Question 1

Which of the following positions would a mercantilist support?

Accepted Answer

A) Trade in manufacturing goods is good for the US. 
B) Imports to the U.S.from Japan are beneficial to the U.S. 
C) Exports from Japan to the U.K.are beneficial to Japan. 
D) Movement of labor from UK to US is beneficial to US. 
A) Trade in manufacturing goods is good for the US. 
B) Imports to the U.S.from Japan are beneficial to the U.S. 
C) Exports from Japan to the U.K.are beneficial to Japan. 
D) Movement of labor from UK to US is beneficial to US.

Question 2

In the past, when the United States enjoyed a continuing trade surplus, wages in the United States

Accepted Answer

A) were much lower than wages in countries that imported U.S.products. 
B) were much higher than wages in countries that imported U.S.products. 
C) were roughly the same as wages in countries that imported U.S.products. 
D) fell throughout that period, enabling the continuing trade surplus. 
E) rose throughout that period, ending the trade surplus. 
A) were much lower than wages in countries that imported U.S.products. 
B) were much higher than wages in countries that imported U.S.products. 
C) were roughly the same as wages in countries that imported U.S.products. 
D) fell throughout that period, enabling the continuing trade surplus. 
E) rose throughout that period, ending the trade surplus.

Question 3

Comparative advantage is the rule that ordinarily prevents a nation from independently producing all of the goods it requires.

Accepted Answer

A) True 
 B)False

Question 4

Figure 22-9
  
-In Figure 22-9, Pestoland exports pasta to Pastaland.Equilibrium will occur when

Accepted Answer

A) points E and B are reached simultaneously. 
B) either E or B is reached. 
C) exports equal imports. 
D) exports are maximized. 
A) points E and B are reached simultaneously. 
B) either E or B is reached. 
C) exports equal imports. 
D) exports are maximized.

Question 5

Figure 22-9
  
-In Figure 22-9, Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

Accepted Answer

A) OC 
B) OJ 
C) OA 
D) OK 
A) OC 
B) OJ 
C) OA 
D) OK

Question 6

If nations begin to specialize in production for the purpose of trade,

Accepted Answer

A) the utility from consumption will increase, but not the total output. 
B) total world output will increase, as well as well being from consumption. 
C) total world output will increase, but well being from consumption will not. 
D) neither total output nor well being from consumption will change. 
E) the impact on total output and well being cannot be predicted. 
A) the utility from consumption will increase, but not the total output. 
B) total world output will increase, as well as well being from consumption. 
C) total world output will increase, but well being from consumption will not. 
D) neither total output nor well being from consumption will change. 
E) the impact on total output and well being cannot be predicted.

Question 7

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively, it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

Accepted Answer

The United States has the lower opportun

Question 8

Figure 22-7
  
-In Figure 22-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

Accepted Answer

A) pasta because OA/OB < OC/OD. 
B) pesto because OA/OB < OC/OD. 
C) pasta because OA/OB OC/OD. 
D) pesto because OA/OB OC/OD. 
A) pasta because OA/OB < OC/OD. 
B) pesto because OA/OB < OC/OD. 
C) pasta because OA/OB OC/OD. 
D) pesto because OA/OB OC/OD.

Question 9

If a nation has "cheap labor,"

Accepted Answer

A) it can still benefit from trade. 
B) other nations can still compete with it. 
C) it cannot have a comparative advantage in everything. 
D) All of the above are true. 
A) it can still benefit from trade. 
B) other nations can still compete with it. 
C) it cannot have a comparative advantage in everything. 
D) All of the above are true.

Question 10

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Accepted Answer

A) True 
 B)False

Question 11

Trade adjustment assistance in the United States began in 1962.The program

Accepted Answer

A) was designed to provide assistance to firms or workers who suffer idle facilities, unprofitability, and unemployment because of sharp increases in imports. 
B) provided little assistance to victims of free trade before the 1970s. 
C) was enlarged and worker benefits were extended in 1981 by the Reagan administration. 
D) All of the above are correct. 
A) was designed to provide assistance to firms or workers who suffer idle facilities, unprofitability, and unemployment because of sharp increases in imports. 
B) provided little assistance to victims of free trade before the 1970s. 
C) was enlarged and worker benefits were extended in 1981 by the Reagan administration. 
D) All of the above are correct.

Question 12

When can a country gain a price advantage on imports by imposing a tariff?

Accepted Answer

A) when it is the largest country with absolute advantage in all goods 
B) when it has a comparative advantage in the production of all goods 
C) when it can do so without other countries retaliating with tariffs 
D) when trade agreements prohibit quotas but permit tariffs 
A) when it is the largest country with absolute advantage in all goods 
B) when it has a comparative advantage in the production of all goods 
C) when it can do so without other countries retaliating with tariffs 
D) when trade agreements prohibit quotas but permit tariffs

Question 13

After the American Civil War, many prominent Southerners lamented the fact that the South "overproduced" cotton and "underproduced" food.In fact, the South did import a very large percentage of its food.Nevertheless, rather than reduce cotton production and grow more food, Southern farmers did the opposite because

Accepted Answer

A) they were irrational and distraught over the loss of slavery. 
B) the South had a comparative advantage in cotton production. 
C) the North had a comparative advantage in cotton production. 
D) corn was absolutely cheaper to produce in the North. 
A) they were irrational and distraught over the loss of slavery. 
B) the South had a comparative advantage in cotton production. 
C) the North had a comparative advantage in cotton production. 
D) corn was absolutely cheaper to produce in the North.

Question 14

Political factors influence international trade because

Accepted Answer

A) foreign trade always involves at least two governments. 
B) foreign governments are much less concerned with the welfare of citizens in other countries. 
C) foreign governments often establish impediments to free international trade. 
D) All of the above are correct. 
A) foreign trade always involves at least two governments. 
B) foreign governments are much less concerned with the welfare of citizens in other countries. 
C) foreign governments often establish impediments to free international trade. 
D) All of the above are correct.

Question 15

Specialization permits larger outputs and offers economies of large-scale production.

Accepted Answer

A) True 
 B)False

Question 16

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

Accepted Answer

A) True 
 B)False

Question 17

A quota ordinarily specifies both minimum and maximum amounts of goods that can come into a country.

Accepted Answer

A) True 
 B)False

Question 18

-Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If the United States and Japan decide to trade with each other, what will happen to the output of television sets in Japan?

Accepted Answer

A) TV production in Japan will fall by 10,000 units. 
B) TV production in Japan will fall by 20,000 units. 
C) TV production in Japan will fall by 30,000 units. 
D) TV production in Japan will increase by 10,000 units. 
A) TV production in Japan will fall by 10,000 units. 
B) TV production in Japan will fall by 20,000 units. 
C) TV production in Japan will fall by 30,000 units. 
D) TV production in Japan will increase by 10,000 units.

Question 19

The effect of an import quota is to

Accepted Answer

A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports. 
A) raise the price and reduce the quantity of imports. 
B) raise the price and the quantity of imports. 
C) lower the price and the quantity of imports. 
D) raise the quantity and reduce the price of imports.

Question 20

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

Accepted Answer

A) remain unchanged in that nation. 
B) rise and then fall below where it was originally. 
C) rise in that nation. 
D) drop in that nation. 
A) remain unchanged in that nation. 
B) rise and then fall below where it was originally. 
C) rise in that nation. 
D) drop in that nation.

Exam 35: International Trade and Comparative Advantage

Which of the following positions would a mercantilist support?

In the past, when the United States enjoyed a continuing trade surplus, wages in the United States

Comparative advantage is the rule that ordinarily prevents a nation from independently producing all of the goods it requires.

Figure 22-9 -In Figure 22-9, Pestoland exports pasta to Pastaland.Equilibrium will occur when

Figure 22-9 -In Figure 22-9, Pestoland exports pasta to Pastaland.The equilibrium price of pasta will be

If nations begin to specialize in production for the purpose of trade,

The United States can produce 1,000 shoes if it specializes in shoe production.Alternatively, it can produce 500 shirts.Taiwan can produce 500 shoes or 200 shirts.Explain which country will specialize in shoe production and which in shirt production.What are the possible terms of trade?

Figure 22-7 -In Figure 22-7, AB represents the production possibilities of Pestoland and CD that of Pastaland.In this graph, Pestoland has a comparative advantage in

If a nation has "cheap labor,"

The quantity supplied by domestic producers in an importing country must be less than the quantity demanded by its population.

Trade adjustment assistance in the United States began in 1962.The program

When can a country gain a price advantage on imports by imposing a tariff?

Political factors influence international trade because

Specialization permits larger outputs and offers economies of large-scale production.

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

A quota ordinarily specifies both minimum and maximum amounts of goods that can come into a country.

-Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States.If the United States and Japan decide to trade with each other, what will happen to the output of television sets in Japan?

The effect of an import quota is to

If a country begins to import more of a commodity, one can normally expect the price of the commodity to

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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