Question 1

The law of increasing opportunity costs:

Accepted Answer

A)  applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. 
B)  results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. 
C)  refutes the principle of comparative advantage. 
D)  may limit the extent to which a nation specializes in producing a particular product. 
A)  applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. 
B)  results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. 
C)  refutes the principle of comparative advantage. 
D)  may limit the extent to which a nation specializes in producing a particular product.

Question 2

A protective tariff will:

Accepted Answer

A)  increase the sales of foreign exporters. 
B)  increase the price and sales of domestic producers. 
C)  increase the welfare of domestic consumers. 
D)  create an efficiency gain in the domestic economy. 
A)  increase the sales of foreign exporters. 
B)  increase the price and sales of domestic producers. 
C)  increase the welfare of domestic consumers. 
D)  create an efficiency gain in the domestic economy.

Question 3

Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. $\begin{array}{c}
\underline{\text { Domestic Market For Steel, Alpha }}\
\begin{array}{c}
\underline{Q_{s}}\  
60\
40\
30\
20\
10 
\end{array}
\begin{array}{c}
\underline{P}\
\$ 5 \
4 \
3 \
2 \
1 
\end{array}
\begin{array}{l}
\underline{Q_{d}} \
10 \
20 \
30 \
40 \
50 
\end{array}
\end{array}$

$\begin{array}{c}
\underline{\text { Domestic Market For Steel, Beta  }}\
\begin{array}{c}
\underline{Q_{s}}\  
80 \
70 \
60 \
50 \
40
\end{array}
\begin{array}{c}
\underline{P}\
\$ 5 \
4 \
3 \
2 \
1 
\end{array}
\begin{array}{l}
\underline{Q_{d}} \
20 \
30 \
40 \
50 \
60 
\end{array}
\end{array}$

Refer to the given data.Alpha's export supply is represented by:

Accepted Answer

A) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&40\
4&20 \
3&0 \
\end{array}$ 
B) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&50\
4&20 \
3&0 \
\end{array}$ 
C) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&60\
4&30 \
3&0 \
\end{array}$ 
D) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&40\
4&30 \
3&15 \
\end{array}$ 
A) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&40\
4&20 \
3&0 \
\end{array}$ 
B) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&50\
4&20 \
3&0 \
\end{array}$ 
C) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&60\
4&30 \
3&0 \
\end{array}$ 
D) 
$\begin{array} { l } 
\underline{ P }& \underline { Q }  \
\$5&40\
4&30 \
3&15 \
\end{array}$

Question 4

Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. $\begin{array}{c}
\underline{\text { Domestic Market For Steel, Alpha }}\
\begin{array}{c}
\underline{Q_{s}}\  
60\
40\
30\
20\
10 
\end{array}
\begin{array}{c}
\underline{P}\
\$ 5 \
4 \
3 \
2 \
1 
\end{array}
\begin{array}{l}
\underline{Q_{d}} \
10 \
20 \
30 \
40 \
50 
\end{array}
\end{array}$

$\begin{array}{c}
\underline{\text { Domestic Market For Steel, Beta  }}\
\begin{array}{c}
\underline{Q_{s}}\  
80 \
70 \
60 \
50 \
40
\end{array}
\begin{array}{c}
\underline{P}\
\$ 5 \
4 \
3 \
2 \
1 
\end{array}
\begin{array}{l}
\underline{Q_{d}} \
20 \
30 \
40 \
50 \
60 
\end{array}
\end{array}$

Refer to the given data.Assuming that Alpha and Beta are the only two nations in the world,the equilibrium world price must be higher than $1 because at $1:

Accepted Answer

A)  Beta wants to import more than Alpha. 
B)  Alpha wants to export more than Beta. 
C)  both nations want to export steel. 
D)  both nations want to import steel. 
A)  Beta wants to import more than Alpha. 
B)  Alpha wants to export more than Beta. 
C)  both nations want to export steel. 
D)  both nations want to import steel.

Question 5

Which is an example of a nontariff barrier (NTB)?

Accepted Answer

A)  An export subsidy. 
B)  An excise tax on the physical volume of imported goods. 
C)  Box-by-box inspection requirements for imported fruit. 
D)  An excise tax on the dollar value of imported goods. 
A)  An export subsidy. 
B)  An excise tax on the physical volume of imported goods. 
C)  Box-by-box inspection requirements for imported fruit. 
D)  An excise tax on the dollar value of imported goods.

Question 6

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 7

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:

Accepted Answer

A)  the production possibilities curves of any two nations are identical. 
B)  a nation's production possibilities and trading possibilities lines coincide. 
C)  a nation's trading possibilities line lies to the right of its production possibilities line. 
D)  a nation's production possibilities line lies to the right of its trading possibilities line. 
A)  the production possibilities curves of any two nations are identical. 
B)  a nation's production possibilities and trading possibilities lines coincide. 
C)  a nation's trading possibilities line lies to the right of its production possibilities line. 
D)  a nation's production possibilities line lies to the right of its trading possibilities line.

Question 8

Assume that by devoting all of its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all of its resources to Y,Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that:

Accepted Answer

A)  the terms of trade will be 3X equals 1Y. 
B)  Alpha should specialize in Y and Beta in X. 
C)  Alpha should specialize in X and Beta in Y. 
D)  there is no basis for mutually beneficial specialization and trade. 
A)  the terms of trade will be 3X equals 1Y. 
B)  Alpha should specialize in Y and Beta in X. 
C)  Alpha should specialize in X and Beta in Y. 
D)  there is no basis for mutually beneficial specialization and trade.

Question 9

Economists who criticize trade adjustment assistance argue that:

Accepted Answer

A)  it only benefits a very small fraction of all unemployed workers. 
B)  money spent on the program overstimulates aggregate demand and threatens to cause inflation. 
C)  benefits are too low to provide unemployed workers with a livable wage. 
D)  it distorts patterns of foreign trade,reducing the gains from trade. 
A)  it only benefits a very small fraction of all unemployed workers. 
B)  money spent on the program overstimulates aggregate demand and threatens to cause inflation. 
C)  benefits are too low to provide unemployed workers with a livable wage. 
D)  it distorts patterns of foreign trade,reducing the gains from trade.

Question 10

Answer the question on the basis of the following production possibilities tables for two countries,Latalia and Trombonia: $\begin{array}{c}
\quad\quad\quad\underline{ \text {Latalia's Production Possibilities }}\
\begin{array}{lll}
\
 \text {Pork (Tons)}\
 \text {Beans (Tons)}
\end{array}
\begin{array}{c}
\underline{\text {A}}\
4\
0
\end{array}
\begin{array}{c}
\underline{\text {B}}\
3\
5
\end{array}
\begin{array}{c}
\underline{\text {C}}\
2\
10
\end{array}
\begin{array}{c}
\underline{\text {D}}\
1\
15
\end{array}
\begin{array}{c}
\underline{\text {E}}\
0\
20
\end{array}
\end{array}$
 
 $\begin{array}{c}
\quad\quad\quad\underline{\text {Trombonia's Production Possibilities  }}\
\begin{array}{lll}
\
 \text {Pork (Tons)}\
 \text {Beans (Tons)}
\end{array}
\begin{array}{c}
\underline{\text {A}}\
8\
0
\end{array}
\begin{array}{c}
\underline{\text {B}}\
6\
6
\end{array}
\begin{array}{c}
\underline{\text {C}}\
4\
12
\end{array}
\begin{array}{c}
\underline{\text {D}}\
2\
18
\end{array}
\begin{array}{c}
\underline{\text {E}}\
0\
24
\end{array}
\end{array}$

Refer to the tables.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 11

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

Accepted Answer

A)  The increased domestic employment argument. 
B)  The cheap foreign labor argument. 
C)  The diversification-for-stability argument. 
D)  The infant industry argument. 
A)  The increased domestic employment argument. 
B)  The cheap foreign labor argument. 
C)  The diversification-for-stability argument. 
D)  The infant industry argument.

Question 12

Other things equal,economists would prefer:

Accepted Answer

A)  free trade to tariffs and tariffs to import quotas. 
B)  free trade to import quotas and import quotas to tariffs. 
C)  import quotas to tariffs and tariffs to voluntary export restrictions. 
D)  import quotas to free trade and free trade to tariffs. 
A)  free trade to tariffs and tariffs to import quotas. 
B)  free trade to import quotas and import quotas to tariffs. 
C)  import quotas to tariffs and tariffs to voluntary export restrictions. 
D)  import quotas to free trade and free trade to tariffs.

Question 13

The primary gain from international trade is:

Accepted Answer

A)  increased employment in the domestic export sector. 
B)  more goods than would be attainable through domestic production alone. 
C)  tariff revenue. 
D)  increased employment in the domestic import sector. 
A)  increased employment in the domestic export sector. 
B)  more goods than would be attainable through domestic production alone. 
C)  tariff revenue. 
D)  increased employment in the domestic import sector.

Question 14

Answer the question on the basis of the following production possibilities data for Gamma and Sigma.All data are in tons. Gamma's production possibilities: $\begin{array}{llcc}
&\underline{\text { A } }&\underline{\text {B}}&\underline{\text { C} } &\underline{\text { D } }&\underline{\text {E}}\
\text { Tea } &120&90&60&30&0\
\text { Pots}&0&30&60&90&120
\end{array}$
 Sigma's production possibilities: $\begin{array}{llcc}
&\underline{\text { A } }&\underline{\text {B}}&\underline{\text { C} } &\underline{\text { D } }&\underline{\text {E}}\
\text { Tea } &120&90&60&30&0\
\text { Pots}&0&30&60&90&120
\end{array}$
 On the basis of the given information:

Accepted Answer

A)  Gamma should export both tea and pots to Sigma. 
B)  Sigma should export tea to Gamma and Gamma should export pots to Sigma. 
C)  Gamma should export tea to Sigma and Sigma should export pots to Gamma. 
D)  Gamma should export tea to Sigma,but it will not be profitable for the two nations to exchange pots. 
A)  Gamma should export both tea and pots to Sigma. 
B)  Sigma should export tea to Gamma and Gamma should export pots to Sigma. 
C)  Gamma should export tea to Sigma and Sigma should export pots to Gamma. 
D)  Gamma should export tea to Sigma,but it will not be profitable for the two nations to exchange pots.

Question 15

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 16

Which of the following statements is false?

Accepted Answer

A)  In recent years,the United States has had large annual trade deficits in goods and services. 
B)  The United States imports some of the same categories of goods as it exports. 
C)  China has the largest share of world exports. 
D)  As a percentage of GDP,U.S.exports are the highest among the industrially advanced nations. 
A)  In recent years,the United States has had large annual trade deficits in goods and services. 
B)  The United States imports some of the same categories of goods as it exports. 
C)  China has the largest share of world exports. 
D)  As a percentage of GDP,U.S.exports are the highest among the industrially advanced nations.

Question 17

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 18

Answer the question on the basis of the following data for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. $\begin{array}{c}
\underline{\text { Domestic Market For Steel, Alpha }}\
\begin{array}{c}
\underline{Q_{s}}\  
60\
40\
30\
20\
10 
\end{array}
\begin{array}{c}
\underline{P}\
\$ 5 \
4 \
3 \
2 \
1 
\end{array}
\begin{array}{l}
\underline{Q_{d}} \
10 \
20 \
30 \
40 \
50 
\end{array}
\end{array}$

$\begin{array}{c}
\underline{\text { Domestic Market For Steel, Beta  }}\
\begin{array}{c}
\underline{Q_{s}}\  
80 \
70 \
60 \
50 \
40
\end{array}
\begin{array}{c}
\underline{P}\
\$ 5 \
4 \
3 \
2 \
1 
\end{array}
\begin{array}{l}
\underline{Q_{d}} \
20 \
30 \
40 \
50 \
60 
\end{array}
\end{array}$

Refer to the given data.Assuming that Alpha and Beta are the only two nations in the world,at the equilibrium world price:

Accepted Answer

A)  both nations will export steel. 
B)  both nations will import steel. 
C)  Alpha will export steel and Beta will import steel. 
D)  Beta will export steel and Alpha will import steel. 
A)  both nations will export steel. 
B)  both nations will import steel. 
C)  Alpha will export steel and Beta will import steel. 
D)  Beta will export steel and Alpha will import steel.

Question 19

NAFTA:

Accepted Answer

A)  has increased the standard of living in the North African member nations. 
B)  benefits workers in the participating nations but hurts consumers by raising prices. 
C)  allows completely unrestricted movement of goods,services,and resources between the member nations. 
D)  has reduced most trade barriers between Canada,Mexico,and the United States. 
A)  has increased the standard of living in the North African member nations. 
B)  benefits workers in the participating nations but hurts consumers by raising prices. 
C)  allows completely unrestricted movement of goods,services,and resources between the member nations. 
D)  has reduced most trade barriers between Canada,Mexico,and the United States.

Question 20

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.

The law of increasing opportunity costs:

A protective tariff will:

Which is an example of a nontariff barrier (NTB)?

Graphical analysis of tariffs reveals that:

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:

Assume that by devoting all of its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all of its resources to Y,Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that:

Economists who criticize trade adjustment assistance argue that:

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

Other things equal,economists would prefer:

The primary gain from international trade is:

The United States' most important trading partner quantitatively is:

Which of the following statements is false?

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

NAFTA:

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:

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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Exam 39: International Trade

The law of increasing opportunity costs:

A protective tariff will:

Which is an example of a nontariff barrier (NTB)?

Graphical analysis of tariffs reveals that:

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:

Assume that by devoting all of its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all of its resources to Y,Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that:

Economists who criticize trade adjustment assistance argue that:

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

Other things equal,economists would prefer:

The primary gain from international trade is:

The United States' most important trading partner quantitatively is:

Which of the following statements is false?

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

NAFTA:

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:

Income Inequality Poverty and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

Filters