Question 1

Data on trade barriers,income levels,and the growth of per capita GDP indicate that

Accepted Answer

A) there is no link between trade restrictions and either the per capita income levels or growth rates of economies. 
B) countries that impose high trade restrictions have both high income levels and rapid rates of economic growth. 
C) countries that impose high trade restrictions have low income levels,but they have been growing rapidly in recent decades. 
D) countries that have lower trade restrictions have both higher income levels and more rapid rates of economic growth than those with high trade barriers. 
A) there is no link between trade restrictions and either the per capita income levels or growth rates of economies. 
B) countries that impose high trade restrictions have both high income levels and rapid rates of economic growth. 
C) countries that impose high trade restrictions have low income levels,but they have been growing rapidly in recent decades. 
D) countries that have lower trade restrictions have both higher income levels and more rapid rates of economic growth than those with high trade barriers.

Question 2

"Trade restrictions will stop foreign imports,which will increase American employment and protect American jobs." Most economists realize this argument is wrong.Can you explain why?

Accepted Answer

Trade restrictions will stop foreign imp

Question 3

The table outlines the production possibilities of Italia and Slavia for food and clothing.Use it to answer the following question(s).
Table 17-1
  
-Refer to Table 17-1.Which of the following is true?

Accepted Answer

A) Italia has the comparative advantage in producing food. 
B) Italia has the comparative advantage in producing clothing. 
C) Slavia has the comparative advantage in producing clothing. 
D) Slavia is the low opportunity-cost producer of clothing. 
A) Italia has the comparative advantage in producing food. 
B) Italia has the comparative advantage in producing clothing. 
C) Slavia has the comparative advantage in producing clothing. 
D) Slavia is the low opportunity-cost producer of clothing.

Question 4

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 the United States import?

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

Question 5

Figure 17-9
  
-Refer to Figure 17-9.The imposition of a tariff on carnations

Accepted Answer

A) increases the number of carnations imported by 100. 
B) increases the number of carnations imported by 200. 
C) decreases the number of carnations imported by 200. 
D) decreases the number of carnations imported by 400. 
A) increases the number of carnations imported by 100. 
B) increases the number of carnations imported by 200. 
C) decreases the number of carnations imported by 200. 
D) decreases the number of carnations imported by 400.

Question 6

When a country fixes the price of foreign exchange (in terms of the domestic currency)below equilibrium,which of the following will result?

Accepted Answer

A) A black market will develop for foreign exchange. 
B) Residents of that country can buy as much foreign currency as they want. 
C) There will be a surplus of foreign exchange. 
D) A depreciation of the currency will restore equilibrium in the foreign exchange market. 
A) A black market will develop for foreign exchange. 
B) Residents of that country can buy as much foreign currency as they want. 
C) There will be a surplus of foreign exchange. 
D) A depreciation of the currency will restore equilibrium in the foreign exchange market.

Question 7

Figure 17-12
  
-If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00,the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

Accepted Answer

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

Question 8

Figure 17-9
  
-Refer to Figure 17-9.With trade and without a tariff,

Accepted Answer

A) the domestic price is equal to the world price. 
B) carnations are sold at $8 in this market. 
C) there is a shortage of 400 carnations in this market. 
D) this country imports 200 carnations. 
A) the domestic price is equal to the world price. 
B) carnations are sold at $8 in this market. 
C) there is a shortage of 400 carnations in this market. 
D) this country imports 200 carnations.

Question 9

Figure 17-10
  
-Refer to Figure 17-10.The amount of government revenue created by the tariff is

Accepted Answer

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

Question 10

Trade restrictions that limit the sale of low-price foreign goods in the U.S.market

Accepted Answer

A) increase the real income of Americans. 
B) benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries. 
C) help channel more of our resources into producing goods for which we are a low-cost producer. 
D) reduce unemployment and increase the productivity of American workers. 
A) increase the real income of Americans. 
B) benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries. 
C) help channel more of our resources into producing goods for which we are a low-cost producer. 
D) reduce unemployment and increase the productivity of American workers.

Question 11

A nation can gain from international trade when

Accepted Answer

A) its relative production costs are the same as those of other countries. 
B) it exports goods for which it is a low-opportunity cost producer while importing goods that it could produce only at a high opportunity cost. 
C) it imports goods for which it is a low-opportunity cost producer and exports goods for which it is a high opportunity cost producer. 
D) it has a trade deficit. 
A) its relative production costs are the same as those of other countries. 
B) it exports goods for which it is a low-opportunity cost producer while importing goods that it could produce only at a high opportunity cost. 
C) it imports goods for which it is a low-opportunity cost producer and exports goods for which it is a high opportunity cost producer. 
D) it has a trade deficit.

Question 12

Use the table below to answer the following question.The table outlines the production possibilities of Slavia and Italia for food and clothing.
 
Which of the following is true?

Accepted Answer

A) Italia has a comparative advantage in producing both food and clothing. 
B) Italia is the low-opportunity cost producer of clothing. 
C) Slavia is the low-opportunity cost producer of food. 
D) Italia has a comparative advantage in producing food. 
A) Italia has a comparative advantage in producing both food and clothing. 
B) Italia is the low-opportunity cost producer of clothing. 
C) Slavia is the low-opportunity cost producer of food. 
D) Italia has a comparative advantage in producing food.

Question 13

Large quantities of many products produced in the United States are exported to purchasers in other countries.Exports account for the largest share of which one of the following products produced in the United States?

Accepted Answer

A) shoes 
B) civilian aircraft 
C) radio and television sets 
D) petroleum 
A) shoes 
B) civilian aircraft 
C) radio and television sets 
D) petroleum

Question 14

Over the five decades of GATT's existence,the average tariff rate of its members

Accepted Answer

A) fell from approximately 40 percent to less than 5 percent. 
B) fell from approximately 70 percent to less than 40 percent. 
C) rose from less than 5 percent to approximately 40 percent. 
D) rose from less than 40 percent to approximately 70 percent. 
A) fell from approximately 40 percent to less than 5 percent. 
B) fell from approximately 70 percent to less than 40 percent. 
C) rose from less than 5 percent to approximately 40 percent. 
D) rose from less than 40 percent to approximately 70 percent.

Question 15

Figure 17-8
  
-Refer to Figure 17-8.The horizontal line at the world price of wagons represents the

Accepted Answer

A) demand for wagons from the rest of the world. 
B) supply of wagons from the rest of the world. 
C) level of inefficiency in the domestic market caused by trade. 
D) surplus in the domestic wagon market. 
A) demand for wagons from the rest of the world. 
B) supply of wagons from the rest of the world. 
C) level of inefficiency in the domestic market caused by trade. 
D) surplus in the domestic wagon market.

Question 16

Data on trade barriers and the growth of per capita GDP indicate that

Accepted Answer

A) there is no link between the degree of a country's trade openness and its economic growth. 
B) more open economies have grown more rapidly than those that have imposed substantial barriers restricting trade. 
C) economies that have imposed high trade barriers have,on average,grown more rapidly than economies that are more open to international trade. 
D) countries with higher trade barriers have been able to achieve higher levels of per capita GDP than those that are more open to international trade. 
E) both c and d are correct. 
A) there is no link between the degree of a country's trade openness and its economic growth. 
B) more open economies have grown more rapidly than those that have imposed substantial barriers restricting trade. 
C) economies that have imposed high trade barriers have,on average,grown more rapidly than economies that are more open to international trade. 
D) countries with higher trade barriers have been able to achieve higher levels of per capita GDP than those that are more open to international trade. 
E) both c and d are correct.

Question 17

Suppose that in the absence of trade,the U.S.price for peas was lower than the world price for peas.Would allowing international trade mean that the United States would import or export peas? Who in the United States would benefit and who would lose with a free trade policy,and would the gains be greater than the losses?

Accepted Answer

The United States would export peas as p

Question 18

An increase in the tariff on foreign-produced automobiles would most likely help

Accepted Answer

A) the domestic producers of automobiles. 
B) steel producers that sell most of their output to foreign producers of automobiles. 
C) workers in the foreign automobile industry. 
D) consumers looking for alternatives to domestic automobiles. 
A) the domestic producers of automobiles. 
B) steel producers that sell most of their output to foreign producers of automobiles. 
C) workers in the foreign automobile industry. 
D) consumers looking for alternatives to domestic automobiles.

Question 19

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

Accepted Answer

A) lower the standard of living in both countries. 
B) raise the standard of living in both countries. 
C) raise the standard of living in the "expensive labor" country and lower the standard of living in the "cheap labor" country. 
D) raise the standard of living in the "cheap labor" country and lower the standard of living in the "expensive labor" country. 
A) lower the standard of living in both countries. 
B) raise the standard of living in both countries. 
C) raise the standard of living in the "expensive labor" country and lower the standard of living in the "cheap labor" country. 
D) raise the standard of living in the "cheap labor" country and lower the standard of living in the "expensive labor" country.

Question 20

Figure 17-4
  
-In Figure 17-4,the equilibrium price of Dominican pesos is Pₑ.If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at Pf (below equilibrium),what does the quantity Qd through Qs represent?

Accepted Answer

A) the quantity of Dominican exports 
B) a shortage of foreign exchange 
C) the quantity of Dominican imports 
D) a surplus of foreign exchange 
A) the quantity of Dominican exports 
B) a shortage of foreign exchange 
C) the quantity of Dominican imports 
D) a surplus of foreign exchange

Exam 18: Gaining From International Trade

Data on trade barriers,income levels,and the growth of per capita GDP indicate that

"Trade restrictions will stop foreign imports,which will increase American employment and protect American jobs." Most economists realize this argument is wrong.Can you explain why?

The table outlines the production possibilities of Italia and Slavia for food and clothing.Use it to answer the following question(s). Table 17-1 -Refer to Table 17-1.Which of the following is true?

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 the United States import?

Figure 17-9 -Refer to Figure 17-9.The imposition of a tariff on carnations

When a country fixes the price of foreign exchange (in terms of the domestic currency)below equilibrium,which of the following will result?

Figure 17-12 -If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00,the loss of consumer surplus as a result of a tariff of $0.50 per unit is represented by area

Figure 17-9 -Refer to Figure 17-9.With trade and without a tariff,

Figure 17-10 -Refer to Figure 17-10.The amount of government revenue created by the tariff is

Trade restrictions that limit the sale of low-price foreign goods in the U.S.market

A nation can gain from international trade when

Use the table below to answer the following question.The table outlines the production possibilities of Slavia and Italia for food and clothing. Which of the following is true?

Large quantities of many products produced in the United States are exported to purchasers in other countries.Exports account for the largest share of which one of the following products produced in the United States?

Over the five decades of GATT's existence,the average tariff rate of its members

Figure 17-8 -Refer to Figure 17-8.The horizontal line at the world price of wagons represents the

Data on trade barriers and the growth of per capita GDP indicate that

An increase in the tariff on foreign-produced automobiles would most likely help

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

Figure 17-4 -In Figure 17-4,the equilibrium price of Dominican pesos is Pₑ.If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at Pf (below equilibrium),what does the quantity Qd through Qs represent?

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

Filters