Question 1

When tariffs on imported products are removed by a nation, it will result in

Accepted Answer

A)  higher prices and lower quantities consumed in that nation. 
B)  higher prices and higher quantities consumed in that nation. 
C)  lower prices and lower quantities consumed in that nation. 
D)  lower prices and higher quantities consumed in that nation. 
A)  higher prices and lower quantities consumed in that nation. 
B)  higher prices and higher quantities consumed in that nation. 
C)  lower prices and lower quantities consumed in that nation. 
D)  lower prices and higher quantities consumed in that nation.

Question 2

Dumping of goods abroad

Accepted Answer

A)  constitutes a general case for permanent tariffs. 
B)  may be part of a firm's price discrimination strategy. 
C)  may be part of a nation's strategy to rectify its trade deficit. 
D)  drives up prices of the dumped goods. 
A)  constitutes a general case for permanent tariffs. 
B)  may be part of a firm's price discrimination strategy. 
C)  may be part of a nation's strategy to rectify its trade deficit. 
D)  drives up prices of the dumped goods.

Question 3

It is impossible for a nation to have a comparative advantage in producing everything.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Accepted Answer

A)  U.S. firms and workers must be protected from the cheaper labor in nations where wages are low. 
B)  All nations cannot simultaneously succeed in restricting imports while maintaining exports. 
C)  Reducing tariffs will benefit all consumers and domestic producers. 
D)  The need to protect U.S. workers from unemployment is not a concern in international economics. 
A)  U.S. firms and workers must be protected from the cheaper labor in nations where wages are low. 
B)  All nations cannot simultaneously succeed in restricting imports while maintaining exports. 
C)  Reducing tariffs will benefit all consumers and domestic producers. 
D)  The need to protect U.S. workers from unemployment is not a concern in international economics.

Question 5

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will

Accepted Answer

A)  have a domestic shortage of wheat. 
B)  export wheat. 
C)  import wheat. 
D)  neither export nor import wheat. 
A)  have a domestic shortage of wheat. 
B)  export wheat. 
C)  import wheat. 
D)  neither export nor import wheat.

Question 6

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Accepted Answer

A) True 
 B)False

Question 7

Trade protection in most instances transfers wealth from consumers to domestic producers.

Accepted Answer

A) True 
 B)False

Question 8

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60 Y. Comparable figures for nation Beta are 60 X and 40 Y. Beta would prefer terms of trade at, or close to, 1X = 1½Y.

Accepted Answer

A) True 
 B)False

Question 9

In 2015, U.S. exports of services U.S. imports of services by about .

Accepted Answer

A)  exceeded; $20 B 
B)  fell short of; $20 B 
C)  exceeded; $220 B 
D)  fell short of; $220 B 
A)  exceeded; $20 B 
B)  fell short of; $20 B 
C)  exceeded; $220 B 
D)  fell short of; $220 B

Question 10

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

Accepted Answer

A)  labor costs and product prices are not related. 
B)  there is no discernible relationship between wage rates and labor productivity. 
C)  wage rates and labor productivity are directly related. 
D)  wage rates and labor productivity are inversely related. 
A)  labor costs and product prices are not related. 
B)  there is no discernible relationship between wage rates and labor productivity. 
C)  wage rates and labor productivity are directly related. 
D)  wage rates and labor productivity are inversely related.

Question 11

The slopes of the production possibilities curves for two nations reflect the

Accepted Answer

A)  relative prices of the resources in the two nations. 
B)  amounts of imports and exports of the two nations. 
C)  average income levels in the two nations. 
D)  opportunity costs of production in the two nations. 
A)  relative prices of the resources in the two nations. 
B)  amounts of imports and exports of the two nations. 
C)  average income levels in the two nations. 
D)  opportunity costs of production in the two nations.

Question 12

A high tariff on imported good X might reduce domestic employment in industry Y if

Accepted Answer

A)  X is an input used domestically in producing Y. 
B)  X and Y are substitute goods. 
C)  X is an inferior good. 
D)  Y is an inferior good. 
A)  X is an input used domestically in producing Y. 
B)  X and Y are substitute goods. 
C)  X is an inferior good. 
D)  Y is an inferior good.

Question 13

The World Trade Organization

Accepted Answer

A)  is also known as the International Monetary Fund (IMF). 
B)  is also known as NAFTA. 
C)  was established to resolve disputes arising under world trade rules. 
D)  enhances world trade by providing interest rate subsidies to foreign borrowers who buy exports on credit. 
A)  is also known as the International Monetary Fund (IMF). 
B)  is also known as NAFTA. 
C)  was established to resolve disputes arising under world trade rules. 
D)  enhances world trade by providing interest rate subsidies to foreign borrowers who buy exports on credit.

Question 14

A nation's import demand curve for a specific product

Accepted Answer

A)  is upsloping. 
B)  shows the amount of the product it will import at prices below its domestic price. 
C)  lies above its export supply curve for the product. 
D)  depends on domestic demand for the product, but not on domestic supply. 
A)  is upsloping. 
B)  shows the amount of the product it will import at prices below its domestic price. 
C)  lies above its export supply curve for the product. 
D)  depends on domestic demand for the product, but not on domestic supply.

Question 15

Which of the following was not one of the principles on which the General Agreement on Tariffs and Trade (GATT) was established?

Accepted Answer

A)  the elimination of import quotas 
B)  equal, nondiscriminatory trade treatment for all member nations 
C)  the formation of international trade contracts to alleviate global poverty 
D)  the reduction of tariffs by multilateral negotiations 
A)  the elimination of import quotas 
B)  equal, nondiscriminatory trade treatment for all member nations 
C)  the formation of international trade contracts to alleviate global poverty 
D)  the reduction of tariffs by multilateral negotiations

Question 16

In 2015, the United States had its first-ever trade surplus with OPEC.

Accepted Answer

A) True 
 B)False

Question 17

A tariff is a

Accepted Answer

A)  tax. 
B)  price ceiling. 
C)  quantity limit. 
D)  subsidy. 
A)  tax. 
B)  price ceiling. 
C)  quantity limit. 
D)  subsidy.

Question 18

Answer the question on the basis of the accompanying production possibilities tables for two countries, Latalia and Trombonia. $ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$\text { Latalia's production possibilities }$
$\begin{array}{|c|c|c|c|c|c|}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Pork (Tons) } & 4 & 3 & 2 & 1 & 0 \
\hline \text { Beans (Tons) } & 0 & 5 & 10 & 15 & 20 \
\hline
\end{array}$ $ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$\text { Trombonia's production }$
$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$\text { possibilities }$
$\begin{array}{c|c|c|c|c|c}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Pork (Tons) } & 8 & 6 & 4 & 2 & 0 \
\hline \text { Beans (Tons) } & 0 & 6 & 12 & 18 & 24 \
\hline
\end{array}$ The given data indicate that production in

Accepted Answer

A)  both Latalia and Trombonia is subject to constant opportunity costs. 
B)  Trombonia is subject to decreasing costs, but production in Latalia occurs under increasing opportunity costs. 
C)  Latalia is subject to increasing costs, but production in Trombonia occurs under constant opportunity costs. 
D)  both Latalia and Trombonia are subject to the law of increasing opportunity costs. 
A)  both Latalia and Trombonia is subject to constant opportunity costs. 
B)  Trombonia is subject to decreasing costs, but production in Latalia occurs under increasing opportunity costs. 
C)  Latalia is subject to increasing costs, but production in Trombonia occurs under constant opportunity costs. 
D)  both Latalia and Trombonia are subject to the law of increasing opportunity costs.

Question 19

Answer the question using the accompanying cost ratios for two products, fish (F) and chicken (C), in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C
In Singsong the domestic real cost of each chicken

Accepted Answer

A)  is ½ fish. 
B)  is 2 fish. 
C)  increases with the level of fish caught. 
D)  decreases with the level of fish caught. 
A)  is ½ fish. 
B)  is 2 fish. 
C)  increases with the level of fish caught. 
D)  decreases with the level of fish caught.

Question 20

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

Accepted Answer

A)  exporting products. 
B)  importing products. 
C)  import tariffs. 
D)  import quotas. 
A)  exporting products. 
B)  importing products. 
C)  import tariffs. 
D)  import quotas.

Exam 26: International Trade

When tariffs on imported products are removed by a nation, it will result in

Dumping of goods abroad

It is impossible for a nation to have a comparative advantage in producing everything.

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Trade protection in most instances transfers wealth from consumers to domestic producers.

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all its resources to Y, Alpha can produce 60 Y. Comparable figures for nation Beta are 60 X and 40 Y. Beta would prefer terms of trade at, or close to, 1X = 1½Y.

In 2015, U.S. exports of services U.S. imports of services by about .

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that

The slopes of the production possibilities curves for two nations reflect the

A high tariff on imported good X might reduce domestic employment in industry Y if

The World Trade Organization

A nation's import demand curve for a specific product

Which of the following was not one of the principles on which the General Agreement on Tariffs and Trade (GATT) was established?

In 2015, the United States had its first-ever trade surplus with OPEC.

A tariff is a

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

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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