Question 1

The effects of offshore outsourcing from opening up call centres in India are similar to the effects from

Accepted Answer

A) free trade. 
B) tariffs. 
C) import quota. 
D) voluntary export restraints. 
E) export subsidies. 
A) free trade. 
B) tariffs. 
C) import quota. 
D) voluntary export restraints. 
E) export subsidies.

Question 2

Canada exports athletic coaching services and imports computer tech support. The price of athletic coaching services in Canada is ________ with international trade than without international trade. As a result of trade in athletic coaching services, the Canadian producer surplus from athletic coaching services ________.

Accepted Answer

A) higher; does not change 
B) lower; increases 
C) lower; decreases 
D) higher; increases 
E) higher; decreases 
A) higher; does not change 
B) lower; increases 
C) lower; decreases 
D) higher; increases 
E) higher; decreases

Question 3

Refer to the figure below to answer the following questions.
   
Figure 7.3.1
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Canada imposes a tariff on imported shirts of $4 per shirt.
-Refer to Figure 7.3.1. Canadian producers' ________ from the tariff is ________.

Accepted Answer

A) loss; $32 million 
B) loss; $64 million 
C) gain; $80 million 
D) gain; $128 million 
E) gain; $64 million 
A) loss; $32 million 
B) loss; $64 million 
C) gain; $80 million 
D) gain; $128 million 
E) gain; $64 million

Question 4

Which of the following are reasons economists consider valid for trade protection?
I. Protection penalizes countries that have weak environmental standards.
II. Protection limits dumping of low-wage jobs into the domestic economy.
III. Protection prevents low-wage jobs in foreign countries from lowering wages in Canada.

Accepted Answer

A) I and II 
B) II and III 
C) I, II, and III 
D) I and III 
E) None of the above 
A) I and II 
B) II and III 
C) I, II, and III 
D) I and III 
E) None of the above

Question 5

A country opens up to trade. In an import industry, surplus has been redistributed from

Accepted Answer

A) producers to consumers. 
B) consumers to producers. 
C) government to consumers. 
D) producers to government. 
E) government to producers. 
A) producers to consumers. 
B) consumers to producers. 
C) government to consumers. 
D) producers to government. 
E) government to producers.

Question 6

Refer to the figure below to answer the following questions.
   
Figure 7.2.1
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt.
-In Figure 7.2.1, international trade ________ producer surplus in Canada by ________.

Accepted Answer

A) increases; $320 million 
B) decreases; $192 million 
C) increases; $192 million 
D) decreases; $320 million 
E) decreases; $256 million 
A) increases; $320 million 
B) decreases; $192 million 
C) increases; $192 million 
D) decreases; $320 million 
E) decreases; $256 million

Question 7

In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the world. We can conclude that

Accepted Answer

A) Brazil has comparative advantage in coffee production. 
B) Brazil has an absolute advantage in coffee production. 
C) the rest of the world has a comparative advantage in coffee production. 
D) the rest of the world has an absolute advantage in coffee production. 
E) Brazil's government has placed a tariff on coffee. 
A) Brazil has comparative advantage in coffee production. 
B) Brazil has an absolute advantage in coffee production. 
C) the rest of the world has a comparative advantage in coffee production. 
D) the rest of the world has an absolute advantage in coffee production. 
E) Brazil's government has placed a tariff on coffee.

Question 8

The infant industry argument is based on the idea of

Accepted Answer

A) global comparative advantage. 
B) global absolute advantage. 
C) tariff maximization. 
D) learning-by-doing. 
E) tariff minimization. 
A) global comparative advantage. 
B) global absolute advantage. 
C) tariff maximization. 
D) learning-by-doing. 
E) tariff minimization.

Question 9

Refer to the figure below to answer the following question.
   
Figure 7.2.4
-Refer to Figure 7.2.4. The graph shows the demand for shoes in Brazil, DB, the supply of shoes produced in Brazil, SB, and the market equilibrium in Brazil when it does not trade internationally. If the world price of a pair of shoes is $20 and Brazil opens up and trades internationally, producer surplus in Brazil ________ and consumer surplus in Brazil ________.

Accepted Answer

A) increases by area C + D; decreases by area C 
B) increases by area C; decreases by area C and a deadweight loss equal to area D arises 
C) increases by area D; decreases by area D 
D) decreases by area C; increases by area C + D 
E) decreases by area C + D; increases by area C 
A) increases by area C + D; decreases by area C 
B) increases by area C; decreases by area C and a deadweight loss equal to area D arises 
C) increases by area D; decreases by area D 
D) decreases by area C; increases by area C + D 
E) decreases by area C + D; increases by area C

Question 10

Import quotas ________ the price of imported goods and ________ the quantity consumed in the country imposing the quota.

Accepted Answer

A) raise; increase 
B) raise; decrease 
C) lower; increase 
D) lower; decrease 
E) raise; do not change 
A) raise; increase 
B) raise; decrease 
C) lower; increase 
D) lower; decrease 
E) raise; do not change

Question 11

A country opens up to trade and becomes an importer of some good. Consumer surplus ________, and producer surplus ________.

Accepted Answer

A) increases; decreases 
B) decreases; decreases 
C) decreases; increases 
D) increases; increases 
E) increases; does not change 
A) increases; decreases 
B) decreases; decreases 
C) decreases; increases 
D) increases; increases 
E) increases; does not change

Question 12

A tariff is imposed on a good. This ________ the quantity supplied and ________ the quantity demanded in the importing country.

Accepted Answer

A) increases; decreases 
B) increases; does not change 
C) increases; increases 
D) decreases; decreases 
E) decreases; increases 
A) increases; decreases 
B) increases; does not change 
C) increases; increases 
D) decreases; decreases 
E) decreases; increases

Question 13

Refer to the figure below to answer the following questions.
   
Figure 7.3.1
The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. Canada imposes a tariff on imported shirts of $4 per shirt.
-Refer to Figure 7.3.1. The Canadian government's revenue from the tariff is ________.

Accepted Answer

A) $64 million 
B) $32 million 
C) $128 million 
D) $48 million 
E) $480 million 
A) $64 million 
B) $32 million 
C) $128 million 
D) $48 million 
E) $480 million

Question 14

Compared to the situation before international trade, after Canada imports a good, production in Canada ________ and consumption in Canada ________.

Accepted Answer

A) increases; increases 
B) increases; decreases 
C) decreases; increases 
D) decreases; decreases 
E) does not change; increases 
A) increases; increases 
B) increases; decreases 
C) decreases; increases 
D) decreases; decreases 
E) does not change; increases

Question 15

Refer to the figure below to answer the following questions.
   
Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, with international trade, ________ helicopters per year are produced in Canada.

Accepted Answer

A) 360 
B) 480 
C) 720 
D) 240 
E) 600 
A) 360 
B) 480 
C) 720 
D) 240 
E) 600

Question 16

In a market that moves from a situation of no trade to a situation where a good is exported, in the exporting country the price of the good ________, and producer surplus ________.

Accepted Answer

A) rises; increases 
B) falls; decreases 
C) does not change; increases 
D) does not change; decreases 
E) rises; decreases 
A) rises; increases 
B) falls; decreases 
C) does not change; increases 
D) does not change; decreases 
E) rises; decreases

Question 17

Goods and services that we buy from other countries are our

Accepted Answer

A) balance of payments. 
B) exports. 
C) imports. 
D) terms of trade. 
E) comparative goods and services. 
A) balance of payments. 
B) exports. 
C) imports. 
D) terms of trade. 
E) comparative goods and services.

Question 18

Refer to the figure below to answer the following questions.
   
Figure 7.2.2
The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In Figure 7.2.2, international trade ________ producer surplus in Canada by ________.

Accepted Answer

A) decreases; $2.88 billion 
B) decreases; $1.92 billion 
C) increases; $4.8 billion 
D) increases; $3.6 billion 
E) decreases; $4.8 billion 
A) decreases; $2.88 billion 
B) decreases; $1.92 billion 
C) increases; $4.8 billion 
D) increases; $3.6 billion 
E) decreases; $4.8 billion

Question 19

Use the information below to answer the following questions.
Fact 7.3.1
Before 1995, trade between Canada and Mexico was subject to tariffs. In 1995, Mexico joined NAFTA and all Canadian and Mexican tariffs have gradually been removed.
-Refer to Fact 7.3.1. When Canadian tariffs are removed from a good, Canadian consumers of the good ________, and Canadian producers of the good ________.

Accepted Answer

A) gain; lose 
B) gain; gain 
C) lose; gain 
D) lose; lose 
E) and the Canadian government gain; lose 
A) gain; lose 
B) gain; gain 
C) lose; gain 
D) lose; lose 
E) and the Canadian government gain; lose

Question 20

The winners from a tariff on imports are

Accepted Answer

A) producers and government. 
B) producers only. 
C) consumers only. 
D) consumers, producers, and government. 
E) government only. 
A) producers and government. 
B) producers only. 
C) consumers only. 
D) consumers, producers, and government. 
E) government only.

Exam 7: Global Markets in Action

The effects of offshore outsourcing from opening up call centres in India are similar to the effects from

A country opens up to trade. In an import industry, surplus has been redistributed from

In one year, Brazil exported more than 1.8 billion kilograms of coffee to the rest of the world. We can conclude that

The infant industry argument is based on the idea of

Import quotas ________ the price of imported goods and ________ the quantity consumed in the country imposing the quota.

A country opens up to trade and becomes an importer of some good. Consumer surplus ________, and producer surplus ________.

A tariff is imposed on a good. This ________ the quantity supplied and ________ the quantity demanded in the importing country.

Compared to the situation before international trade, after Canada imports a good, production in Canada ________ and consumption in Canada ________.

In a market that moves from a situation of no trade to a situation where a good is exported, in the exporting country the price of the good ________, and producer surplus ________.

Goods and services that we buy from other countries are our

The winners from a tariff on imports are

What Is Economics

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Macro Only: International Trade Policy

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Import quotas the price of imported goods and the quantity consumed in the country imposing the quota.

A country opens up to trade and becomes an importer of some good. Consumer surplus , and producer surplus .

A tariff is imposed on a good. This the quantity supplied and the quantity demanded in the importing country.

Compared to the situation before international trade, after Canada imports a good, production in Canada and consumption in Canada .

In a market that moves from a situation of no trade to a situation where a good is exported, in the exporting country the price of the good , and producer surplus .