Exam 17: International Trade

Suppose the United States and Japan each produce only two goods and have the production possibilities shown in Figure 17.1.Without trade,Japan produces at point A and the United States produces at point B.Use the figure to answer the question(s)below. -Which of the following best describes the comparative advantage of the two countries illustrated in Figure 17.1?

A trade surplus occurs when:

The General Agreement on Tariffs and Trade (GATT):

The United States buys large quantities of goods and services from other countries,but foreign countries buy very few U.S.goods and services.

Specialization decreases total world output.

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 output of corn and wheat would be greatest if:

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 opportunity cost implied in Table 17.1:

Which group does not benefit from trade when the U.S.imports leather?

Tariffs tend to reduce the volume of imports because they: