Question 1

Both tariffs and import quotas

Accepted Answer

A)  increase the quantity of imports and raise the domestic price of the good. 
B)  increase the quantity of imports and lower the domestic price of the good. 
C)  decrease the quantity of imports and raise the domestic price of the good. 
D)  decrease the quantity of imports and lower the domestic price of the good. 
A)  increase the quantity of imports and raise the domestic price of the good. 
B)  increase the quantity of imports and lower the domestic price of the good. 
C)  decrease the quantity of imports and raise the domestic price of the good. 
D)  decrease the quantity of imports and lower the domestic price of the good.

Question 2

Which of the following assertions is not correct about the multilateral approach to free trade?

Accepted Answer

A)  The multilateral approach has the potential to result in freer trade than does the unilateral approach. 
B)  The multilateral approach may have a political advantage over the unilateral approach. 
C)  The multilateral approach is simpler than the unilateral approach. 
D)  NAFTA and GATT both represent multilateral approaches to free trade. 
A)  The multilateral approach has the potential to result in freer trade than does the unilateral approach. 
B)  The multilateral approach may have a political advantage over the unilateral approach. 
C)  The multilateral approach is simpler than the unilateral approach. 
D)  NAFTA and GATT both represent multilateral approaches to free trade.

Question 3

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 4

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,

Accepted Answer

A)  producer surplus increases and total surplus increases in the market for that good. 
B)  producer surplus increases and total surplus decreases in the market for that good. 
C)  producer surplus decreases and total surplus increases in the market for that good. 
D)  producer surplus decreases and total surplus decreases in the market for that good. 
A)  producer surplus increases and total surplus increases in the market for that good. 
B)  producer surplus increases and total surplus decreases in the market for that good. 
C)  producer surplus decreases and total surplus increases in the market for that good. 
D)  producer surplus decreases and total surplus decreases in the market for that good.

Question 5

The General Agreement on Tariffs and Trade (GATT)was initiated in response to

Accepted Answer

A)  in increase in exports of low-priced goods from developing countries to developed countries. 
B)  the replacement of manufacturing jobs with service jobs in developed countries. 
C)  economic dislocations caused by the North American Free Trade Agreement (NAFT
A) in the 1990s. 
D)  high tariffs imposed during the Great Depression of the 1930s. 
A)  in increase in exports of low-priced goods from developing countries to developed countries. 
B)  the replacement of manufacturing jobs with service jobs in developed countries. 
C)  economic dislocations caused by the North American Free Trade Agreement (NAFT
A) in the 1990s. 
D)  high tariffs imposed during the Great Depression of the 1930s.

Question 6

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good. 
A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good.

Question 7

A tariff is a

Accepted Answer

A)  limit on how much of a good can be exported. 
B)  limit on how much of a good can be imported. 
C)  tax on an exported good. 
D)  tax on an imported good. 
A)  limit on how much of a good can be exported. 
B)  limit on how much of a good can be imported. 
C)  tax on an exported good. 
D)  tax on an imported good.

Question 8

Figure 9-1
The figure illustrates the market for wool in New Zealand.  
-Refer to Figure 9-1.In the absence of trade,total surplus in New Zealand is represented by the area

Accepted Answer

A)  A + B + C. 
B)  A + B + C + D + F. 
C)  A + B + C + D + F + G. 
D)  A + B + C + D + F + G + H. 
A)  A + B + C. 
B)  A + B + C + D + F. 
C)  A + B + C + D + F + G. 
D)  A + B + C + D + F + G + H.

Question 9

The results of a 2007 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Question 10

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

Accepted Answer

A) True 
 B)False

Question 11

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai

Question 12

Trade among nations is ultimately based on

Accepted Answer

A)  absolute advantage. 
B)  strategic advantage. 
C)  comparative advantage. 
D)  technical advantage. 
A)  absolute advantage. 
B)  strategic advantage. 
C)  comparative advantage. 
D)  technical advantage.

Question 13

When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that

Accepted Answer

A)  Mooseland became an exporter of sugar. 
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. 
C)  consumer surplus in Mooseland increased by $7 million. 
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right. 
A)  Mooseland became an exporter of sugar. 
B)  the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. 
C)  consumer surplus in Mooseland increased by $7 million. 
D)  the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Question 14

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good. 
A)  consumer surplus increases and total surplus increases in the market for that good. 
B)  consumer surplus increases and total surplus decreases in the market for that good. 
C)  consumer surplus decreases and total surplus increases in the market for that good. 
D)  consumer surplus decreases and total surplus decreases in the market for that good.

Question 15

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that

Accepted Answer

A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result. 
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. 
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. 
D)  even though total surplus in that nation decreased,it was still true that consumer surplus and producer surplus increased. 
A)  both producers of automobiles and consumers of automobiles in that nation became better off as a result. 
B)  the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. 
C)  the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. 
D)  even though total surplus in that nation decreased,it was still true that consumer surplus and producer surplus increased.

Question 16

When a country allows international trade and becomes an importer of a good,domestic producers of the good are better off,and domestic consumers of the good are worse off.

Accepted Answer

A) True 
 B)False

Question 17

Figure 9-5  
-Refer to Figure 9-5.If this country allows free trade in wagons,

Accepted Answer

A)  consumers will gain more than producers will lose. 
B)  producers will gain more than consumers will lose. 
C)  producers and consumers will both gain equally. 
D)  producers and consumers will both lose equally. 
A)  consumers will gain more than producers will lose. 
B)  producers will gain more than consumers will lose. 
C)  producers and consumers will both gain equally. 
D)  producers and consumers will both lose equally.

Question 18

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

A)  Trade restrictions make all Americans better off. 
B)  Trade restrictions increase economic efficiency. 
C)  Trade restrictions are necessary for economic growth. 
D)  Trade restrictions are sometimes necessary for national security. 
A)  Trade restrictions make all Americans better off. 
B)  Trade restrictions increase economic efficiency. 
C)  Trade restrictions are necessary for economic growth. 
D)  Trade restrictions are sometimes necessary for national security.

Question 19

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Accepted Answer

A) True 
 B)False

Question 20

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Accepted Answer

A)  40 percent to about 5 percent. 
B)  40 percent to about 20 percent. 
C)  80 percent to about 20 percent. 
D)  20 percent to about 10 percent. 
A)  40 percent to about 5 percent. 
B)  40 percent to about 20 percent. 
C)  80 percent to about 20 percent. 
D)  20 percent to about 10 percent.

Exam 9: Application: International Trade

Both tariffs and import quotas

Which of the following assertions is not correct about the multilateral approach to free trade?

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,

The General Agreement on Tariffs and Trade (GATT)was initiated in response to

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

A tariff is a

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,total surplus in New Zealand is represented by the area

The results of a 2007 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

How does an import quota differ from an equivalent tariff?

Trade among nations is ultimately based on

When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that

When a country allows international trade and becomes an importer of a good,domestic producers of the good are better off,and domestic consumers of the good are worse off.

Figure 9-5 -Refer to Figure 9-5.If this country allows free trade in wagons,

Which of the following arguments for trade restrictions is often advanced?

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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