Question 1

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

Accepted Answer

A)  an import quota. 
B)  a revenue tariff. 
C)  a protective tariff. 
D)  a voluntary export restriction. 
A)  an import quota. 
B)  a revenue tariff. 
C)  a protective tariff. 
D)  a voluntary export restriction.

Question 2

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

Accepted Answer

A)  The government needs to protect U.S. workers from the dumping of foreign products. 
B)  Strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions. 
C)  U.S. firms and workers must be protected from the ruinous competition of nations where wages for workers are low. 
D)  Imports may eliminate some U.S. jobs, but they create others, so they may have little or no effect on employment. 
A)  The government needs to protect U.S. workers from the dumping of foreign products. 
B)  Strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions. 
C)  U.S. firms and workers must be protected from the ruinous competition of nations where wages for workers are low. 
D)  Imports may eliminate some U.S. jobs, but they create others, so they may have little or no effect on employment.

Question 3

The United States' most important trading partner quantitatively is

Accepted Answer

A)  China. 
B)  Canada. 
C)  Mexico. 
D)  Japan. 
A)  China. 
B)  Canada. 
C)  Mexico. 
D)  Japan.

Question 4

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Accepted Answer

A) True 
 B)False

Question 5

Research studies indicate that

Accepted Answer

A)  U.S. producers gain more from tariffs than U.S. consumers lose. 
B)  the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. 
C)  the revenue from tariffs equals the total cost that tariffs impose on consumers. 
D)  U.S. consumers lose more from tariffs than U.S. producers gain. 
A)  U.S. producers gain more from tariffs than U.S. consumers lose. 
B)  the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. 
C)  the revenue from tariffs equals the total cost that tariffs impose on consumers. 
D)  U.S. consumers lose more from tariffs than U.S. producers gain.

Question 6

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is true?

Accepted Answer

A)  Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. 
B)  Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner. 
C)  Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. 
D)  Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product. 
A)  Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it. 
B)  Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner. 
C)  Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product. 
D)  Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.

Question 8

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size. $ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$\text { Alpha's production possibilities }$
$\begin{array}{|c|c|c|c|c|c|}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Fish (Tons) } & 80 & 60 & 40 & 20 & 0 \
\hline \text { Chips (Tons) } & 0 & 5 & 10 & 15 & 20 \
\hline
\end{array}$ $ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$\text { Beta's production possibilities }$
$\begin{array}{|c|c|c|c|c|c|} 
\hline& \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \
\hline \text { Fish (Tons) } & 240 & 180 & 120 & 60 & 0 \
\hline \text { Chips (Tons) } & 0 & 10 & 20 & 30 & 40\
\hline
\end{array}$ Suppose that before specialization and trade, Alpha chose production alternative C and Beta chose production alternative B. After specialization and trade, the gains will be

Accepted Answer

A)  20 tons of fish. 
B)  20 tons of chips. 
C)  20 tons of fish and 20 tons of chips. 
D)  240 tons of fish and 20 tons of chips. 
A)  20 tons of fish. 
B)  20 tons of chips. 
C)  20 tons of fish and 20 tons of chips. 
D)  240 tons of fish and 20 tons of chips.

Question 9

(Consider This) The greatest benefit to an economy from international trade is

Accepted Answer

A)  greater employment in the export sector of the economy. 
B)  the economic power it gives a nation over other countries. 
C)  full employment of its labor force. 
D)  consumption beyond domestic production possibilities. 
A)  greater employment in the export sector of the economy. 
B)  the economic power it gives a nation over other countries. 
C)  full employment of its labor force. 
D)  consumption beyond domestic production possibilities.

Question 10

Frederic Bastiat's satire clearly illustrates that

Accepted Answer

A)  French candlemakers would benefit from government restrictions on trade. 
B)  French consumers would benefit from a tariff on U.S. candles. 
C)  the arguments in favor of trade protectionism can sometimes be ridiculous. 
D)  the arguments in favor of protectionism are sometimes well-founded. 
A)  French candlemakers would benefit from government restrictions on trade. 
B)  French consumers would benefit from a tariff on U.S. candles. 
C)  the arguments in favor of trade protectionism can sometimes be ridiculous. 
D)  the arguments in favor of protectionism are sometimes well-founded.

Question 11

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 }$
$\begin{array}{c|c|c|c|c|c} 
& \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Pork (Tons) } & 4 & 3 & 2 & 1 & 0 \
\hline \text { Beans (Tons) } & 0 & 5 & 10 & 15 & 20
\end{array}$ $ \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 }$
$\begin{array}{c|c|c|c|c|c}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Pork (Tons) } & 8 & 6 & 4 & 2 & 0 \
\hline \text { Beans (Tons) } & 0 & 6 & 12 & 18 & 24 \
\hline
\end{array}$ Which of the following would be feasible terms for trade between Latalia and Trombonia?

Accepted Answer

A)  1 ton of beans for 1 ton of pork 
B)  2 tons of beans for 1 ton of pork 
C)  6 tons of beans for 1 ton of pork 
D)  4 tons of beans for 1 ton of pork 
A)  1 ton of beans for 1 ton of pork 
B)  2 tons of beans for 1 ton of pork 
C)  6 tons of beans for 1 ton of pork 
D)  4 tons of beans for 1 ton of pork

Question 12

As it relates to international trade, dumping

Accepted Answer

A)  is a form of price discrimination illegal under U.S. antitrust laws. 
B)  is the practice of selling goods in a foreign market at less than cost. 
C)  constitutes a general case for permanent tariffs. 
D)  is defined as selling more goods than allowed by an import quota. 
A)  is a form of price discrimination illegal under U.S. antitrust laws. 
B)  is the practice of selling goods in a foreign market at less than cost. 
C)  constitutes a general case for permanent tariffs. 
D)  is defined as selling more goods than allowed by an import quota.

Question 13

In 2014, the United States was the largest exporter in the world.

Accepted Answer

A) True 
 B)False

Question 14

(Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that

Accepted Answer

A)  there is no reason for them to trade services. 
B)  Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. 
C)  Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. 
D)  Madison has the comparative advantage in both services. 
A)  there is no reason for them to trade services. 
B)  Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. 
C)  Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. 
D)  Madison has the comparative advantage in both services.

Question 15

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?

Accepted Answer

A)  Country Y should specialize in the growing of soybeans according to the principle of comparative advantage. 
B)  Country X is the least-cost producer of wheat. 
C)  The domestic opportunity cost of wheat production is lower in country Y. 
D)  The high-cost producer of soybeans is country X. 
A)  Country Y should specialize in the growing of soybeans according to the principle of comparative advantage. 
B)  Country X is the least-cost producer of wheat. 
C)  The domestic opportunity cost of wheat production is lower in country Y. 
D)  The high-cost producer of soybeans is country X.

Question 16

If two nations specialize in their respective comparative advantage and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

Accepted Answer

A) True 
 B)False

Question 17

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

Accepted Answer

A)  U.S. firms to establish export markets around the world. 
B)  other nations to become familiar with, and adjust to, U.S. products. 
C)  workers displaced by imports or plant relocations abroad. 
D)  businesses who wish to globalize and compete in the world market. 
A)  U.S. firms to establish export markets around the world. 
B)  other nations to become familiar with, and adjust to, U.S. products. 
C)  workers displaced by imports or plant relocations abroad. 
D)  businesses who wish to globalize and compete in the world market.

Question 18

The imposition of a tariff on a product is least likely to result in a(n)

Accepted Answer

A)  increase in efficiency in the domestic industry producing the product. 
B)  increase in the price of the product. 
C)  decrease in the quantity of imports. 
D)  decrease in the real incomes of workers in other industries. 
A)  increase in efficiency in the domestic industry producing the product. 
B)  increase in the price of the product. 
C)  decrease in the quantity of imports. 
D)  decrease in the real incomes of workers in other industries.

Question 19

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

Accepted Answer

A)  decrease in total supply and an increase in the price of the product. 
B)  decrease in demand and a decrease in the price of the product. 
C)  decrease in supply of, and an increase in demand for, the product. 
D)  increase in supply of, and a decrease in demand for, the product. 
A)  decrease in total supply and an increase in the price of the product. 
B)  decrease in demand and a decrease in the price of the product. 
C)  decrease in supply of, and an increase in demand for, the product. 
D)  increase in supply of, and a decrease in demand for, the product.

Question 20

Which of the following statements about the European Union (EU) is true?

Accepted Answer

A)  All members of the EU use a common currency (the euro). 
B)  The EU has abolished most trade barriers among participating countries and has common tariffs applied to non-EU goods. 
C)  The EU has eliminated most barriers to the trade of goods and services among participating nations but largely restricts the movement of labor and capital. 
D)  Trade within the EU is liberalized, but EU nations set most of their own policies with regard to trade with non-EU nations. 
A)  All members of the EU use a common currency (the euro). 
B)  The EU has abolished most trade barriers among participating countries and has common tariffs applied to non-EU goods. 
C)  The EU has eliminated most barriers to the trade of goods and services among participating nations but largely restricts the movement of labor and capital. 
D)  Trade within the EU is liberalized, but EU nations set most of their own policies with regard to trade with non-EU nations.

Exam 26: International Trade

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of

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

The United States' most important trading partner quantitatively is

Economists prefer free trade to tariffs and prefer tariffs to import quotas.

Research studies indicate that

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Which of the following statements is true?

(Consider This) The greatest benefit to an economy from international trade is

Frederic Bastiat's satire clearly illustrates that

As it relates to international trade, dumping

In 2014, the United States was the largest exporter in the world.

(Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat. Which of the following is true?

If two nations specialize in their respective comparative advantage and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

The imposition of a tariff on a product is least likely to result in a(n)

If a nation imposes a tariff on an imported product, then the nation will experience a(n)

Which of the following statements about the European Union (EU) is true?

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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