Question 1

All but one of the following statements is used to justify protectionism.Which statement is not used to justify protectionism?

Accepted Answer

A) Free trade leads to higher prices for imported goods. 
B) Free trade reduces employment by driving domestic firms out of business. 
C) A country should not rely on other countries for goods that are critical to its national defense. 
D) Trade restrictions are necessary to protect new firms until they can gain experience and become more productive. 
A) Free trade leads to higher prices for imported goods. 
B) Free trade reduces employment by driving domestic firms out of business. 
C) A country should not rely on other countries for goods that are critical to its national defense. 
D) Trade restrictions are necessary to protect new firms until they can gain experience and become more productive.

Question 2

What was the GATT,why was it established,and why and with what was it replaced?

Accepted Answer

By the end of World War II in 1945,gover

Question 3

Table 7-2
   Madison and Austin own Cafe Ole'.Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour.
-Refer to Table 7-2.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Madison has an absolute advantage in making tacos and Austin has an absolute advantage in making empanadas. 
B) Madison has an absolute advantage in making empanadas and Austin has an absolute advantage in making tacos. 
C) Madison has an absolute advantage in making empanadas and tacos. 
D) Austin has an absolute advantage in making empanadas and tacos. 
A) Madison has an absolute advantage in making tacos and Austin has an absolute advantage in making empanadas. 
B) Madison has an absolute advantage in making empanadas and Austin has an absolute advantage in making tacos. 
C) Madison has an absolute advantage in making empanadas and tacos. 
D) Austin has an absolute advantage in making empanadas and tacos.

Question 4

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

Accepted Answer

A) Australia also has an absolute advantage in producing surfboards relative to New Zealand. 
B) Australia has a lower opportunity cost of producing surfboards relative to New Zealand. 
C) New Zealand has an absolute disadvantage in producing surfboards relative to Australia. 
D) Labor costs are higher for surfboard producers in New Zealand than in Australia. 
A) Australia also has an absolute advantage in producing surfboards relative to New Zealand. 
B) Australia has a lower opportunity cost of producing surfboards relative to New Zealand. 
C) New Zealand has an absolute disadvantage in producing surfboards relative to Australia. 
D) Labor costs are higher for surfboard producers in New Zealand than in Australia.

Question 5

The first discussion of comparative advantage appears in a book written by

Accepted Answer

A) Adam Smith. 
B) Paul Samuelson. 
C) David Portugal. 
D) David Ricardo. 
A) Adam Smith. 
B) Paul Samuelson. 
C) David Portugal. 
D) David Ricardo.

Question 6

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

Accepted Answer

A) the average cost of production for sugar cane is lower in Brazil than in Cuba. 
B) the implicit costs of production for sugar cane are lower in Brazil than in Cuba. 
C) the opportunity cost of production for sugar cane is lower in Brazil than in Cuba. 
D) the explicit cost of production for sugar cane is lower in Brazil than in Cuba. 
A) the average cost of production for sugar cane is lower in Brazil than in Cuba. 
B) the implicit costs of production for sugar cane are lower in Brazil than in Cuba. 
C) the opportunity cost of production for sugar cane is lower in Brazil than in Cuba. 
D) the explicit cost of production for sugar cane is lower in Brazil than in Cuba.

Question 7

Which of the following countries is not one of the top three exporting countries in the world?

Accepted Answer

A) China 
B) Germany 
C) South Korea 
D) the United States 
A) China 
B) Germany 
C) South Korea 
D) the United States

Question 8

Although the United States is the second largest exporting country,international trade is less important to the United States than it is to most other countries.

Accepted Answer

A) True 
 B)False

Question 9

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden,which of the following would explain this pattern of trade?

Accepted Answer

A) Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter. 
B) The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden. 
C) Sweden must have an absolute advantage in producing cell phones and Denmark must have an absolute advantage in producing butter. 
D) Sweden has a higher opportunity cost of producing cell phones than Denmark,and Denmark has a higher opportunity cost of producing butter. 
A) Sweden has a lower opportunity cost of producing cell phones than Denmark and Denmark has a comparative advantage in producing butter. 
B) The opportunity cost of producing butter in Denmark is higher than the opportunity cost of producing butter in Sweden. 
C) Sweden must have an absolute advantage in producing cell phones and Denmark must have an absolute advantage in producing butter. 
D) Sweden has a higher opportunity cost of producing cell phones than Denmark,and Denmark has a higher opportunity cost of producing butter.

Question 10

Figure 7-1   Figure 7-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Accepted Answer

A) Q0 
B) Q1 
C) Q2 
D) Q2 - Q0 
A) Q0 
B) Q1 
C) Q2 
D) Q2 - Q0

Question 11

Which of the following statements is false?

Accepted Answer

A) Exports benefit trading countries because exports create jobs.Imports do not benefit trading countries because they result in a loss of jobs. 
B) Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. 
C) Most of the leading exporting countries are large,high-income countries. 
D) Not all sectors of the U.S.economy are affected equally by international trade. 
A) Exports benefit trading countries because exports create jobs.Imports do not benefit trading countries because they result in a loss of jobs. 
B) Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop. 
C) Most of the leading exporting countries are large,high-income countries. 
D) Not all sectors of the U.S.economy are affected equally by international trade.

Question 12

Table 7-3
   Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Mateo has an absolute advantage in making saddles and spurs. 
B) Celeste has an absolute advantage in making saddles and spurs. 
C) Neither Mateo nor Celeste has an absolute advantage in making saddles. 
D) Neither Mateo nor Celeste has an absolute advantage in making spurs. 
A) Mateo has an absolute advantage in making saddles and spurs. 
B) Celeste has an absolute advantage in making saddles and spurs. 
C) Neither Mateo nor Celeste has an absolute advantage in making saddles. 
D) Neither Mateo nor Celeste has an absolute advantage in making spurs.

Question 13

In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.

Accepted Answer

A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower 
A) higher; higher 
B) higher; lower 
C) lower; higher 
D) lower; lower

Question 14

What are terms of trade?

Accepted Answer

Terms of trade refers to the r

Question 15

How does the U.S.federal government assist workers who have lost their jobs due to international trade?

Accepted Answer

The federal government uses the Trade Ad

Question 16

If a country has a comparative advantage in producing a product,it must also have an absolute advantage in producing that product.

Accepted Answer

A) True 
 B)False

Question 17

Figure 7-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.Without the quota,the domestic price of peanuts equals the world price which is $2.00 per pound.What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?

Accepted Answer

A) 10 million pounds 
B) 28 million pounds 
C) 30 million pounds 
D) 40 million pounds 
A) 10 million pounds 
B) 28 million pounds 
C) 30 million pounds 
D) 40 million pounds

Question 18

Figure 7-3   Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota.
-Refer to Figure 7-3.What is the value of the deadweight loss as a result of the quota?

Accepted Answer

A) $5.25 million 
B) $8 million 
C) $17.25 million 
D) $20 million 
A) $5.25 million 
B) $8 million 
C) $17.25 million 
D) $20 million

Question 19

The increase in unemployment in the United States that resulted from the China shock

Accepted Answer

A) was actually very small,as very few people lost jobs were unable to find comparable employment relatively quickly. 
B) was almost immediately offset by economic growth in other sectors. 
C) was concentrated primarily in the service sector. 
D) recovered at a much slower pace than it had from import increases in previous decades. 
A) was actually very small,as very few people lost jobs were unable to find comparable employment relatively quickly. 
B) was almost immediately offset by economic growth in other sectors. 
C) was concentrated primarily in the service sector. 
D) recovered at a much slower pace than it had from import increases in previous decades.

Question 20

Over the past several decades there has been rapid growth in international trade.This growth has been due to all but one of the following factors.Which factor has not contributed to the growth of international trade?

Accepted Answer

A) the spread of reliable communications 
B) an increase in the tariffs charged on many goods 
C) a reduction in shipping costs 
D) favorable changes in government policies 
A) the spread of reliable communications 
B) an increase in the tariffs charged on many goods 
C) a reduction in shipping costs 
D) favorable changes in government policies

All but one of the following statements is used to justify protectionism.Which statement is not used to justify protectionism?

What was the GATT,why was it established,and why and with what was it replaced?

Table 7-2 Madison and Austin own Cafe Ole'.Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 7-2.Select the statement that accurately interprets the data in the table.

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

The first discussion of comparative advantage appears in a book written by

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

Which of the following countries is not one of the top three exporting countries in the world?

Although the United States is the second largest exporting country,international trade is less important to the United States than it is to most other countries.

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden,which of the following would explain this pattern of trade?

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Which of the following statements is false?

Table 7-3 Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

In the United States during the Great Depression,tariffs were than they were following World War II,and than they are today.

What are terms of trade?

How does the U.S.federal government assist workers who have lost their jobs due to international trade?

If a country has a comparative advantage in producing a product,it must also have an absolute advantage in producing that product.

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of the deadweight loss as a result of the quota?

The increase in unemployment in the United States that resulted from the China shock

Over the past several decades there has been rapid growth in international trade.This growth has been due to all but one of the following factors.Which factor has not contributed to the growth of international trade?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 7: Comparative Advantage and the Gains From International Trade

All but one of the following statements is used to justify protectionism.Which statement is not used to justify protectionism?

What was the GATT,why was it established,and why and with what was it replaced?

Table 7-2 Madison and Austin own Cafe Ole'.Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour. -Refer to Table 7-2.Select the statement that accurately interprets the data in the table.

Assume that Australia has a comparative advantage in producing surfboards and New Zealand imports surfboards from Australia.We can conclude that

The first discussion of comparative advantage appears in a book written by

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

Which of the following countries is not one of the top three exporting countries in the world?

Although the United States is the second largest exporting country,international trade is less important to the United States than it is to most other countries.

If Sweden exports cell phones to Denmark and Denmark exports butter to Sweden,which of the following would explain this pattern of trade?

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Which of the following statements is false?

Table 7-3 Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.

What are terms of trade?

How does the U.S.federal government assist workers who have lost their jobs due to international trade?

If a country has a comparative advantage in producing a product,it must also have an absolute advantage in producing that product.

Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts.Figure 7-3 illustrates the impact of the quota. -Refer to Figure 7-3.What is the value of the deadweight loss as a result of the quota?

The increase in unemployment in the United States that resulted from the China shock

Over the past several decades there has been rapid growth in international trade.This growth has been due to all but one of the following factors.Which factor has not contributed to the growth of international trade?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

In the United States during the Great Depression,tariffs were than they were following World War II,and than they are today.