Question 1

Usually the removal of trade barriers affecting a particular good benefits ________ people domestically, each of whom gains a ________.

Accepted Answer

A) a few; little 
B) a few; lot 
C) many; little 
D) many; lot 
E) We can't determine the relative benefits from the removal of trade barriers. 
A) a few; little 
B) a few; lot 
C) many; little 
D) many; lot 
E) We can't determine the relative benefits from the removal of trade barriers.

Question 2

Which of the following statements is true?

Accepted Answer

A) International trade raises wages in developing countries. 
B) International trade with rich industrial countries forces people in the developing countries to work for lower wages. 
C) International trade leads to job losses in both import competing industries and exporting industries. 
D) Unlike other types of international trade, offshore outsourcing does not bring any gains from trade. 
E) International trade encourages lax environmental standards. 
A) International trade raises wages in developing countries. 
B) International trade with rich industrial countries forces people in the developing countries to work for lower wages. 
C) International trade leads to job losses in both import competing industries and exporting industries. 
D) Unlike other types of international trade, offshore outsourcing does not bring any gains from trade. 
E) International trade encourages lax environmental standards.

Question 3

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 ________ total surplus in Canada by ________.

Accepted Answer

A) decreases; $2.56 billion 
B) increases; $4.8 billion 
C) decreases; $3.6 billion 
D) decreases; $1.92 billion 
E) increases; $1.92 billion 
A) decreases; $2.56 billion 
B) increases; $4.8 billion 
C) decreases; $3.6 billion 
D) decreases; $1.92 billion 
E) increases; $1.92 billion

Question 4

Use the information below to answer the following questions.
Fact 7.3.2
With free trade between Australia and Canada, Australia would export beef to Canada. But Canada imposes an import quota on Australian beef.
-Refer to Fact 7.3.2. Canadian gains from trade will ________ and Australian gains from trade will ________.

Accepted Answer

A) increase; decrease 
B) decrease; decrease 
C) decrease; increase 
D) increase; increase 
E) not change; not change 
A) increase; decrease 
B) decrease; decrease 
C) decrease; increase 
D) increase; increase 
E) not change; not change

Question 5

Table 7.1.1
Glazeland's Doughnut Market
  
-Table 7.1.1 shows Glazeland's doughnut market before international trade. Glazeland opens up to international trade. If the world price is $0.40 a doughnut then Glazeland will produce ________ doughnuts and will ________ doughnuts.

Accepted Answer

A) 3 million; import 3 million 
B) 3 million; export 3 million 
C) 4 million; import 1 million 
D) 4 million; export 1 million 
E) 6 million; export 3 million 
A) 3 million; import 3 million 
B) 3 million; export 3 million 
C) 4 million; import 1 million 
D) 4 million; export 1 million 
E) 6 million; export 3 million

Question 6

Table 7.2.2
  
-Table 7.2.2 shows a country's demand and supply schedules. Based on Table 7.2.2, at what world price would the country export?

Accepted Answer

A) at only $8 a unit 
B) any price below $8 
C) a price of $6 a unit 
D) a price of $4 a unit 
E) any price above $8 a unit 
A) at only $8 a unit 
B) any price below $8 
C) a price of $6 a unit 
D) a price of $4 a unit 
E) any price above $8 a unit

Question 7

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 ________ consumer surplus in Canada by ________.

Accepted Answer

A) increases; $320 million 
B) decreases; $192 million 
C) increases; $192 million 
D) decreases; $320 million 
E) increases; $576 million 
A) increases; $320 million 
B) decreases; $192 million 
C) increases; $192 million 
D) decreases; $320 million 
E) increases; $576 million

Question 8

A tariff is imposed on imports. Surplus will be redistributed from

Accepted Answer

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

Question 9

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 consumers' ________ from the tariff is ________.

Accepted Answer

A) loss; $176 million 
B) gain; $64 million 
C) loss; $80 million 
D) gain; $128 million 
E) gain; $176 million 
A) loss; $176 million 
B) gain; $64 million 
C) loss; $80 million 
D) gain; $128 million 
E) gain; $176 million

Question 10

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's coffee producers lose from this trade. 
B) coffee consumers in the rest of the world lose from this trade. 
C) Brazil's coffee consumers lose from this trade. 
D) coffee producers in the rest of the world gain from this trade. 
E) the deadweight loss in Brazil's coffee market is large and growing. 
A) Brazil's coffee producers lose from this trade. 
B) coffee consumers in the rest of the world lose from this trade. 
C) Brazil's coffee consumers lose from this trade. 
D) coffee producers in the rest of the world gain from this trade. 
E) the deadweight loss in Brazil's coffee market is large and growing.

Question 11

Canada's producer surplus ________ when Canada imports a good, and Canada's producer surplus ________ when Canada exports a good.

Accepted Answer

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

Question 12

Which of the following is a Canadian service export?

Accepted Answer

A) a Canadian buys dinner while travelling in Switzerland 
B) a Swiss buys dinner while travelling in Canada 
C) a Canadian buys a clock made in Switzerland 
D) a Swiss buys a computer made in Canada 
E) a Canadian buys a Canadian computer in Switzerland 
A) a Canadian buys dinner while travelling in Switzerland 
B) a Swiss buys dinner while travelling in Canada 
C) a Canadian buys a clock made in Switzerland 
D) a Swiss buys a computer made in Canada 
E) a Canadian buys a Canadian computer in Switzerland

Question 13

If Canada imposes a tariff on imported steel, the tariff

Accepted Answer

A) raises the Canadian price of imported steel. 
B) decreases the Canadian production of steel. 
C) increases the total Canadian consumption of steel. 
D) decreases employment in the Canadian steel industry. 
E) increases Canadian consumer surplus. 
A) raises the Canadian price of imported steel. 
B) decreases the Canadian production of steel. 
C) increases the total Canadian consumption of steel. 
D) decreases employment in the Canadian steel industry. 
E) increases Canadian consumer surplus.

Question 14

When considering rent seeking, which of the following is true?

Accepted Answer

A) The anti-free trade group generally will lobby more than the pro-free trade group. 
B) The pro-free trade group generally will lobby more than the anti-free trade group. 
C) Usually only the anti-free trade group is concerned about what is best for society at large. 
D) Only the pro-free trade group is concerned about the government's revenue from tariffs. 
E) Rent seeking is the primary reason why consumers gain from free trade. 
A) The anti-free trade group generally will lobby more than the pro-free trade group. 
B) The pro-free trade group generally will lobby more than the anti-free trade group. 
C) Usually only the anti-free trade group is concerned about what is best for society at large. 
D) Only the pro-free trade group is concerned about the government's revenue from tariffs. 
E) Rent seeking is the primary reason why consumers gain from free trade.

Question 15

A Canadian tariff imposed on items that can be produced more cheaply abroad

Accepted Answer

A) benefits Canadians by making these goods cheaper. 
B) makes the goods more expensive in foreign markets. 
C) creates a deadweight loss. 
D) equalizes the cost of production between Canada and foreign producers. 
E) increases total surplus. 
A) benefits Canadians by making these goods cheaper. 
B) makes the goods more expensive in foreign markets. 
C) creates a deadweight loss. 
D) equalizes the cost of production between Canada and foreign producers. 
E) increases total surplus.

Question 16

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

Accepted Answer

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

Question 17

Choose the statement that is incorrect.

Accepted Answer

A) Gains from trade do not bring gains for every single person. 
B) Canadians, on average, gain from offshore outsourcing. 
C) The losers from offshore outsourcing are those who have invested in the human capital to do a specific job that has now gone offshore. 
D) The costs from offshore outsourcing outweigh the gains. 
E) Offshore outsourcing brings gains from trade identical to those of any other type of trade. 
A) Gains from trade do not bring gains for every single person. 
B) Canadians, on average, gain from offshore outsourcing. 
C) The losers from offshore outsourcing are those who have invested in the human capital to do a specific job that has now gone offshore. 
D) The costs from offshore outsourcing outweigh the gains. 
E) Offshore outsourcing brings gains from trade identical to those of any other type of trade.

Question 18

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 tariff ________ Canada's imports of shirts by ________ million shirts per year.

Accepted Answer

A) decreases; 16 
B) decreases; 8 
C) increases; 8 
D) increases; 4 
E) increases; 16 
A) decreases; 16 
B) decreases; 8 
C) increases; 8 
D) increases; 4 
E) increases; 16

Question 19

A key difference between tariffs and import quotas is that

Accepted Answer

A) consumers are hurt with import quotas but not with tariffs. 
B) consumers are hurt with tariffs but not with import quotas. 
C) the government receives revenue with a tariff, but the importer makes a profit with an import quota. 
D) the government receives revenue with an import quota, but the importer makes a profit with a tariff. 
E) producer surplus increases with a tariff and decreases with an import quota. 
A) consumers are hurt with import quotas but not with tariffs. 
B) consumers are hurt with tariffs but not with import quotas. 
C) the government receives revenue with a tariff, but the importer makes a profit with an import quota. 
D) the government receives revenue with an import quota, but the importer makes a profit with a tariff. 
E) producer surplus increases with a tariff and decreases with an import quota.

Question 20

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. With the tariff, Canada imports ________ million shirts per year.

Accepted Answer

A) 24 
B) 8 
C) 32 
D) 16 
E) 40 
A) 24 
B) 8 
C) 32 
D) 16 
E) 40

Exam 7: Global Markets in Action

Usually the removal of trade barriers affecting a particular good benefits ________ people domestically, each of whom gains a ________.

Which of the following statements is true?

Table 7.1.1 Glazeland's Doughnut Market -Table 7.1.1 shows Glazeland's doughnut market before international trade. Glazeland opens up to international trade. If the world price is $0.40 a doughnut then Glazeland will produce ________ doughnuts and will ________ doughnuts.

Table 7.2.2 -Table 7.2.2 shows a country's demand and supply schedules. Based on Table 7.2.2, at what world price would the country export?

A tariff is imposed on imports. Surplus will be 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

Canada's producer surplus ________ when Canada imports a good, and Canada's producer surplus ________ when Canada exports a good.

Which of the following is a Canadian service export?

If Canada imposes a tariff on imported steel, the tariff

When considering rent seeking, which of the following is true?

A Canadian tariff imposed on items that can be produced more cheaply abroad

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

Choose the statement that is incorrect.

A key difference between tariffs and import quotas is that

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments Actions in Markets

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Usually the removal of trade barriers affecting a particular good benefits people domestically, each of whom gains a .

Table 7.1.1 Glazeland's Doughnut Market -Table 7.1.1 shows Glazeland's doughnut market before international trade. Glazeland opens up to international trade. If the world price is $0.40 a doughnut then Glazeland will produce doughnuts and will doughnuts.

Canada's producer surplus when Canada imports a good, and Canada's producer surplus when Canada exports a good.

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