Question 1

Which country has the largest share of total world exports?

Accepted Answer

A)  Japan 
B)  Germany 
C)  United States 
D)  China 
A)  Japan 
B)  Germany 
C)  United States 
D)  China

Question 2

Common arguments often raised to present the case for protectionism include the following, except

Accepted Answer

A)  protecting infant industries until they mature. 
B)  protection against foreign suppliers' dumping. 
C)  raising domestic employment in specific industries. 
D)  reducing the price of the product to consumers. 
A)  protecting infant industries until they mature. 
B)  protection against foreign suppliers' dumping. 
C)  raising domestic employment in specific industries. 
D)  reducing the price of the product to consumers.

Question 3

If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation. $ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$ \quad$$\text { Output (Units) }$
$\begin{array}{c|c|c|}
\hline \text { Nations } & \text { Aluminum } & \text { Oil } \
\hline \text { Quirk } & 20 & 40 \
\hline \text { Tunk } & 30 & 90\
\hline 
\end{array}$ Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations?

Accepted Answer

A)  0.5 unit of oil for 1 unit of aluminum 
B)  0.5 unit of oil for 2 units of aluminum 
C)  1 unit of oil for 0.4 unit of aluminum 
D)  1 unit of oil for 4 units of aluminum 
A)  0.5 unit of oil for 1 unit of aluminum 
B)  0.5 unit of oil for 2 units of aluminum 
C)  1 unit of oil for 0.4 unit of aluminum 
D)  1 unit of oil for 4 units of aluminum

Question 4

In the real world, specialization is rarely complete because

Accepted Answer

A)  nations normally experience increasing opportunity costs in producing more of the product in which they are specializing. 
B)  production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin. 
C)  one nation's imports are necessarily another nation's exports. 
D)  international law prohibits monopolies. 
A)  nations normally experience increasing opportunity costs in producing more of the product in which they are specializing. 
B)  production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin. 
C)  one nation's imports are necessarily another nation's exports. 
D)  international law prohibits monopolies.

Question 5

An excise tax on imported items is known as a(n)

Accepted Answer

A)  quota. 
B)  tariff. 
C)  export restriction. 
D)  price ceiling. 
A)  quota. 
B)  tariff. 
C)  export restriction. 
D)  price ceiling.

Question 6

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)

Accepted Answer

A)  protective tariff. 
B)  export subsidy. 
C)  import quota. 
D)  voluntary export restriction. 
A)  protective tariff. 
B)  export subsidy. 
C)  import quota. 
D)  voluntary export restriction.

Question 7

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 }$
$\begin{array}{|c|c|c|c|c|c|} 
\hline& \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \
\hline \text { Fish (Tons) } & 240 & 180 & 120 & 60 & 0 \
\hline \text { Chips (Tons) } & 0 & 10 & 20 & 30 & 40\
\hline
\end{array}$ The given data show that

Accepted Answer

A)  Beta has a comparative advantage in producing chips. 
B)  Alpha has a comparative advantage in catching fish. 
C)  Alpha is subject to constant costs and Beta is subject to increasing costs. 
D)  Beta is more efficient than Alpha both in catching fish and in producing chips. 
A)  Beta has a comparative advantage in producing chips. 
B)  Alpha has a comparative advantage in catching fish. 
C)  Alpha is subject to constant costs and Beta is subject to increasing costs. 
D)  Beta is more efficient than Alpha both in catching fish and in producing chips.

Question 8

NAFTA established a free-trade area and eliminated trade barriers between

Accepted Answer

A)  the U.S. and Canada only. 
B)  the U.S., Mexico, and China. 
C)  the U.S., Mexico, and Canada. 
D)  the U.S., China, and Canada. 
A)  the U.S. and Canada only. 
B)  the U.S., Mexico, and China. 
C)  the U.S., Mexico, and Canada. 
D)  the U.S., China, and Canada.

Question 9

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

Accepted Answer

A)  Taiwan in both goods 
B)  Taiwan in clocks and Germany in mugs 
C)  Germany in clocks and Taiwan in mugs 
D)  Germany in both goods 
A)  Taiwan in both goods 
B)  Taiwan in clocks and Germany in mugs 
C)  Germany in clocks and Taiwan in mugs 
D)  Germany in both goods

Question 10

The use of tariffs and quotas for trade protection results in

Accepted Answer

A)  lower prices for domestic consumers. 
B)  less revenue for government. 
C)  less efficiency in the economy. 
D)  less rent-seeking activity. 
A)  lower prices for domestic consumers. 
B)  less revenue for government. 
C)  less efficiency in the economy. 
D)  less rent-seeking activity.

Question 11

A tariff can best be described as

Accepted Answer

A)  an excise tax on an imported good. 
B)  a government payment to domestic producers to enable them to sell competitively in world markets. 
C)  an excise tax on an exported good. 
D)  a law that sets a limit on the amount of a good that can be imported. 
A)  an excise tax on an imported good. 
B)  a government payment to domestic producers to enable them to sell competitively in world markets. 
C)  an excise tax on an exported good. 
D)  a law that sets a limit on the amount of a good that can be imported.

Question 12

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Accepted Answer

A) True 
 B)False

Question 13

In the theory of comparative advantage, a good should be produced in that nation where

Accepted Answer

A)  the production possibilities line lies further to the right than the trading possibilities line. 
B)  its cost is least in terms of alternative goods that might otherwise be produced. 
C)  its absolute cost in terms of real resources used is least. 
D)  its absolute money cost of production is least. 
A)  the production possibilities line lies further to the right than the trading possibilities line. 
B)  its cost is least in terms of alternative goods that might otherwise be produced. 
C)  its absolute cost in terms of real resources used is least. 
D)  its absolute money cost of production is least.

Question 14

The following are commonly used arguments for protection against imports, except

Accepted Answer

A)  self-sufficiency and diversification-for-stability. 
B)  protection against dumping. 
C)  infant industry protection. 
D)  price- and profit-maintenance. 
A)  self-sufficiency and diversification-for-stability. 
B)  protection against dumping. 
C)  infant industry protection. 
D)  price- and profit-maintenance.

Question 15

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

Accepted Answer

A)  International Monetary Fund (IMF). 
B)  World Trade Organization (WTO). 
C)  Common Market Organization (CMO). 
D)  International Trade Commission (IT
C) . 
A)  International Monetary Fund (IMF). 
B)  World Trade Organization (WTO). 
C)  Common Market Organization (CMO). 
D)  International Trade Commission (IT
C) .

Question 16

From an economic perspective, studies of the costs of trade barriers show that they

Accepted Answer

A)  are outweighed by the reduction in foreign competition provided by the barriers. 
B)  are much less than benefits for domestic producers and workers. 
C)  are about equal to the benefits from trade barriers. 
D)  far exceed their benefits for society. 
A)  are outweighed by the reduction in foreign competition provided by the barriers. 
B)  are much less than benefits for domestic producers and workers. 
C)  are about equal to the benefits from trade barriers. 
D)  far exceed their benefits for society.

Question 17

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

Accepted Answer

A) True 
 B)False

Question 18

The "eurozone"

Accepted Answer

A)  is another name for the European Union. 
B)  refers to the common currency used by all European Union members. 
C)  is a geographic region in Europe with no national sovereignty, where free trade between European nations is allowed to occur. 
D)  is the subset of the EU that uses a common currency. 
A)  is another name for the European Union. 
B)  refers to the common currency used by all European Union members. 
C)  is a geographic region in Europe with no national sovereignty, where free trade between European nations is allowed to occur. 
D)  is the subset of the EU that uses a common currency.

Question 19

Among the principal exports of the United States are agricultural products.

Accepted Answer

A) True 
 B)False

Question 20

Which is not a commonly heard argument for protectionism?

Accepted Answer

A)  A strong national defense requires that some military products be produced domestically. 
B)  Infant industries need short-term protection from foreign competition in order to grow. 
C)  Specialization along the lines of comparative advantage can lead to some economic instability in a nation. 
D)  When other nations' economies grow, they typically import fewer goods and services. 
A)  A strong national defense requires that some military products be produced domestically. 
B)  Infant industries need short-term protection from foreign competition in order to grow. 
C)  Specialization along the lines of comparative advantage can lead to some economic instability in a nation. 
D)  When other nations' economies grow, they typically import fewer goods and services.

Exam 26: International Trade

Which country has the largest share of total world exports?

Common arguments often raised to present the case for protectionism include the following, except

In the real world, specialization is rarely complete because

An excise tax on imported items is known as a(n)

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)

NAFTA established a free-trade area and eliminated trade barriers between

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

The use of tariffs and quotas for trade protection results in

A tariff can best be described as

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

In the theory of comparative advantage, a good should be produced in that nation where

The following are commonly used arguments for protection against imports, except

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

From an economic perspective, studies of the costs of trade barriers show that they

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

The "eurozone"

Among the principal exports of the United States are agricultural products.

Which is not a commonly heard argument for protectionism?

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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