Question 1

The amount by which exports exceed imports is a:

Accepted Answer

A)  Quota. 
B)  Trade deficit. 
C)  Trade surplus. 
D)  Comparative advantage. 
A)  Quota. 
B)  Trade deficit. 
C)  Trade surplus. 
D)  Comparative advantage.

Question 2

Which of the following statements about trade is true?

Accepted Answer

A)  On a global scale,exports are greater than imports. 
B)  The United States has a trade deficit with all of the countries it trades with. 
C)  The United States typically has a modest trade surplus in services. 
D)  The United States has a high export ratio. 
A)  On a global scale,exports are greater than imports. 
B)  The United States has a trade deficit with all of the countries it trades with. 
C)  The United States typically has a modest trade surplus in services. 
D)  The United States has a high export ratio.

Question 3

Assume Russia and the United States each produce only two goods,tanks and automobiles.The values in Table 17.1 represent the maximum amount of each good that can be produced using existing resources.
Table 17.1 - Full-employment output of goods   
-Based on the information in Table 17.1,the opportunity cost of producing 1 automobile in the United States is:

Accepted Answer

A)  1/2 of a tank. 
B)  1 tank. 
C)  2 tanks. 
D)  4 tanks. 
A)  1/2 of a tank. 
B)  1 tank. 
C)  2 tanks. 
D)  4 tanks.

Question 4

Discuss the difference between comparative advantage and absolute advantage.Must a country have an absolute advantage in order to participate in trade with other countries?

Accepted Answer

A comparative advantage is the ability o

Question 5

Which of the following countries has the highest export ratio?

Accepted Answer

A)  The United States. 
B)  Japan. 
C)  Belgium. 
D)  Great Britain. 
A)  The United States. 
B)  Japan. 
C)  Belgium. 
D)  Great Britain.

Question 6

Tariffs on imported sugar will result in:

Accepted Answer

A)  Lower prices for imported sugar. 
B)  Higher prices for domestic sugar. 
C)  Gains for foreign sugar producers. 
D)  Gains for domestic cookie producers. 
A)  Lower prices for imported sugar. 
B)  Higher prices for domestic sugar. 
C)  Gains for foreign sugar producers. 
D)  Gains for domestic cookie producers.

Question 7

If the terms of trade are superior to domestic opportunities,then a country is likely to:

Accepted Answer

A)  Participate in trade. 
B)  Impose a tariff. 
C)  Impose a quota. 
D)  Request U.N. sanctions 
A)  Participate in trade. 
B)  Impose a tariff. 
C)  Impose a quota. 
D)  Request U.N. sanctions

Question 8

If the United States has a trade deficit:

Accepted Answer

A)  Exports exceed imports. 
B)  The U.S.economy produces more than it consumes. 
C)  The trade balance is negative. 
D)  The export ratio is high. 
A)  Exports exceed imports. 
B)  The U.S.economy produces more than it consumes. 
C)  The trade balance is negative. 
D)  The export ratio is high.

Question 9

The most desired goods and services that are given up in order to obtain something else is the:

Accepted Answer

A)  Comparative advantage. 
B)  Absolute advantage. 
C)  Opportunity cost. 
D)  Advantage cost. 
A)  Comparative advantage. 
B)  Absolute advantage. 
C)  Opportunity cost. 
D)  Advantage cost.

Question 10

Assume Country A and Country B each have the same amount of resources with which to produce wheat and corn and they produce no other goods.The values in Table 17.2 represent the maximum amount of each good that can be produced.
Table 17.1 - Full-employment output of goods  
-Based on the information in Table 17.2,the opportunity cost of producing 1 bushel of corn in Country B is:

Accepted Answer

A)  9/2 of a bushel of wheat. 
B)  1/2 of a bushel of wheat. 
C)  1/3 of a bushel of wheat. 
D)  2/9 of a bushel of wheat. 
A)  9/2 of a bushel of wheat. 
B)  1/2 of a bushel of wheat. 
C)  1/3 of a bushel of wheat. 
D)  2/9 of a bushel of wheat.

Question 11

Even with trade a country must continue to consume inside or on its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 12

The terms of trade between two goods depend on:

Accepted Answer

A)  Which country has an absolute advantage in the good. 
B)  Negotiations by the Federal Reserve. 
C)  Each country's domestic opportunity costs. 
D)  Which country pays the transportation costs. 
A)  Which country has an absolute advantage in the good. 
B)  Negotiations by the Federal Reserve. 
C)  Each country's domestic opportunity costs. 
D)  Which country pays the transportation costs.

Question 13

Since one country's imports are another country's exports,overall world trade must balance.

Accepted Answer

A) True 
 B)False

Question 14

The model represents the market for sugar in a small nation.Assume SS1U1B11S1U1B0 represents the U.S.domestic supply of sugar and SS1U1B12S1U1B0 represents the supply in the U.S.under conditions of free trade  
-In Figure 17.2,in the absence of trade,the domestic price of sugar will be:

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  Cannot be determined with the given information. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  Cannot be determined with the given information.

Question 15

Which of the following is not true currently?

Accepted Answer

A)  The United States has an overall trade surplus. 
B)  The United States has a low export ratio. 
C)  The United States has a merchandise trade deficit. 
D)  The United States has a services trade surplus. 
A)  The United States has an overall trade surplus. 
B)  The United States has a low export ratio. 
C)  The United States has a merchandise trade deficit. 
D)  The United States has a services trade surplus.

Question 16

The terms of trade between two countries should always:

Accepted Answer

A)  Be set to favor the country with the least comparative advantage. 
B)  Be set to favor the larger country. 
C)  Be between their respective opportunity costs in production. 
D)  Allow each country to develop its area of absolute advantage. 
A)  Be set to favor the country with the least comparative advantage. 
B)  Be set to favor the larger country. 
C)  Be between their respective opportunity costs in production. 
D)  Allow each country to develop its area of absolute advantage.

Question 17

Which of the following explains why world output is greater as a result of trade?

Accepted Answer

A)  Specialization in production. 
B)  Reduced terms of trade. 
C)  Imported technologies. 
D)  Protection of infant industries. 
A)  Specialization in production. 
B)  Reduced terms of trade. 
C)  Imported technologies. 
D)  Protection of infant industries.

Question 18

Which group does not benefit from trade when the United States imports cotton?

Accepted Answer

A)  U.S.cotton growers. 
B)  U.S.cotton shirt producers. 
C)  U.S.consumers who buy cotton shirts. 
D)  Foreign cotton growers. 
A)  U.S.cotton growers. 
B)  U.S.cotton shirt producers. 
C)  U.S.consumers who buy cotton shirts. 
D)  Foreign cotton growers.

Question 19

Comparative advantage refers to a country's:

Accepted Answer

A)  Ability to produce a specific good with fewer resources than another country. 
B)  Monopoly power in the world market for a specific good. 
C)  Ability to sell a specific good for a higher price than another country. 
D)  Ability to produce a specific good at a lower opportunity cost than another country. 
A)  Ability to produce a specific good with fewer resources than another country. 
B)  Monopoly power in the world market for a specific good. 
C)  Ability to sell a specific good for a higher price than another country. 
D)  Ability to produce a specific good at a lower opportunity cost than another country.

Question 20

The WTO functions as:

Accepted Answer

A)  The enforcer of trade rules for the world. 
B)  An international informant on terrorism. 
C)  An international weapons inspector. 
D)  The international authority on currency exchange. 
A)  The enforcer of trade rules for the world. 
B)  An international informant on terrorism. 
C)  An international weapons inspector. 
D)  The international authority on currency exchange.

The amount by which exports exceed imports is a:

Which of the following statements about trade is true?

Discuss the difference between comparative advantage and absolute advantage.Must a country have an absolute advantage in order to participate in trade with other countries?

Which of the following countries has the highest export ratio?

Tariffs on imported sugar will result in:

If the terms of trade are superior to domestic opportunities,then a country is likely to:

If the United States has a trade deficit:

The most desired goods and services that are given up in order to obtain something else is the:

Even with trade a country must continue to consume inside or on its production possibilities curve.

The terms of trade between two goods depend on:

Since one country's imports are another country's exports,overall world trade must balance.

The model represents the market for sugar in a small nation.Assume S₁ represents the U.S.domestic supply of sugar and S₂ represents the supply in the U.S.under conditions of free trade -In Figure 17.2,in the absence of trade,the domestic price of sugar will be:

Which of the following is not true currently?

The terms of trade between two countries should always:

Which of the following explains why world output is greater as a result of trade?

Which group does not benefit from trade when the United States imports cotton?

Comparative advantage refers to a country's:

The WTO functions as:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

Filters

Exam 17: International Trade

The amount by which exports exceed imports is a:

Which of the following statements about trade is true?

Discuss the difference between comparative advantage and absolute advantage.Must a country have an absolute advantage in order to participate in trade with other countries?

Which of the following countries has the highest export ratio?

Tariffs on imported sugar will result in:

If the terms of trade are superior to domestic opportunities,then a country is likely to:

If the United States has a trade deficit:

The most desired goods and services that are given up in order to obtain something else is the:

Even with trade a country must continue to consume inside or on its production possibilities curve.

The terms of trade between two goods depend on:

Since one country's imports are another country's exports,overall world trade must balance.

The model represents the market for sugar in a small nation.Assume S1 represents the U.S.domestic supply of sugar and S2 represents the supply in the U.S.under conditions of free trade -In Figure 17.2,in the absence of trade,the domestic price of sugar will be:

Which of the following is not true currently?

The terms of trade between two countries should always:

Which of the following explains why world output is greater as a result of trade?

Which group does not benefit from trade when the United States imports cotton?

Comparative advantage refers to a country's:

The WTO functions as:

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

Filters

The model represents the market for sugar in a small nation.Assume S₁ represents the U.S.domestic supply of sugar and S₂ represents the supply in the U.S.under conditions of free trade -In Figure 17.2,in the absence of trade,the domestic price of sugar will be: