Question 1

What are voluntary export restrictions?

Accepted Answer

A) A restriction placed on the importation of foreign products. 
B) An agreement by an exporting country to restrict the amount of exports to another country. 
C) Government restrictions limiting the amount of foreign currency which can be obtained. 
D) A limit imposed on the production or sale of a product. 
A) A restriction placed on the importation of foreign products. 
B) An agreement by an exporting country to restrict the amount of exports to another country. 
C) Government restrictions limiting the amount of foreign currency which can be obtained. 
D) A limit imposed on the production or sale of a product.

Question 2

Some commentators have suggested that the government should protect the Canadian automobile industry.Which argument against free trade is being suggested?

Accepted Answer

A) The strategic-industry argument. 
B) The comparative-protection argument. 
C) The infant-industry argument. 
D) The cultural-identity argument. 
A) The strategic-industry argument. 
B) The comparative-protection argument. 
C) The infant-industry argument. 
D) The cultural-identity argument.

Question 3

Below is the productivity per worker in the beef and pork industries of two countries: Cholesterol and Fat.
(Output in kilos per day)
  
-Refer to the information above to answer this question.Suppose that a single worker in each country is transferred from the less to the more productive industry.What will be the total gains from specialization?

Accepted Answer

A) Beef + 6 and pork + 2. 
B) Beef + 6 and pork - 2. 
C) Beef + 2 and pork + 6. 
D) Beef - 2 and pork + 6. 
A) Beef + 6 and pork + 2. 
B) Beef + 6 and pork - 2. 
C) Beef + 2 and pork + 6. 
D) Beef - 2 and pork + 6.

Question 4

Below is some hypothetical data for the countries of Canada and Mexico.(Assume that Canada has 10 million workers per month available and Mexico has 20 million. )
Canada's Production Possibilities
(Output in millions of bushels per month)
   Mexico's Production Possibilities
(Output in millions of bushels per month)
   Output Before Trade
(Output in millions of bushels per month)
  
-Suppose that a country has a comparative advantage in the production of wheat.Which of the following statements is true?

Accepted Answer

A) It must also have an absolute advantage in the production of wheat. 
B) The purchasing power parity theory must also be in its favour. 
C) Specialization is wise only up to a point because of the law of increasing costs. 
D) Specialization is wise only if exchange rates are fixed. 
A) It must also have an absolute advantage in the production of wheat. 
B) The purchasing power parity theory must also be in its favour. 
C) Specialization is wise only up to a point because of the law of increasing costs. 
D) Specialization is wise only if exchange rates are fixed.

Question 5

-Refer to above figure to answer this question.What could be possible terms of trade between the two countries?

Accepted Answer

A) 1 apple = 0.25 pears. 
B) 1 apple = 2.5 pears. 
C) 1 apple = 3 pears. 
D) 1 pear = 0.5 apples. 
E) 1 pear = 2.5 apples. 
A) 1 apple = 0.25 pears. 
B) 1 apple = 2.5 pears. 
C) 1 apple = 3 pears. 
D) 1 pear = 0.5 apples. 
E) 1 pear = 2.5 apples.

Question 6

Under what circumstances will there be no opportunity for mutually advantageous trade between two countries?

Accepted Answer

A) When the terms of trade are the same. 
B) When comparative costs are the same. 
C) When comparative costs are different. 
D) When tariffs exist. 
A) When the terms of trade are the same. 
B) When comparative costs are the same. 
C) When comparative costs are different. 
D) When tariffs exist.

Question 7

If a country's trading possibilities curve lies to the right of its production possibilities curve,there are no gains from trade.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the following domestic demand and supply schedule for Germany's laptop industry:
   a)In the absence of free trade,what is the equilibrium price and quantity traded for domestically Germany's laptop industry?
b)Suppose the international price for a laptop is €400.Will Germany export or import laptops? How many units?
c)Now suppose the German government places a €100 tariff on imported laptop.How many units will Germany import?

Accepted Answer

a)€600 and 60,000 un

Question 9

Below is a graph illustrating the market for mustard seeds in Rysen III.(Sd is domestic supply,and Dd is domestic demand. ).The world price of mustard seeds is $100.
  
-Refer to the graph above to answer this question.Suppose that the government introduces a quota of 400 on imports of mustard seeds,what will be the new price?

Accepted Answer

A) $40. 
B) $100. 
C) $120. 
D) $140. 
E) Cannot be determined. 
A) $40. 
B) $100. 
C) $120. 
D) $140. 
E) Cannot be determined.

Question 10

Below is production possibilities data for the countries of Mental and Etheric.
  
-Refer to the information above to answer this question.Suppose that each country was producing combination D before trade but then specializes in the product in which it has a comparative advantage.What would be the total gains from trade?

Accepted Answer

A) 40 million units of rice cakes. 
B) 100 million units of rice cakes. 
C) 60 million units of soya milk and 40 million units of rice cakes. 
D) 40 million units of soya milk and 60 million units of rice cakes. 
E) 20 million units of soya milk. 
A) 40 million units of rice cakes. 
B) 100 million units of rice cakes. 
C) 60 million units of soya milk and 40 million units of rice cakes. 
D) 40 million units of soya milk and 60 million units of rice cakes. 
E) 20 million units of soya milk.

Question 11

List four major advantages of free trade.

Accepted Answer

Four major advantages of free trade are:

Question 12

Compared to 50 years ago,international world trade has ________ substantially and the geographical areas leading this change are _________.

Accepted Answer

A) Increased;Europe and Asia 
B) Increased;Canada and the U.S. 
C) Decreased;Europe and Asia 
D) Decreased;Canada and Asia 
A) Increased;Europe and Asia 
B) Increased;Canada and the U.S. 
C) Decreased;Europe and Asia 
D) Decreased;Canada and Asia

Question 13

What is a quota?

Accepted Answer

A) A limit imposed on the production or sale of a product. 
B) A restriction placed on the importation of foreign products. 
C) A tax levied on imports. 
D) A maximum or minimum price placed on a product by government regulation. 
A) A limit imposed on the production or sale of a product. 
B) A restriction placed on the importation of foreign products. 
C) A tax levied on imports. 
D) A maximum or minimum price placed on a product by government regulation.

Question 14

David Ricardo first introduced the theory of comparative advantage.

Accepted Answer

A) True 
 B)False

Question 15

What is the term for an agreement by an exporting country to restrict the amount of exports to another country?

Accepted Answer

A) Tariff. 
B) Trade agreement. 
C) Voluntary export restrictions. 
D) Quota. 
A) Tariff. 
B) Trade agreement. 
C) Voluntary export restrictions. 
D) Quota.

Question 16

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people.
  
-Refer to the data above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Caledonia should specialize and export wheat. 
B) Ibrox should specialize and export wheat. 
C) Caledonia should specialize and export beans. 
D) Ibrox should specialize in beans but export wheat. 
A) Caledonia should specialize and export wheat. 
B) Ibrox should specialize and export wheat. 
C) Caledonia should specialize and export beans. 
D) Ibrox should specialize in beans but export wheat.

Question 17

What is the definition of "the terms of trade"?

Accepted Answer

A) It is the average price of a country's imports divided by the average price of its exports. 
B) It is the average price of a country's exports divided by the average price of its imports. 
C) They are the rules and regulations governing international trade. 
D) The value of a country's currency compared to that of its biggest trading partner. 
A) It is the average price of a country's imports divided by the average price of its exports. 
B) It is the average price of a country's exports divided by the average price of its imports. 
C) They are the rules and regulations governing international trade. 
D) The value of a country's currency compared to that of its biggest trading partner.

Question 18

Below is a graph illustrating rice and flax production in the countries of Cardassia and Bajor.
  
-Refer to the graph above to answer this question.What is the opportunity cost of 100 tons of rice in Cardassia?

Accepted Answer

A) 80 tons of flax. 
B) 100 tons of flax. 
C) 125 tons of flax. 
D) 200 tons of flax. 
E) 500 tons of flax. 
A) 80 tons of flax. 
B) 100 tons of flax. 
C) 125 tons of flax. 
D) 200 tons of flax. 
E) 500 tons of flax.

Question 19

Below is production possibilities data for the countries of Mental and Etheric.
  
-Refer to the information above to answer this question.In which product should Mental specialize and export?

Accepted Answer

A) It should specialize in soya milk and export rice cakes. 
B) It should specialize and export soya milk. 
C) It should specialize and export rice cakes. 
D) It should specialize in rice cakes and export soya milk. 
A) It should specialize in soya milk and export rice cakes. 
B) It should specialize and export soya milk. 
C) It should specialize and export rice cakes. 
D) It should specialize in rice cakes and export soya milk.

Question 20

A country has a comparative advantage over another only if it is able to produce all products more cheaply.

Accepted Answer

A) True 
 B)False

What are voluntary export restrictions?

Some commentators have suggested that the government should protect the Canadian automobile industry.Which argument against free trade is being suggested?

-Refer to above figure to answer this question.What could be possible terms of trade between the two countries?

Under what circumstances will there be no opportunity for mutually advantageous trade between two countries?

If a country's trading possibilities curve lies to the right of its production possibilities curve,there are no gains from trade.

List four major advantages of free trade.

Compared to 50 years ago,international world trade has substantially and the geographical areas leading this change are _.

What is a quota?

David Ricardo first introduced the theory of comparative advantage.

What is the term for an agreement by an exporting country to restrict the amount of exports to another country?

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people. -Refer to the data above to answer this question.Which of the following statements is correct?

What is the definition of "the terms of trade"?

Below is a graph illustrating rice and flax production in the countries of Cardassia and Bajor. -Refer to the graph above to answer this question.What is the opportunity cost of 100 tons of rice in Cardassia?

Below is production possibilities data for the countries of Mental and Etheric. -Refer to the information above to answer this question.In which product should Mental specialize and export?

A country has a comparative advantage over another only if it is able to produce all products more cheaply.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Exam 10: International Trade

What are voluntary export restrictions?

Some commentators have suggested that the government should protect the Canadian automobile industry.Which argument against free trade is being suggested?

-Refer to above figure to answer this question.What could be possible terms of trade between the two countries?

Under what circumstances will there be no opportunity for mutually advantageous trade between two countries?

If a country's trading possibilities curve lies to the right of its production possibilities curve,there are no gains from trade.

List four major advantages of free trade.

Compared to 50 years ago,international world trade has ________ substantially and the geographical areas leading this change are _________.

What is a quota?

David Ricardo first introduced the theory of comparative advantage.

What is the term for an agreement by an exporting country to restrict the amount of exports to another country?

Below is the productivity per worker (kilos per day)in the wheat and bean industries of Caledonia and Ibrox.The working population in each country is 16 million people. -Refer to the data above to answer this question.Which of the following statements is correct?

What is the definition of "the terms of trade"?

Below is a graph illustrating rice and flax production in the countries of Cardassia and Bajor. -Refer to the graph above to answer this question.What is the opportunity cost of 100 tons of rice in Cardassia?

Below is production possibilities data for the countries of Mental and Etheric. -Refer to the information above to answer this question.In which product should Mental specialize and export?

A country has a comparative advantage over another only if it is able to produce all products more cheaply.

The Economic Problem

Demand and Supply: an Introduction

Measuring the Economy 1: GDP and Economic Growth

Measuring the Economy 2: Unemployment and Inflation

Aggregate Demand and Supply

Aggregate Expenditures

Fiscal Policy

Money and Banking

The Money Market and Monetary Policy

Exchange Rates and the Balance of Payments

Macroeconomic Policy Revisited

A Walk Through the Twentieth Century and Beyond

Filters

Compared to 50 years ago,international world trade has substantially and the geographical areas leading this change are _.