Question 1

In order for mutually beneficial trade to occur between two otherwise isolated nations,

Accepted Answer

A)  each nation must be able to produce at least one good absolutely cheaper than the other. 
B)  each nation must be able to produce at least one good relatively cheaper than the other. 
C)  each nation must face constant costs in the production of the good it exports. 
D)  one nation's production must be labor-intensive, while the other nation's production is capital-intensive. 
A)  each nation must be able to produce at least one good absolutely cheaper than the other. 
B)  each nation must be able to produce at least one good relatively cheaper than the other. 
C)  each nation must face constant costs in the production of the good it exports. 
D)  one nation's production must be labor-intensive, while the other nation's production is capital-intensive.

Question 2

Graphical analysis of tariffs reveals that

Accepted Answer

A)  they benefit domestic consumers at the expense of domestic producers. 
B)  revenue gains outweigh the costs to domestic consumers. 
C)  they increase domestic production of the good for which imports face tariffs. 
D)  although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs. 
A)  they benefit domestic consumers at the expense of domestic producers. 
B)  revenue gains outweigh the costs to domestic consumers. 
C)  they increase domestic production of the good for which imports face tariffs. 
D)  although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs.

Question 3

As of 2015, how many European nations belonged to the European Union (EU)?

Accepted Answer

A)  All of the nations of Europe automatically belong to the EU. 
B)  17 
C)  28 
D)  10 
A)  All of the nations of Europe automatically belong to the EU. 
B)  17 
C)  28 
D)  10

Question 4

Trade adjustment assistance

Accepted Answer

A)  provides financial assistance to all unemployed workers in the United States. 
B)  guarantees jobs for all workers displaced by imports or plant relocations abroad. 
C)  provides assistance to about 20 percent of unemployed U.S. workers each year. 
D)  provides cash assistance for workers displaced by imports or plant relocations abroad. 
A)  provides financial assistance to all unemployed workers in the United States. 
B)  guarantees jobs for all workers displaced by imports or plant relocations abroad. 
C)  provides assistance to about 20 percent of unemployed U.S. workers each year. 
D)  provides cash assistance for workers displaced by imports or plant relocations abroad.

Question 5

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.

Accepted Answer

A) True 
 B)False

Question 6

The terms of trade will favor a larger nation over a smaller nation.

Accepted Answer

A) True 
 B)False

Question 7

When a tariff or quota on a product is removed, this policy action

Accepted Answer

A)  benefits domestic producers of the product. 
B)  benefits consumers of the product. 
C)  benefits the government. 
D)  hurts nations exporting the product. 
A)  benefits domestic producers of the product. 
B)  benefits consumers of the product. 
C)  benefits the government. 
D)  hurts nations exporting the product.

Question 8

Other things equal, a tariff is

Accepted Answer

A)  superior to an import quota for Americans because a tariff increases the profits of foreign producers. 
B)  inferior to an import quota for Americans because a tariff increases the profits of domestic producers. 
C)  superior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury. 
D)  inferior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury. 
A)  superior to an import quota for Americans because a tariff increases the profits of foreign producers. 
B)  inferior to an import quota for Americans because a tariff increases the profits of domestic producers. 
C)  superior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury. 
D)  inferior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury.

Question 9

The so-called eurozone refers to

Accepted Answer

A)  all members of the European Union. 
B)  the EU nations that have adopted a common currency. 
C)  the combined Eastern and Western Europe. 
D)  nations in Europe where the U.S. has military bases. 
A)  all members of the European Union. 
B)  the EU nations that have adopted a common currency. 
C)  the combined Eastern and Western Europe. 
D)  nations in Europe where the U.S. has military bases.

Question 10

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Accepted Answer

A) True 
 B)False

Question 11

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Accepted Answer

A)  higher combined output. 
B)  higher consumption and standard of living. 
C)  rising total employment. 
D)  consuming combinations of products that are outside their PPCs. 
A)  higher combined output. 
B)  higher consumption and standard of living. 
C)  rising total employment. 
D)  consuming combinations of products that are outside their PPCs.

Question 12

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

Accepted Answer

A) True 
 B)False

Question 13

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that

Accepted Answer

A)  we should buy everything from abroad. 
B)  people should only consume what they can produce themselves. 
C)  consumers should only buy goods from other states. 
D)  the best quality goods are found in the United States. 
A)  we should buy everything from abroad. 
B)  people should only consume what they can produce themselves. 
C)  consumers should only buy goods from other states. 
D)  the best quality goods are found in the United States.

Question 14

Which is a valid counterargument to the infant industry argument for protective tariffs?

Accepted Answer

A)  Protective tariffs result in too many benefits for domestic firms that export goods and services. 
B)  It is difficult to determine which infant industries will become mature industries with a comparative advantage. 
C)  The objective would be better achieved through strategic trade policy. 
D)  The objective would be better achieved by import quotas and nontariff barriers. 
A)  Protective tariffs result in too many benefits for domestic firms that export goods and services. 
B)  It is difficult to determine which infant industries will become mature industries with a comparative advantage. 
C)  The objective would be better achieved through strategic trade policy. 
D)  The objective would be better achieved by import quotas and nontariff barriers.

Question 15

A nation with abundant capital resources tends to be an exporter of

Accepted Answer

A)  labor-intensive products 
B)  capital-intensive products. 
C)  natural resource-based products. 
D)  consumer products. 
A)  labor-intensive products 
B)  capital-intensive products. 
C)  natural resource-based products. 
D)  consumer products.

Question 16

Assume that a VER (voluntary export restraint) is imposed on an imported product. The difference between the domestic price and the world price is captured by

Accepted Answer

A)  the government. 
B)  foreign exporters. 
C)  domestic consumers. 
D)  domestic workers. 
A)  the government. 
B)  foreign exporters. 
C)  domestic consumers. 
D)  domestic workers.

Question 17

If a nation has a comparative advantage in the production of X, this means the nation

Accepted Answer

A)  cannot benefit by producing and trading this product. 
B)  must give up less of other goods than other nations in producing a unit of X. 
C)  has a production possibilities curve identical to those of other nations. 
D)  is not subject to increasing opportunity costs. 
A)  cannot benefit by producing and trading this product. 
B)  must give up less of other goods than other nations in producing a unit of X. 
C)  has a production possibilities curve identical to those of other nations. 
D)  is not subject to increasing opportunity costs.

Question 18

A key difference between import quotas and voluntary export restraints (VERs) is that the

Accepted Answer

A)  domestic government administers the former, whereas the foreign government administers the latter. 
B)  foreign government administers the former, whereas the domestic government administers the latter. 
C)  one is a tax, whereas the other is a quantity limit. 
D)  one raises the price of the imported product involved, whereas the other one does not. 
A)  domestic government administers the former, whereas the foreign government administers the latter. 
B)  foreign government administers the former, whereas the domestic government administers the latter. 
C)  one is a tax, whereas the other is a quantity limit. 
D)  one raises the price of the imported product involved, whereas the other one does not.

Question 19

Excise taxes on imported goods that help shield domestic producers of the good are called

Accepted Answer

A)  protective tariffs. 
B)  import quotas. 
C)  revenue tariffs. 
D)  voluntary export restrictions. 
A)  protective tariffs. 
B)  import quotas. 
C)  revenue tariffs. 
D)  voluntary export restrictions.

Question 20

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Accepted Answer

A)  a decrease in consumer prices 
B)  a decrease in the tariff rates of foreign nations 
C)  an increase in the number of jobs 
D)  an increase in the possibility of retaliatory tariffs 
A)  a decrease in consumer prices 
B)  a decrease in the tariff rates of foreign nations 
C)  an increase in the number of jobs 
D)  an increase in the possibility of retaliatory tariffs

Exam 26: International Trade

In order for mutually beneficial trade to occur between two otherwise isolated nations,

Graphical analysis of tariffs reveals that

As of 2015, how many European nations belonged to the European Union (EU)?

Trade adjustment assistance

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.

The terms of trade will favor a larger nation over a smaller nation.

When a tariff or quota on a product is removed, this policy action

Other things equal, a tariff is

The so-called eurozone refers to

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Specialization and trade based on comparative advantage allow nations to attain the following results, except

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that

Which is a valid counterargument to the infant industry argument for protective tariffs?

A nation with abundant capital resources tends to be an exporter of

Assume that a VER (voluntary export restraint) is imposed on an imported product. The difference between the domestic price and the world price is captured by

If a nation has a comparative advantage in the production of X, this means the nation

A key difference between import quotas and voluntary export restraints (VERs) is that the

Excise taxes on imported goods that help shield domestic producers of the good are called

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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