Question 1

The fundamental force that drives international trade is

Accepted Answer

A)  comparative advantage. 
B)  absolute advantage. 
C)  countries' desire to increase their trade surplus. 
D)  cheap labor in countries like China or India. 
A)  comparative advantage. 
B)  absolute advantage. 
C)  countries' desire to increase their trade surplus. 
D)  cheap labor in countries like China or India.

Question 2

The current U.S. average tariff rate

Accepted Answer

A)  less than 5 percent. 
B)  greater than 10 percent. 
C)  approximately 20 percent. 
D)  over 50 percent. 
A)  less than 5 percent. 
B)  greater than 10 percent. 
C)  approximately 20 percent. 
D)  over 50 percent.

Question 3

During the Great Depression in the 1930s, the average tariff level in the United States peaked at about

Accepted Answer

A)  zero. 
B)  6 percent. 
C)  20 percent. 
D)  100 percent. 
A)  zero. 
B)  6 percent. 
C)  20 percent. 
D)  100 percent.

Question 4

Tariffs and quotas both decrease the amount of a good consumed and raise the price paid by domestic residents for the good.

Accepted Answer

A) True 
 B)False

Question 5

Which of the statements about the gains from international trade is CORRECT?

Accepted Answer

A)  Everyone gains from international trade. 
B)  Some people gain from international trade and some lose, though overall the gains exceed the losses. 
C)  Some people gain from international trade and some lose; though overall the losses exceed the gains. 
D)  Everyone loses from international trade. 
A)  Everyone gains from international trade. 
B)  Some people gain from international trade and some lose, though overall the gains exceed the losses. 
C)  Some people gain from international trade and some lose; though overall the losses exceed the gains. 
D)  Everyone loses from international trade.

Question 6

Most economists agree that valid reasons for protecting trade include which of the following?
I.the economies of scale argument
II.the saving jobs argument
III.the protection of high wages argument

Accepted Answer

A)  I only 
B)  I and II 
C)  I and III 
D)  None of the reasons are valid. 
A)  I only 
B)  I and II 
C)  I and III 
D)  None of the reasons are valid.

Question 7

As a result of an increase in tariffs, imports decrease and government revenue increases.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that elimination of tariffs on agricultural products means that 1,000 farm workers lose jobs that pay an average of $20,000 per year. At the same time, because of the importation of relatively cheaper foreign vegetables, 150 million consumers save $2 per year on their grocery bills.
a)What is the total income lost by farm workers because of the free trade?
b)What is the total dollar amount saved by all consumers combined?
c)Which is greater, the lost income or the consumer savings? Do the benefits of free trade out-weigh the costs in this simple example?
d)Which group is most likely to become politically involved over the issue of removing the tariffs, the farm workers or the consumers? Why?

Accepted Answer

a)The total income lost by farm workers

Question 9

Which of the following reasons explains why rich countries persistently restrict textile imports from poor countries?

Accepted Answer

A)  The trade restrictions make textile consumers better off. 
B)  The trade restrictions make workers in poor countries better off. 
C)  The trade restrictions benefit an organized visible special interest in rich countries. 
D)  Rich countries have a strong need for the revenue from these trade restrictions. 
A)  The trade restrictions make textile consumers better off. 
B)  The trade restrictions make workers in poor countries better off. 
C)  The trade restrictions benefit an organized visible special interest in rich countries. 
D)  Rich countries have a strong need for the revenue from these trade restrictions.

Question 10

Compared to the situation before international trade, after the United States imports a good, then production in the United States ________ and consumption in the United States ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 11

Suppose that the country of Pacifica imposes a quota on bananas. The reason that the government imposed this trade restriction could be

Accepted Answer

A)  that the government of Pacifica needs to increase its revenue. 
B)  lobbying from banana farmers in Pacifica. 
C)  comparative advantage. 
D)  Both answers A and B are correct. 
A)  that the government of Pacifica needs to increase its revenue. 
B)  lobbying from banana farmers in Pacifica. 
C)  comparative advantage. 
D)  Both answers A and B are correct.

Question 12

Tariffs

Accepted Answer

A)  generate revenue for consumers. 
B)  generate revenue for the government. 
C)  encourage domestic consumers to buy more imports. 
D)  encourage domestic producers to produce less. 
A)  generate revenue for consumers. 
B)  generate revenue for the government. 
C)  encourage domestic consumers to buy more imports. 
D)  encourage domestic producers to produce less.

Question 13

Consider a market that, with no international trade, is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade then in this market

Accepted Answer

A)  imports will increase, price will fall, and quantity supplied will fall. 
B)  exports will increase, price will be unchanged, and quantity supplied will increase. 
C)  imports will increase, price will decrease, and the supply curve will shift to the left. 
D)  quantity demanded will decrease, quantity supplied will decrease, and price will decrease. 
A)  imports will increase, price will fall, and quantity supplied will fall. 
B)  exports will increase, price will be unchanged, and quantity supplied will increase. 
C)  imports will increase, price will decrease, and the supply curve will shift to the left. 
D)  quantity demanded will decrease, quantity supplied will decrease, and price will decrease.

Question 14

How does a quota affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

Accepted Answer

A quota raises the price of the good bec

Question 15

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

Accepted Answer

A)  rise; increase 
B)  rise; decrease 
C)  fall; increase 
D)  fall; decrease 
A)  rise; increase 
B)  rise; decrease 
C)  fall; increase 
D)  fall; decrease

Question 16

Of the following, in which decade were U.S. tariffs at their lowest level?

Accepted Answer

A)  2000s 
B)  1970s 
C)  1950s 
D)  1930s 
A)  2000s 
B)  1970s 
C)  1950s 
D)  1930s

Question 17

An import quota protects domestic producers by

Accepted Answer

A)  setting a limit on the amount of imports. 
B)  placing a prohibitive tax on imports. 
C)  encouraging competition among domestic producers. 
D)  increasing the total supply of the product. 
A)  setting a limit on the amount of imports. 
B)  placing a prohibitive tax on imports. 
C)  encouraging competition among domestic producers. 
D)  increasing the total supply of the product.

Question 18

Tariffs and import quotas both result in

Accepted Answer

A)  lower levels of domestic production. 
B)  the domestic government gaining revenue. 
C)  lower levels of imports. 
D)  higher levels of domestic consumption. 
A)  lower levels of domestic production. 
B)  the domestic government gaining revenue. 
C)  lower levels of imports. 
D)  higher levels of domestic consumption.

Question 19

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Accepted Answer

A)  pay U.S. taxes. 
B)  receive subsidies. 
C)  are more productive. 
D)  belong to unions. 
A)  pay U.S. taxes. 
B)  receive subsidies. 
C)  are more productive. 
D)  belong to unions.

Question 20

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

Accepted Answer

There are several reasons advanced to re

The fundamental force that drives international trade is

The current U.S. average tariff rate

During the Great Depression in the 1930s, the average tariff level in the United States peaked at about

Tariffs and quotas both decrease the amount of a good consumed and raise the price paid by domestic residents for the good.

Which of the statements about the gains from international trade is CORRECT?

Most economists agree that valid reasons for protecting trade include which of the following? I.the economies of scale argument II.the saving jobs argument III.the protection of high wages argument

As a result of an increase in tariffs, imports decrease and government revenue increases.

Which of the following reasons explains why rich countries persistently restrict textile imports from poor countries?

Compared to the situation before international trade, after the United States imports a good, then production in the United States and consumption in the United States .

Suppose that the country of Pacifica imposes a quota on bananas. The reason that the government imposed this trade restriction could be

Tariffs

Consider a market that, with no international trade, is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade then in this market

How does a quota affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

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

Of the following, in which decade were U.S. tariffs at their lowest level?

An import quota protects domestic producers by

Tariffs and import quotas both result in

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

What Is Economics?

The Economic Problem

Demand and Supply

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

Filters

Exam 15: International Trade Policy

The fundamental force that drives international trade is

The current U.S. average tariff rate

During the Great Depression in the 1930s, the average tariff level in the United States peaked at about

Tariffs and quotas both decrease the amount of a good consumed and raise the price paid by domestic residents for the good.

Which of the statements about the gains from international trade is CORRECT?

Most economists agree that valid reasons for protecting trade include which of the following? I.the economies of scale argument II.the saving jobs argument III.the protection of high wages argument

As a result of an increase in tariffs, imports decrease and government revenue increases.

Which of the following reasons explains why rich countries persistently restrict textile imports from poor countries?

Compared to the situation before international trade, after the United States imports a good, then production in the United States ________ and consumption in the United States ________.

Suppose that the country of Pacifica imposes a quota on bananas. The reason that the government imposed this trade restriction could be

Tariffs

Consider a market that, with no international trade, is initially in equilibrium with quantity demanded equal to quantity supplied at a price of $20. If the world price of the good is $10 and the country opens up to international trade then in this market

How does a quota affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?

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

Of the following, in which decade were U.S. tariffs at their lowest level?

An import quota protects domestic producers by

Tariffs and import quotas both result in

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Discuss reasons why we see trade restrictions. Are any of these reasons valid?

What Is Economics?

The Economic Problem

Demand and Supply

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

Filters

Compared to the situation before international trade, after the United States imports a good, then production in the United States and consumption in the United States .

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