit producers while causing losses to consumers.In the balance then,international trade neither benefits nor hurts a nation as a whole." Evaluate this statement.

Accepted Answer

The first part is True,but the conclusio

Question 6

Imposing a restrictive quota on imported plasma TVs will likely

Accepted Answer

A) increase the price of the plasma TVs and decrease the quantity consumed. 
B) increase both the price of the plasma TVs and the quantity consumed. 
C) leave the price of the plasma TVs unchanged but decrease the quantity consumed. 
D) leave the price and the quantity consumed of plasma TVs unchanged,because domestic producers will expand production to make up for the reduction in imports 
A) increase the price of the plasma TVs and decrease the quantity consumed. 
B) increase both the price of the plasma TVs and the quantity consumed. 
C) leave the price of the plasma TVs unchanged but decrease the quantity consumed. 
D) leave the price and the quantity consumed of plasma TVs unchanged,because domestic producers will expand production to make up for the reduction in imports

Question 7

Which of the following provides the foundation of the case for free trade?

Accepted Answer

A) the law of diminishing marginal utility 
B) the anti-dumping argument 
C) the industrial diversity argument 
D) the law of comparative advantage 
A) the law of diminishing marginal utility 
B) the anti-dumping argument 
C) the industrial diversity argument 
D) the law of comparative advantage

Question 8

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

Accepted Answer

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

Question 9

The primary source of purchasing power used to buy imported goods is the

Accepted Answer

A) revenue received from exports. 
B) monetary sector. 
C) balance of payments deficit. 
D) domestic currency of a nation. 
A) revenue received from exports. 
B) monetary sector. 
C) balance of payments deficit. 
D) domestic currency of a nation.

Question 10

Figure 17-8
  
-Refer to Figure 17-8.If this country allows free trade in wagons,

Accepted Answer

A) consumers will gain more than producers will lose. 
B) producers will gain more than consumers will lose. 
C) producers and consumers will both gain equally. 
D) producers and consumers will both lose equally. 
A) consumers will gain more than producers will lose. 
B) producers will gain more than consumers will lose. 
C) producers and consumers will both gain equally. 
D) producers and consumers will both lose equally.

Question 11

In recent years,the largest trading partners of the United States have been

Accepted Answer

A) Germany,France,Spain,and the United Kingdom. 
B) Canada,Mexico,China,and Japan. 
C) Canada,Brazil,Argentina,and Chile. 
D) Russia,Venezuela,Saudi Arabia,and Indonesia. 
A) Germany,France,Spain,and the United Kingdom. 
B) Canada,Mexico,China,and Japan. 
C) Canada,Brazil,Argentina,and Chile. 
D) Russia,Venezuela,Saudi Arabia,and Indonesia.

Question 12

Figure 17-10
  
-Refer to Figure 17-10.With the tariff,the domestic price and domestic quantity demanded are

Accepted Answer

A) P₁ and Q₁. 
B) P₁ and Q₄. 
C) P₂ and Q₂. 
D) P₂ and Q₃. 
A) P₁ and Q₁. 
B) P₁ and Q₄. 
C) P₂ and Q₂. 
D) P₂ and Q₃.

Question 13

Figure 17-10
  
-Refer to Figure 17-10.Consumer surplus with trade and without a tariff is

Accepted Answer

A) A. 
B) A + B. 
C) A + C + G. 
D) A + B + C + D + E + F. 
A) A. 
B) A + B. 
C) A + C + G. 
D) A + B + C + D + E + F.

Question 14

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 15

Hong Kong and Singapore both have relatively

Accepted Answer

A) high trade barriers and high rates of economic growth. 
B) high trade barriers and low rates of economic growth. 
C) low trade barriers and high rates of economic growth. 
D) low trade barriers and low rates of economic growth. 
A) high trade barriers and high rates of economic growth. 
B) high trade barriers and low rates of economic growth. 
C) low trade barriers and high rates of economic growth. 
D) low trade barriers and low rates of economic growth.

Question 16

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 lose 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 consumption of goods in the United States will be reduced. 
A) the United States will lose 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 consumption of goods in the United States will be reduced.

Question 17

What impact will a decrease in the supply of ball-point pens imported to the United States have on the domestic price of ball-point pens? Assume the pens are virtually identical regardless of country of origin.

Accepted Answer

A) The domestic price will fall. 
B) The domestic price will rise. 
C) The domestic price will remain constant. 
D) It is impossible to predict the impact. 
A) The domestic price will fall. 
B) The domestic price will rise. 
C) The domestic price will remain constant. 
D) It is impossible to predict the impact.

Question 18

If a country allows trade and,for a certain good,the domestic price without trade is higher than the world price,

Accepted Answer

A) the country will be an exporter of the good. 
B) the country will be an importer of the good. 
C) the country will be neither an exporter nor an importer of the good. 
D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither. 
A) the country will be an exporter of the good. 
B) the country will be an importer of the good. 
C) the country will be neither an exporter nor an importer of the good. 
D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.

Question 19

Use the table below,which outlines the production possibilities of Qatar and Botswana in wine and wheat,to answer the following question.
 
The law of comparative advantage suggests that

Accepted Answer

A) neither country would gain from trade,even if the costs for transporting the products were zero. 
B) Qatar would not gain from trade because it has an absolute advantage in producing both goods. 
C) both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat. 
D) both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine. 
A) neither country would gain from trade,even if the costs for transporting the products were zero. 
B) Qatar would not gain from trade because it has an absolute advantage in producing both goods. 
C) both countries would gain if Botswana traded wine made in Botswana for Qatar's wheat. 
D) both countries would gain if Botswana traded wheat grown in Botswana for Qatar's wine.

Question 20

Suppose the United States exports cars to France and imports cheese from Switzerland.This situation suggests that

Accepted Answer

A) the United States has a comparative advantage relative to Switzerland in producing cheese,and France has a comparative advantage relative to the United States in producing cars. 
B) the United States has a comparative advantage relative to France in producing cars,and Switzerland has a comparative advantage relative to the United States in producing cheese. 
C) the United States has an absolute advantage relative to Switzerland in producing cheese,and France has an absolute advantage relative to the United States in producing cars. 
D) the United States has an absolute advantage relative to France in producing cars,and Switzerland has an absolute advantage relative to the United States in producing cheese. 
A) the United States has a comparative advantage relative to Switzerland in producing cheese,and France has a comparative advantage relative to the United States in producing cars. 
B) the United States has a comparative advantage relative to France in producing cars,and Switzerland has a comparative advantage relative to the United States in producing cheese. 
C) the United States has an absolute advantage relative to Switzerland in producing cheese,and France has an absolute advantage relative to the United States in producing cars. 
D) the United States has an absolute advantage relative to France in producing cars,and Switzerland has an absolute advantage relative to the United States in producing cheese.

Exam 18: Gaining From International Trade

The argument that import restrictions save jobs and promote prosperity fails to recognize that

If labor-intensive textile products could be produced more cheaply in low-wage countries than in the United States,the United States would gain if it

Which of the following is not an argument for adopting trade restrictions on imported goods?

Figure 17-10 -Refer to Figure 17-10.Consumer surplus with the tariff is

"Economists have demonstrated that imports benefit consumers while causing losses to producers,and exports benefit producers while causing losses to consumers.In the balance then,international trade neither benefits nor hurts a nation as a whole." Evaluate this statement.

Imposing a restrictive quota on imported plasma TVs will likely

Which of the following provides the foundation of the case for free trade?

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

The primary source of purchasing power used to buy imported goods is the

Figure 17-8 -Refer to Figure 17-8.If this country allows free trade in wagons,

In recent years,the largest trading partners of the United States have been

Figure 17-10 -Refer to Figure 17-10.With the tariff,the domestic price and domestic quantity demanded are

Figure 17-10 -Refer to Figure 17-10.Consumer surplus with trade and without a tariff is

A tariff differs from a quota in that a tariff is

Hong Kong and Singapore both have relatively

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

What impact will a decrease in the supply of ball-point pens imported to the United States have on the domestic price of ball-point pens? Assume the pens are virtually identical regardless of country of origin.

If a country allows trade and,for a certain good,the domestic price without trade is higher than the world price,

Use the table below,which outlines the production possibilities of Qatar and Botswana in wine and wheat,to answer the following question. The law of comparative advantage suggests that

Suppose the United States exports cars to France and imports cheese from Switzerland.This situation suggests that

The Economic Approach

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