Question 1

Holding all else constant,an economic expansion in Mexico should decrease the demand for U.S.dollars.

Accepted Answer

A) True 
 B)False

Question 2

Table 19-12
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Swards } & \text { Beltr } & & \text { Svards } & \text { Beltr } \
\hline \text { Estoria } & 100 & 50 && 200 & 0 \
\hline \text { Morocco } & 50 & 40 && 0 & 120 \
\hline
\end{array}$$ 
Estonia and Morocco can produce both swords and belts.Table 19-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.Which country has an absolute advantage in producing swords?

Accepted Answer

A) Estonia 
B) Morocco 
C) both countries 
D) neither country 
A) Estonia 
B) Morocco 
C) both countries 
D) neither country

Question 3

Figure 19-3
   
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 19-3 illustrates the impact of the quota.
-Refer to Figure 19-3.With a quota in place,what is the quantity supplied by domestic producers?

Accepted Answer

A) 16 million pounds 
B) 18 million pounds 
C) 28 million pounds 
D) 34 million pounds 
A) 16 million pounds 
B) 18 million pounds 
C) 28 million pounds 
D) 34 million pounds

Question 4

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

Accepted Answer

A) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and reduces the balance of trade. 
B) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and reduces the balance of trade. 
C) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and increases the balance of trade. 
D) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and increases the balance of trade. 
A) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and reduces the balance of trade. 
B) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and reduces the balance of trade. 
C) A decrease in value of a country's currency relative to other currencies reduces imports, raises exports, and increases the balance of trade. 
D) A decrease in value of a country's currency relative to other currencies raises imports, reduces exports, and increases the balance of trade.

Question 5

Table 19-6
 $$\begin{array} { | l | l | l | } 
\hline & \text { Saddles } & \begin{array} { l } 
\text { Spurs } \
\text { (pairs) }
\end{array} \
\hline \text { Mateo } & 75 & 225 \
\hline \text { Celeste } & 100 & 225 \
\hline
\end{array}$$ 
Mateo and Celeste produce custom saddles and spurs.Table 19-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 19-6.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Celeste has a comparative advantage in making saddles. 
B) Mateo has an absolute advantage in making spurs. 
C) Mateo has a comparative advantage in making saddles. 
D) Mateo has a comparative advantage in making saddles and making spurs. 
A) Celeste has a comparative advantage in making saddles. 
B) Mateo has an absolute advantage in making spurs. 
C) Mateo has a comparative advantage in making saddles. 
D) Mateo has a comparative advantage in making saddles and making spurs.

Question 6

Table 19-11
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Clucks } & \text { Huts } & & \text { Clocks } & \text { Hats } \
\hline \text { Derrnark } & 900 & 150 && 1,200 & 0 \
\hline \text { Belize } & 150 & 100 && 0 & 400 \
\hline
\end{array}$$ 
Denmark and Belize can produce both clocks and hats.Table 19-11 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-11.With trade,what is the total gain in hat production?

Accepted Answer

A) 150 
B) 300 
C) 400 
D) 650 
A) 150 
B) 300 
C) 400 
D) 650

Question 7

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country

Accepted Answer

A) total employment is greater. 
B) total consumption of goods is greater. 
C) wages are higher. 
D) total welfare is greater. 
A) total employment is greater. 
B) total consumption of goods is greater. 
C) wages are higher. 
D) total welfare is greater.

Question 8

Which of the following statements is used to justify protectionism?

Accepted Answer

A) Free trade leads to higher prices for imported goods. 
B) Free trade increases employment by protecting domestic firms. 
C) A country should not rely on other countries for goods that are critical to its national defense. 
D) Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection. 
A) Free trade leads to higher prices for imported goods. 
B) Free trade increases employment by protecting domestic firms. 
C) A country should not rely on other countries for goods that are critical to its national defense. 
D) Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection.

Question 9

Table 19-11
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Clucks } & \text { Huts } & & \text { Clocks } & \text { Hats } \
\hline \text { Derrnark } & 900 & 150 && 1,200 & 0 \
\hline \text { Belize } & 150 & 100 && 0 & 400 \
\hline
\end{array}$$ 
Denmark and Belize can produce both clocks and hats.Table 19-11 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-11.Prior to trade,what was the opportunity cost to produce 1 clock in Belize?

Accepted Answer

A) 1/6 of a hat 
B) 2/3 of a hat 
C) 1.5 hats 
D) 6 hats 
A) 1/6 of a hat 
B) 2/3 of a hat 
C) 1.5 hats 
D) 6 hats

Question 10

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

Accepted Answer

A) Australia also has an absolute advantage in producing surfboards relative to New Zealand. 
B) Australia has a lower opportunity cost of producing surfboards relative to New Zealand. 
C) New Zealand has an absolute disadvantage in producing surfboards relative to Australia. 
D) Labor costs are higher for surfboard producers in New Zealand than in Australia. 
A) Australia also has an absolute advantage in producing surfboards relative to New Zealand. 
B) Australia has a lower opportunity cost of producing surfboards relative to New Zealand. 
C) New Zealand has an absolute disadvantage in producing surfboards relative to Australia. 
D) Labor costs are higher for surfboard producers in New Zealand than in Australia.

Question 11

Table 19-1
 $$\begin{array} { | l | c | c | } 
\hline & \text { Bathing } & \text { Grooming } \
\hline \text { Linda } & 60 & 20 \
\hline \text { Sandy } & 50 & 25 \
\hline
\end{array}$$ 
Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 19-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week.
-Refer to Table 19-1.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Linda has a comparative advantage in dog bathing. 
B) Sandy has an absolute advantage in dog bathing. 
C) Sandy has a comparative advantage in dog bathing. 
D) Linda has a comparative advantage in dog grooming and dog bathing. 
A) Linda has a comparative advantage in dog bathing. 
B) Sandy has an absolute advantage in dog bathing. 
C) Sandy has a comparative advantage in dog bathing. 
D) Linda has a comparative advantage in dog grooming and dog bathing.

Question 12

Table 19-12
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Swards } & \text { Beltr } & & \text { Svards } & \text { Beltr } \
\hline \text { Estoria } & 100 & 50 && 200 & 0 \
\hline \text { Morocco } & 50 & 40 && 0 & 120 \
\hline
\end{array}$$ 
Estonia and Morocco can produce both swords and belts.Table 19-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.Which country has an absolute advantage in producing belts?

Accepted Answer

A) Estonia 
B) Morocco 
C) both countries 
D) neither country 
A) Estonia 
B) Morocco 
C) both countries 
D) neither country

Question 13

In the 1930s the United States charged an average tariff rate

Accepted Answer

A) that was less than its average tariff rate in 2007. 
B) that cut its exports to other countries by 50 percent. 
C) that was less than 2 percent. 
D) that exceeded 50 percent. 
A) that was less than its average tariff rate in 2007. 
B) that cut its exports to other countries by 50 percent. 
C) that was less than 2 percent. 
D) that exceeded 50 percent.

Question 14

Figure 19-10
  
-Refer to Figure 19-10.Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

Accepted Answer

A) Supply would decrease, demand would decrease and the economy moves from B to C to D. 
B) Supply would increase, demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease, demand would increase and the economy moves from A to D to C. 
D) Supply would increase, demand would increase and the economy moves from D to A to B. 
A) Supply would decrease, demand would decrease and the economy moves from B to C to D. 
B) Supply would increase, demand would decrease and the economy moves from C to B to A. 
C) Supply would decrease, demand would increase and the economy moves from A to D to C. 
D) Supply would increase, demand would increase and the economy moves from D to A to B.

Question 15

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Accepted Answer

A) marginal 
B) explicit 
C) opportunity 
D) implicit 
A) marginal 
B) explicit 
C) opportunity 
D) implicit

Question 16

A tariff is a numerical limit on the quantity of a good that can be imported.

Accepted Answer

A) True 
 B)False

Question 17

What is autarky?

Accepted Answer

Autarky is a situati

Question 18

Table 19-12
Production and
Consumption Production
Without Trade With Trade
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline & \text { Swards } & \text { Beltr } & & \text { Svards } & \text { Beltr } \
\hline \text { Estoria } & 100 & 50 && 200 & 0 \
\hline \text { Morocco } & 50 & 40 && 0 & 120 \
\hline
\end{array}$$ 
Estonia and Morocco can produce both swords and belts.Table 19-12 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.Prior to trade,what was the opportunity cost to produce 1 sword in Morocco?

Accepted Answer

A) 1/2 of a belt 
B) 4/5 of a belt 
C) 1.25 belts 
D) 2 belts 
A) 1/2 of a belt 
B) 4/5 of a belt 
C) 1.25 belts 
D) 2 belts

Question 19

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods,effectively acting as a quota of zero imports when stimulus money was being spent.In the market for steel,the "Buy American" provision would ________ the price of steel in the United States and ________ the quantity of steel demanded in the United States.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease

Question 20

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Accepted Answer

A) Bulgaria also has an absolute advantage in producing sandals relative to Finland. 
B) Bulgaria has a lower opportunity cost of producing sandals relative to Finland. 
C) Finland has an absolute disadvantage in producing sandals relative to Bulgaria. 
D) Labor costs are higher for sandal producers in Finland than in Bulgaria. 
A) Bulgaria also has an absolute advantage in producing sandals relative to Finland. 
B) Bulgaria has a lower opportunity cost of producing sandals relative to Finland. 
C) Finland has an absolute disadvantage in producing sandals relative to Bulgaria. 
D) Labor costs are higher for sandal producers in Finland than in Bulgaria.

Holding all else constant,an economic expansion in Mexico should decrease the demand for U.S.dollars.

Figure 19-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 19-3 illustrates the impact of the quota. -Refer to Figure 19-3.With a quota in place,what is the quantity supplied by domestic producers?

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country

Which of the following statements is used to justify protectionism?

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

Table 19-1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 19-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 19-1.Select the statement that accurately interprets the data in the table.

In the 1930s the United States charged an average tariff rate

Figure 19-10 -Refer to Figure 19-10.Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

A tariff is a numerical limit on the quantity of a good that can be imported.

What is autarky?

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters

Exam 19: Comparative Advantage, international Trade, and Exchange Rates

Holding all else constant,an economic expansion in Mexico should decrease the demand for U.S.dollars.

Figure 19-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 19-3 illustrates the impact of the quota. -Refer to Figure 19-3.With a quota in place,what is the quantity supplied by domestic producers?

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

Examples of comparative advantage show how trade between two countries can make each better off.Compared to their pre-trade positions,trade makes both countries better off because in each country

Which of the following statements is used to justify protectionism?

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

Table 19-1 Bathing Grooming Linda 60 20 Sandy 50 25 Linda and Sandy own The Preppy Puppy, a dog grooming business.Table 19-1 lists the number of dogs Linda and Sandy can each bathe and groom in one week. -Refer to Table 19-1.Select the statement that accurately interprets the data in the table.

In the 1930s the United States charged an average tariff rate

Figure 19-10 -Refer to Figure 19-10.Currency speculators believe that the value of the euro will decrease relative to the dollar.Assuming all else remains constant,how would this be represented?

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

A tariff is a numerical limit on the quantity of a good that can be imported.

What is autarky?

Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria.We can conclude that

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Filters