Question 1

The imposition of a tariff will typically ________ government revenue and ________ domestic production of the good.

Accepted Answer

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

Question 2

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million.
-Based on the figure above, as a result of international trade, producer surplus

Accepted Answer

A) increases by $15 billion. 
B) decreases by $15 billion. 
C) increases by $27.5 billion. 
D) decreases by $12.5 billion. 
E) remains unchanged. 
A) increases by $15 billion. 
B) decreases by $15 billion. 
C) increases by $27.5 billion. 
D) decreases by $12.5 billion. 
E) remains unchanged.

Question 3

The figure above shows the U.S. market for airplanes, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of an airplane is $150 million.
-In the figure above, U.S. consumers buy ________ airplanes per year at ________ million per airplane.

Accepted Answer

A) 200; $150 
B) 400; $100 
C) 700; $150 
D) 400; $150 
E) 200; $100 
A) 200; $150 
B) 400; $100 
C) 700; $150 
D) 400; $150 
E) 200; $100

Question 4

8.5 Chapter Figures
   
The figure above shows the U.S. market for T-shirts, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of a T-shirt is $5.
-Based on the figure above, as a result of international trade, U.S. domestic production ________ million T-shirts per year.

Accepted Answer

A) decreases by 20 
B) increases by 20 
C) decreases by 10 
D) increases by 40 
E) increases by 10 
A) decreases by 20 
B) increases by 20 
C) decreases by 10 
D) increases by 40 
E) increases by 10

Question 5

Which of the following is NOT a major argument for restricting international trade?

Accepted Answer

A) the promotion of dumping in America 
B) the national security argument 
C) the infant industry argument 
D) the prevention of dumping argument 
E) saves U.S. jobs argument 
A) the promotion of dumping in America 
B) the national security argument 
C) the infant industry argument 
D) the prevention of dumping argument 
E) saves U.S. jobs argument

Question 6

International trade decreases the demand for workers in domestic industries that

Accepted Answer

A) produce goods that are exported from the country. 
B) produce goods that are imported into the country. 
C) help businesses import and export. 
D) service imported goods. 
E) produce the goods in which the nation has a comparative advantage. 
A) produce goods that are exported from the country. 
B) produce goods that are imported into the country. 
C) help businesses import and export. 
D) service imported goods. 
E) produce the goods in which the nation has a comparative advantage.

Question 7

When a nation exports a good, its ________ surplus decreases and its ________ surplus increases.

Accepted Answer

A) consumer; producer 
B) consumer; consumer 
C) producer; producer 
D) producer; consumer 
E) total; consumer 
A) consumer; producer 
B) consumer; consumer 
C) producer; producer 
D) producer; consumer 
E) total; consumer

Question 8

-The above figure shows the U.S. market for chocolate. With international trade, consumer surplus is equal to

Accepted Answer

A) area A + area B + area C + area D. 
B) area A. 
C) area B + area C + area D. 
D) area C + area D. 
E) area E. 
A) area A + area B + area C + area D. 
B) area A. 
C) area B + area C + area D. 
D) area C + area D. 
E) area E.

Question 9

A major reason why it is difficult to lower the barriers to free trade is

Accepted Answer

A) that total benefits are less than total costs from free trade. 
B) the uneven distribution of gains and losses from free trade. 
C) the loss of jobs without any gain of jobs from free trade. 
D) the inability to compensate losers from free trade. 
E) that the barriers allow us to compete with cheap foreign labor. 
A) that total benefits are less than total costs from free trade. 
B) the uneven distribution of gains and losses from free trade. 
C) the loss of jobs without any gain of jobs from free trade. 
D) the inability to compensate losers from free trade. 
E) that the barriers allow us to compete with cheap foreign labor.

Question 10

Which type of policy raises the most revenue for the government?

Accepted Answer

A) tariff 
B) quota 
C) voluntary export restraints 
D) If they are set at the same level, all of the above raise the same amount of revenue. 
E) None of the above answers is correct because none of the policies raise revenue for the government. 
A) tariff 
B) quota 
C) voluntary export restraints 
D) If they are set at the same level, all of the above raise the same amount of revenue. 
E) None of the above answers is correct because none of the policies raise revenue for the government.

Question 11

The figure above shows the U.S. market for T-shirts, where SUS is the domestic supply curve and DUS is the domestic demand curve. The world price of a T-shirt is $5. The U.S. government imposes a $2 per unit tariff on imported T-shirts.
-The figure above shows that as a result of the tariff, the price of a T-shirt in the United States ________, and the quantity of T-shirts bought ________.

Accepted Answer

A) rises by $2; decreases by 15 million per year 
B) rises by $2; increases by 15 million per year 
C) falls by $2; increases by 5 million per year 
D) does not change; decreases by 5 million per year 
E) does not change; does not change 
A) rises by $2; decreases by 15 million per year 
B) rises by $2; increases by 15 million per year 
C) falls by $2; increases by 5 million per year 
D) does not change; decreases by 5 million per year 
E) does not change; does not change

Question 12

The difference between a tariff and a quota is that the revenue from the tariff goes to the

Accepted Answer

A) domestic consumer. 
B) domestic producer. 
C) domestic government. 
D) foreign producers. 
E) foreign government. 
A) domestic consumer. 
B) domestic producer. 
C) domestic government. 
D) foreign producers. 
E) foreign government.

Question 13

When a nation exports a good, its ________ surplus increases, and when it imports a good, its ________ surplus increases.

Accepted Answer

A) total; total 
B) consumer; consumer 
C) producer; producer 
D) producer; consumer 
E) total; consumer 
A) total; total 
B) consumer; consumer 
C) producer; producer 
D) producer; consumer 
E) total; consumer

Question 14

Economists argue for free trade in import markets because

Accepted Answer

A) all consumers and producers benefit from importing goods. 
B) the gains to the U.S. producers outweigh the losses to the U.S. consumers. 
C) the gains to the U.S. consumers outweigh the losses to the U.S. producers. 
D) no one is made worse off by importing goods. 
E) importing goods decreases total surplus. 
A) all consumers and producers benefit from importing goods. 
B) the gains to the U.S. producers outweigh the losses to the U.S. consumers. 
C) the gains to the U.S. consumers outweigh the losses to the U.S. producers. 
D) no one is made worse off by importing goods. 
E) importing goods decreases total surplus.

Question 15

What is "rent seeking"?
 How does it apply to restricting imports?

Accepted Answer

Rent seeking is lobbying and other polit

Question 16

The fundamental force that generates international trade is

Accepted Answer

A) the need for more goods and services. 
B) absolute advantage. 
C) the sea rule. 
D) comparative advantage. 
E) the existence of tariffs. 
A) the need for more goods and services. 
B) absolute advantage. 
C) the sea rule. 
D) comparative advantage. 
E) the existence of tariffs.

Question 17

Looking at the average tariff rate in the United States since 1930, we see that

Accepted Answer

A) at first tariffs declined, but have recently risen. 
B) tariffs have trended downward for most of the period. 
C) tariff levels have remained high, at over 50 percent throughout the period. 
D) while we talk about free trade, tariff levels have risen over the last 30 years. 
E) tariffs were made illegal in the United States in 1955. 
A) at first tariffs declined, but have recently risen. 
B) tariffs have trended downward for most of the period. 
C) tariff levels have remained high, at over 50 percent throughout the period. 
D) while we talk about free trade, tariff levels have risen over the last 30 years. 
E) tariffs were made illegal in the United States in 1955.

Question 18

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

Accepted Answer

A) Dumping 
B) The trickle-down effect 
C) Rent seeking 
D) Tariff avoidance 
E) Nontariff barrier protection 
A) Dumping 
B) The trickle-down effect 
C) Rent seeking 
D) Tariff avoidance 
E) Nontariff barrier protection

Question 19

Which of the following is correct?
I. U.S. total surplus decreases when the United States exports a good.
Ii. U.S. total surplus decreases when the United States imports a good.
Iii. U.S. total surplus increases when the United States imports a good and when it exports a good.

Accepted Answer

A) i only 
B) iii only 
C) i and ii 
D) ii only 
E) None of the above because the U.S. total surplus does not change as a result of trade 
A) i only 
B) iii only 
C) i and ii 
D) ii only 
E) None of the above because the U.S. total surplus does not change as a result of trade

Question 20

8.5 Chapter Figures
   
The figure above shows the U.S. market for T-shirts, where SUS is the domestic supply curve and DUS is the domestic demand curve. The United States trades freely with the rest of the world. The world price of a T-shirt is $5.
-Based on the figure above, as a result of international trade, producer surplus

Accepted Answer

A) increases by $150 million. 
B) decreases by $150 million. 
C) increases by $90 million. 
D) decreases by $90 million. 
E) remains unchanged. 
A) increases by $150 million. 
B) decreases by $150 million. 
C) increases by $90 million. 
D) decreases by $90 million. 
E) remains unchanged.

The imposition of a tariff will typically government revenue and domestic production of the good.

Which of the following is NOT a major argument for restricting international trade?

International trade decreases the demand for workers in domestic industries that

When a nation exports a good, its surplus decreases and its surplus increases.

-The above figure shows the U.S. market for chocolate. With international trade, consumer surplus is equal to

A major reason why it is difficult to lower the barriers to free trade is

Which type of policy raises the most revenue for the government?

The difference between a tariff and a quota is that the revenue from the tariff goes to the

When a nation exports a good, its surplus increases, and when it imports a good, its surplus increases.

Economists argue for free trade in import markets because

What is "rent seeking"? How does it apply to restricting imports?

The fundamental force that generates international trade is

Looking at the average tariff rate in the United States since 1930, we see that

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

Which of the following is correct? I. U.S. total surplus decreases when the United States exports a good. Ii. U.S. total surplus decreases when the United States imports a good. Iii. U.S. total surplus increases when the United States imports a good and when it exports a good.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 8: Global Markets in Action

The imposition of a tariff will typically ________ government revenue and ________ domestic production of the good.

Which of the following is NOT a major argument for restricting international trade?

International trade decreases the demand for workers in domestic industries that

When a nation exports a good, its ________ surplus decreases and its ________ surplus increases.

-The above figure shows the U.S. market for chocolate. With international trade, consumer surplus is equal to

A major reason why it is difficult to lower the barriers to free trade is

Which type of policy raises the most revenue for the government?

The difference between a tariff and a quota is that the revenue from the tariff goes to the

When a nation exports a good, its ________ surplus increases, and when it imports a good, its ________ surplus increases.

Economists argue for free trade in import markets because

What is "rent seeking"? How does it apply to restricting imports?

The fundamental force that generates international trade is

Looking at the average tariff rate in the United States since 1930, we see that

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

Which of the following is correct? I. U.S. total surplus decreases when the United States exports a good. Ii. U.S. total surplus decreases when the United States imports a good. Iii. U.S. total surplus increases when the United States imports a good and when it exports a good.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The imposition of a tariff will typically government revenue and domestic production of the good.

When a nation exports a good, its surplus decreases and its surplus increases.

When a nation exports a good, its surplus increases, and when it imports a good, its surplus increases.