Question 1

A tariff ________ a deadweight loss and an import quota ________ a deadweight loss.

Accepted Answer

A) creates; creates 
B) does not create; creates 
C) creates; does not create 
D) does not create; does not create 
E) sometimes creates; always creates 
A) creates; creates 
B) does not create; creates 
C) creates; does not create 
D) does not create; does not create 
E) sometimes creates; always creates

Question 2

The introduction of a tariff ________ consumer surplus and ________ total surplus.

Accepted Answer

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

Question 3

The fundamental force that drives international trade is

Accepted Answer

A) absolute advantage. 
B) importation duties. 
C) the advantage of execution. 
D) export advantage. 
E) comparative advantage. 
A) absolute advantage. 
B) importation duties. 
C) the advantage of execution. 
D) export advantage. 
E) comparative advantage.

Question 4

In developing countries, there is more reliance on ________ as opposed to ________ for government revenue.

Accepted Answer

A) tariffs; tax collection 
B) import quotas; tariffs 
C) tax collection; tariffs 
D) tariffs; import quotas 
E) import quotas; tax collection 
A) tariffs; tax collection 
B) import quotas; tariffs 
C) tax collection; tariffs 
D) tariffs; import quotas 
E) import quotas; tax collection

Question 5

Choose the statement that is incorrect.

Accepted Answer

A) Free trade destroys some jobs. 
B) Imports create jobs for retailers that sell imported goods and for firms that service those goods. 
C) Imports create income in the rest of the world, some of which is spent on Canadian-made goods and services. 
D) Free trade brings about a global rationalization of labour. 
E) Protection saves jobs at a low cost. 
A) Free trade destroys some jobs. 
B) Imports create jobs for retailers that sell imported goods and for firms that service those goods. 
C) Imports create income in the rest of the world, some of which is spent on Canadian-made goods and services. 
D) Free trade brings about a global rationalization of labour. 
E) Protection saves jobs at a low cost.

Question 6

In poorer countries, free trade ________ the demand for labour in these countries and ________ the wages paid in these countries.

Accepted Answer

A) decreases; lowers 
B) decreases; raises 
C) increases; lowers 
D) increases; raises 
E) increases the supply and decreases; lowers 
A) decreases; lowers 
B) decreases; raises 
C) increases; lowers 
D) increases; raises 
E) increases the supply and decreases; lowers

Question 7

Reducing a tariff ________ the domestic production of the good and ________ the total domestic consumption of the good.

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 8

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 deadweight loss from the tariff is

Accepted Answer

A) $80 million. 
B) $16 million. 
C) zero. 
D) $64 million. 
E) $32 million. 
A) $80 million. 
B) $16 million. 
C) zero. 
D) $64 million. 
E) $32 million.

Question 9

Rent seeking is one reason why countries choose to

Accepted Answer

A) export and import the same goods. 
B) work for freer trade. 
C) follow the theory of comparative advantage. 
D) hire foreign labour. 
E) restrict trade. 
A) export and import the same goods. 
B) work for freer trade. 
C) follow the theory of comparative advantage. 
D) hire foreign labour. 
E) restrict trade.

Question 10

________ specifies the maximum quantity of a good that may be imported in a given period of time.

Accepted Answer

A) An import restriction 
B) A legislative restriction 
C) A trade restriction 
D) An import quota 
E) An import subsidy 
A) An import restriction 
B) A legislative restriction 
C) A trade restriction 
D) An import quota 
E) An import subsidy

Question 11

The fundamental force that drives international trade is

Accepted Answer

A) comparative advantage. 
B) absolute advantage. 
C) a countries' desire to increase their trade surplus. 
D) cheap labour in countries like China and India. 
E) unemployment of factors of production. 
A) comparative advantage. 
B) absolute advantage. 
C) a countries' desire to increase their trade surplus. 
D) cheap labour in countries like China and India. 
E) unemployment of factors of production.

Question 12

________ occurs when a foreign firm sells its exports at a lower price than its cost of production.

Accepted Answer

A) Comparative advantage 
B) Learning-by-doing 
C) A tariff 
D) An infant industry 
E) Dumping 
A) Comparative advantage 
B) Learning-by-doing 
C) A tariff 
D) An infant industry 
E) Dumping

Question 13

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. With the removal of the tariffs, the quantity of Canadian imports from Mexico ________, and the quantity of Canadian exports to Mexico ________.

Accepted Answer

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

Question 14

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of

Accepted Answer

A) avoiding import quotas. 
B) increasing its gains from trade. 
C) dumping. 
D) engaging in learning-by-doing. 
E) exploiting a comparative advantage. 
A) avoiding import quotas. 
B) increasing its gains from trade. 
C) dumping. 
D) engaging in learning-by-doing. 
E) exploiting a comparative advantage.

Question 15

Which of the following statements concerning tariffs is NOT true?

Accepted Answer

A) A tariff results in a deadweight loss. 
B) A tariff creates revenue for the government. 
C) A tariff decreases international trade. 
D) A tariff leaves the price of imports unchanged. 
E) A tariff decreases consumer surplus. 
A) A tariff results in a deadweight loss. 
B) A tariff creates revenue for the government. 
C) A tariff decreases international trade. 
D) A tariff leaves the price of imports unchanged. 
E) A tariff decreases consumer surplus.

Question 16

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, with international trade, Canada ________ million shirts per year.

Accepted Answer

A) imports 32 
B) imports 48 
C) exports 16 
D) exports 32 
E) imports 16 
A) imports 32 
B) imports 48 
C) exports 16 
D) exports 32 
E) imports 16

Question 17

If a government imposes a quota on imports of a popular doll, the price of the doll in the importing country ________ and the quantity purchased in the importing country ________.

Accepted Answer

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

Question 18

An import quota directly restricts ________ and are designed to protect domestic ________.

Accepted Answer

A) exports; consumers only 
B) exports; producers only 
C) imports; consumers only 
D) imports; producers only 
E) imports; producers and consumers 
A) exports; consumers only 
B) exports; producers only 
C) imports; consumers only 
D) imports; producers only 
E) imports; producers and consumers

Question 19

When a firms "dumps" some of its output in another country, it

Accepted Answer

A) creates an environmental hazard in the receiving country. 
B) sells its output abroad at a price lower than it costs to produce the output. 
C) increases the total level of employment in the importing country. 
D) is specializing according to comparative advantage. 
E) creates for itself an absolute advantage. 
A) creates an environmental hazard in the receiving country. 
B) sells its output abroad at a price lower than it costs to produce the output. 
C) increases the total level of employment in the importing country. 
D) is specializing according to comparative advantage. 
E) creates for itself an absolute advantage.

Question 20

Offshore outsourcing occurs when a firm in Canada

Accepted Answer

A) moves its corporate headquarters to another country. 
B) buys finished goods, components, or services from other firms in other countries. 
C) buys finished goods, components, or services from other firms in Canada. 
D) hires Canadian labour and produces in Canada. 
E) hires foreign workers who work in Canada. 
A) moves its corporate headquarters to another country. 
B) buys finished goods, components, or services from other firms in other countries. 
C) buys finished goods, components, or services from other firms in Canada. 
D) hires Canadian labour and produces in Canada. 
E) hires foreign workers who work in Canada.

Exam 7: Global Markets in Action

A tariff ________ a deadweight loss and an import quota ________ a deadweight loss.

The introduction of a tariff ________ consumer surplus and ________ total surplus.

The fundamental force that drives international trade is

In developing countries, there is more reliance on ________ as opposed to ________ for government revenue.

Choose the statement that is incorrect.

In poorer countries, free trade ________ the demand for labour in these countries and ________ the wages paid in these countries.

Reducing a tariff ________ the domestic production of the good and ________ the total domestic consumption of the good.

Rent seeking is one reason why countries choose to

________ specifies the maximum quantity of a good that may be imported in a given period of time.

The fundamental force that drives international trade is

________ occurs when a foreign firm sells its exports at a lower price than its cost of production.

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of

Which of the following statements concerning tariffs is NOT true?

If a government imposes a quota on imports of a popular doll, the price of the doll in the importing country ________ and the quantity purchased in the importing country ________.

An import quota directly restricts ________ and are designed to protect domestic ________.

When a firms "dumps" some of its output in another country, it

Offshore outsourcing occurs when a firm in Canada

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

A tariff a deadweight loss and an import quota a deadweight loss.

The introduction of a tariff consumer surplus and total surplus.

In developing countries, there is more reliance on as opposed to for government revenue.

In poorer countries, free trade the demand for labour in these countries and the wages paid in these countries.

Reducing a tariff the domestic production of the good and the total domestic consumption of the good.

If a government imposes a quota on imports of a popular doll, the price of the doll in the importing country and the quantity purchased in the importing country .

An import quota directly restricts and are designed to protect domestic .