Question 1

If two nations have straight-line production possibilities curves:

Accepted Answer

A)  then their trading possibilities curves must lie inside the production possibilities curves. 
B)  there will be no basis for mutually advantageous trade. 
C)  there will be a basis for mutually advantageous trade whether the slopes are equal or not. 
D)  there will be a basis for mutually advantageous trade provided the slopes differ. 
A)  then their trading possibilities curves must lie inside the production possibilities curves. 
B)  there will be no basis for mutually advantageous trade. 
C)  there will be a basis for mutually advantageous trade whether the slopes are equal or not. 
D)  there will be a basis for mutually advantageous trade provided the slopes differ.

Question 2

Answer the question on the basis of the following domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. $\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { Supplied } \
\text { (Domestic) }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Demanded } \
\text { (Domestic) }
\end{array} \
 12 & \$ 5 & 2 \
10 & 4 & 4 \
7 & 3 & 7 \
4 & 2 & 11 \
1 & 1 & 16
\end{array}$ Refer to the given data.With a $1-per-unit tariff,price and total quantity sold will be:

Accepted Answer

A)  $3 and 7 units. 
B)  $5 and 2 units. 
C)  $1 and 16 units. 
D)  $2 and 11 units. 
A)  $3 and 7 units. 
B)  $5 and 2 units. 
C)  $1 and 16 units. 
D)  $2 and 11 units.

Question 3

The number of countries belonging to the World Trade Organization (WTO),as of 2013,is about:

Accepted Answer

A)  159. 
B)  125. 
C)  80. 
D)  202. 
A)  159. 
B)  125. 
C)  80. 
D)  202.

Question 4

A nation will neither export nor import a specific product when its:

Accepted Answer

A)  domestic price equals the world price. 
B)  export supply curve lies above its import demand curve. 
C)  export supply curve is upsloping. 
D)  import demand curve is downsloping. 
A)  domestic price equals the world price. 
B)  export supply curve lies above its import demand curve. 
C)  export supply curve is upsloping. 
D)  import demand curve is downsloping.

Question 5

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 6

Suppose the domestic price (no-international-trade price)of copper is $1.20 a pound in the United States while the world price is $1.00 a pound.Assuming no transportation costs,the United States will:

Accepted Answer

A)  have a domestic surplus of copper. 
B)  export copper. 
C)  import copper. 
D)  neither export nor import copper. 
A)  have a domestic surplus of copper. 
B)  export copper. 
C)  import copper. 
D)  neither export nor import copper.

Question 7

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 8

(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 9

Answer the question on the basis of the following information.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 60Y.Comparable figures for nation Beta are 60X and 40Y.
Refer to the given information.If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade,then we can say that the gains from specialization and trade are 10X and 10Y.

Accepted Answer

A) True 
 B)False

Question 10

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Accepted Answer

A)  Textiles. 
B)  Financial services. 
C)  Steel. 
D)  Apparel. 
A)  Textiles. 
B)  Financial services. 
C)  Steel. 
D)  Apparel.

Question 11

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.In Latalia the domestic real cost of 1 ton of pork:

Accepted Answer

A)  is 3 tons of beans. 
B)  diminishes with the level of pork production. 
C)  is 5 tons of beans. 
D)  is 1/5 of a ton of beans. 
A)  is 3 tons of beans. 
B)  diminishes with the level of pork production. 
C)  is 5 tons of beans. 
D)  is 1/5 of a ton of beans.

Question 12

Which of the following is an example of a labor-intensive commodity?

Accepted Answer

A)  Digital cameras. 
B)  Beer. 
C)  Aspirin tablets. 
D)  Gasoline. 
A)  Digital cameras. 
B)  Beer. 
C)  Aspirin tablets. 
D)  Gasoline.

Question 13

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

Accepted Answer

A) True 
 B)False

Question 14

"NAFTA" stands for:

Accepted Answer

A)  North African Free Trade Area. 
B)  North American Free Trade Agreement. 
C)  North Asian Free Trade Agreement. 
D)  New Zealand-Australia Free Trade Agreement. 
A)  North African Free Trade Area. 
B)  North American Free Trade Agreement. 
C)  North Asian Free Trade Agreement. 
D)  New Zealand-Australia Free Trade Agreement.

Question 15

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 16

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 17

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 18

The increased-domestic-employment argument for tariff protection holds that:

Accepted Answer

A)  domestic inflation is a desirable policy goal because it stimulates exports. 
B)  domestic deflation is a desirable policy goal because it stimulates imports. 
C)  an increase in tariffs will reduce net exports and stimulate domestic employment. 
D)  an increase in tariffs will increase net exports and stimulate domestic employment. 
A)  domestic inflation is a desirable policy goal because it stimulates exports. 
B)  domestic deflation is a desirable policy goal because it stimulates imports. 
C)  an increase in tariffs will reduce net exports and stimulate domestic employment. 
D)  an increase in tariffs will increase net exports and stimulate domestic employment.

Question 19

Answer the question on the basis of the following production possibilities data for two countries,Alpha and Beta,which have populations of equal size. $\begin{array}{c}
\quad\quad\underline{\text { Alpha's Production Possibilities }}\
\begin{array}{lll}
 \
 \text {Fish (Tons)}\
  \text {Chips (Tons)} 
\end{array}
\begin{array}{c}
\underline{\text {A }}\
 80 \
0
\end{array}
\begin{array}{c}
\underline{\text {B }}\
 60 \
5
\end{array}
\begin{array}{c}
\underline{\text {C }}\
 40 \
10
\end{array}
\begin{array}{c}
\underline{\text {D }}\
20 \
15
\end{array}
\begin{array}{c}
\underline{\text {E }}\
0 \
20 
\end{array}
\end{array}$

$\begin{array}{c}
\quad\quad\underline{\text { Beta's Production Possibilities }}\
\begin{array}{lll}
 \
 \text {Fish (Tons)}\
  \text {Chips (Tons)} 
\end{array}
\begin{array}{c}
\underline{\text {A }}\
240 \
0
\end{array}
\begin{array}{c}
\underline{\text {B }}\
 180 \
10
\end{array}
\begin{array}{c}
\underline{\text {C }}\
120 \
20
\end{array}
\begin{array}{c}
\underline{\text {D }}\
60 \
30
\end{array}
\begin{array}{c}
\underline{\text {E }}\
0 \
40 
\end{array}
\end{array}$

Refer to the given data.Beta:

Accepted Answer

A)  should specialize in catching fish and trade with Alpha for chips. 
B)  should specialize in producing chips and trade with Alpha for fish. 
C)  will not realize gains from specialization and trade. 
D)  will export both fish and chips to Alpha. 
A)  should specialize in catching fish and trade with Alpha for chips. 
B)  should specialize in producing chips and trade with Alpha for fish. 
C)  will not realize gains from specialization and trade. 
D)  will export both fish and chips to Alpha.

Question 20

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.

If two nations have straight-line production possibilities curves:

The number of countries belonging to the World Trade Organization (WTO),as of 2013,is about:

A nation will neither export nor import a specific product when its:

In the real world,specialization is rarely complete because:

Suppose the domestic price (no-international-trade price)of copper is $1.20 a pound in the United States while the world price is $1.00 a pound.Assuming no transportation costs,the United States will:

A tariff can best be described as:

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

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Answer the question on the basis of the following production possibilities tables for two countries,Latalia and Trombonia: Pork (Tons) Beans (Tons) 4 0 3 5 2 10 1 15 0 20 Pork (Tons) Beans (Tons) 8 0 6 6 4 12 2 18 0 24 Refer to the tables.In Latalia the domestic real cost of 1 ton of pork:

Which of the following is an example of a labor-intensive commodity?

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

"NAFTA" stands for:

Which country has the largest share of total world exports?

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

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 increased-domestic-employment argument for tariff protection holds that:

Answer the question on the basis of the following production possibilities data for two countries,Alpha and Beta,which have populations of equal size. Fish (Tons) Chips (Tons) 80 0 60 5 40 10 20 15 0 20 Fish (Tons) Chips (Tons) 240 0 180 10 120 20 60 30 0 40 Refer to the given data.Beta:

Other things equal,a tariff is:

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An Introduction to Macroeconomics

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Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

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Exam 39: International Trade

If two nations have straight-line production possibilities curves:

The number of countries belonging to the World Trade Organization (WTO),as of 2013,is about:

A nation will neither export nor import a specific product when its:

In the real world,specialization is rarely complete because:

Suppose the domestic price (no-international-trade price)of copper is $1.20 a pound in the United States while the world price is $1.00 a pound.Assuming no transportation costs,the United States will:

A tariff can best be described as:

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

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Answer the question on the basis of the following production possibilities tables for two countries,Latalia and Trombonia: Pork (Tons) Beans (Tons) 4 0 3 5 2 10 1 15 0 20 Pork (Tons) Beans (Tons) 8 0 6 6 4 12 2 18 0 24 Refer to the tables.In Latalia the domestic real cost of 1 ton of pork:

Which of the following is an example of a labor-intensive commodity?

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

"NAFTA" stands for:

Which country has the largest share of total world exports?

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

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 increased-domestic-employment argument for tariff protection holds that:

Answer the question on the basis of the following production possibilities data for two countries,Alpha and Beta,which have populations of equal size. Fish (Tons) Chips (Tons) 80 0 60 5 40 10 20 15 0 20 Fish (Tons) Chips (Tons) 240 0 180 10 120 20 60 30 0 40 Refer to the given data.Beta:

Other things equal,a tariff is:

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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