Question 1

International and intranational trade are very different in terms of economic analysis.

Accepted Answer

A) True 
 B)False

Question 2

What are the three major benefits of trade? Explain briefly.

Accepted Answer

Trade requires people or countries to sp

Question 3

You are a policymaker and a lobbyist comes to you, arguing that his industry is important for national security and has important spillover benefits. Why might you be suspicious of his claims?

Accepted Answer

A)  He may not know anything about the industry he represents. 
B)  His industry benefits from tariffs that decrease foreign competition. 
C)  The lobbyist has the same interests as the rest of the country. 
D)  Every industry is important for national security. 
A)  He may not know anything about the industry he represents. 
B)  His industry benefits from tariffs that decrease foreign competition. 
C)  The lobbyist has the same interests as the rest of the country. 
D)  Every industry is important for national security.

Question 4

Lobbyists for many industries argue each of the following, EXCEPT:

Accepted Answer

A)  their industry is important for national security. 
B)  competing workers in foreign countries are oppressed. 
C)  their industry needs protection and subsidization. 
D)  their industry should face more foreign competition. 
A)  their industry is important for national security. 
B)  competing workers in foreign countries are oppressed. 
C)  their industry needs protection and subsidization. 
D)  their industry should face more foreign competition.

Question 5

Economic theory supports the existence of specialized majors in college.

Accepted Answer

A) True 
 B)False

Question 6

Use the following to answer questions:
Figure: Trade 2  
-(Figure: Trade 2) Refer to the figure. In this figure representing the market for oil, by how much will domestic oil consumption increase or decrease following a tariff on imported oil?

Accepted Answer

A)  increase by 250 units 
B)  increase by 300 units 
C)  decrease by 500 units 
D)  decrease by 150 units 
A)  increase by 250 units 
B)  increase by 300 units 
C)  decrease by 500 units 
D)  decrease by 150 units

Question 7

Strategic trade protectionism makes:

Accepted Answer

A)  all countries better off. 
B)  no one better off. 
C)  foreign countries better off at the expense of the domestic country. 
D)  the domestic country better off at the expense of foreign countries. 
A)  all countries better off. 
B)  no one better off. 
C)  foreign countries better off at the expense of the domestic country. 
D)  the domestic country better off at the expense of foreign countries.

Question 8

During the recent economic slowdown, many jobs were lost in the Detroit area because of high prices (and therefore low sales) of domestically produced cars. Domestic companies that have succeeded in weathering the storm, such as Ford Motor Company, have done so by cutting unprofitable car lines, moving production toward more fuel-efficient vehicles, and cutting wasteful spending. Still, many workers lost their jobs. In economic terms, explain whether the market is more or less efficient now than before the recession began.

Accepted Answer

The market is more efficient n

Question 9

Use the following to answer questions:
Figure: Foreign Trade  
-(Figure: Foreign Trade) Refer to the figure. What quantity would be produced domestically?

Accepted Answer

A)  600 
B)  1,400 
C)  1,000 
D)  800 
A)  600 
B)  1,400 
C)  1,000 
D)  800

Question 10

Use the following to answer questions:
Figure: World Imports  
-(Figure: World Imports) Refer to the figure. The imposition of a $20 tariff would generate a value of lost gains from trade of:

Accepted Answer

A)  $45. 
B)  $90. 
C)  $70. 
D)  $160. 
A)  $45. 
B)  $90. 
C)  $70. 
D)  $160.

Question 11

Which statement provides an explanation for tariffs decreasing market efficiency?

Accepted Answer

A)  The supply of goods is not purchased by the buyers with the highest willingness to pay. 
B)  The supply of goods is not produced by the lowest-cost suppliers. 
C)  Prices are not equal to the equilibrium price. 
D)  Deadweight loss is equal to zero. 
A)  The supply of goods is not purchased by the buyers with the highest willingness to pay. 
B)  The supply of goods is not produced by the lowest-cost suppliers. 
C)  Prices are not equal to the equilibrium price. 
D)  Deadweight loss is equal to zero.

Question 12

Protectionism acts to encourage trade.

Accepted Answer

A) True 
 B)False

Question 13

Use the following to answer questions:
Figure: International Trade 2  
-(Figure: International Trade 2) Refer to the figure. With the tariff in this figure, the domestic quantity demanded is ______, and the quantity supplied domestically is ______.

Accepted Answer

A)  10; 8 
B)  8; 8 
C)  10; 10 
D)  9; 7 
A)  10; 8 
B)  8; 8 
C)  10; 10 
D)  9; 7

Question 14

Who does protectionism hurt?

Accepted Answer

A)  domestic producers only 
B)  domestic consumers only 
C)  international producers only 
D)  international producers and domestic consumers 
A)  domestic producers only 
B)  domestic consumers only 
C)  international producers only 
D)  international producers and domestic consumers

Question 15

Why does economic growth require job destruction?

Accepted Answer

A)  Economic growth requires international trade, which has been proven to cause short-term job loss. 
B)  Economic growth comes from creating and producing goods that use resources more productively, causing job loss in industries that use outdated technology. 
C)  Excessive job creation can destroy economic growth. 
D)  When economic growth occurs, there are not enough resources left over for worker retraining and re-education programs. 
A)  Economic growth requires international trade, which has been proven to cause short-term job loss. 
B)  Economic growth comes from creating and producing goods that use resources more productively, causing job loss in industries that use outdated technology. 
C)  Excessive job creation can destroy economic growth. 
D)  When economic growth occurs, there are not enough resources left over for worker retraining and re-education programs.

Question 16

A trade quota is:

Accepted Answer

A)  a restriction on the quantity of goods that can be imported. 
B)  a tax on imports. 
C)  a tax on exports. 
D)  the restriction of trade through regulations on domestic producers. 
A)  a restriction on the quantity of goods that can be imported. 
B)  a tax on imports. 
C)  a tax on exports. 
D)  the restriction of trade through regulations on domestic producers.

Question 17

Which of the following decreases the volume of international trade?

Accepted Answer

A)  increasing tariffs 
B)  decreasing quotas 
C)  lower transportation costs 
D)  stable monetary conditions 
A)  increasing tariffs 
B)  decreasing quotas 
C)  lower transportation costs 
D)  stable monetary conditions

Question 18

Economic benefits to tariffs and import quotas include: more jobs in the protected industry, lower prices to consumers, and increased gains from trade.

Accepted Answer

A) True 
 B)False

Question 19

Eliminating tariffs on imported sugar would:

Accepted Answer

A)  cause resources in the sugar industry to be allocated to inferior uses. 
B)  allow U.S. producers to sell more sugar. 
C)  cause resources to be reallocated from sugar production to higher-valued uses. 
D)  harm domestic consumers. 
A)  cause resources in the sugar industry to be allocated to inferior uses. 
B)  allow U.S. producers to sell more sugar. 
C)  cause resources to be reallocated from sugar production to higher-valued uses. 
D)  harm domestic consumers.

Question 20

Use the following to answer questions:
Figure: Bananas  
-The diagram indicates the revenue distribution of a $299 30GB Apple iPod. Most of the "non-hardware costs" are product development (e.g., software and R&D), but also includes advertising and retail costs. If the key industry argument has merit, what does this diagram suggest about which industries are actually key?

Accepted Answer

A)  hard drives 
B)  electronic parts 
C)  advertising 
D)  product development 
A)  hard drives 
B)  electronic parts 
C)  advertising 
D)  product development

Exam 9: International Trade

International and intranational trade are very different in terms of economic analysis.

What are the three major benefits of trade? Explain briefly.

You are a policymaker and a lobbyist comes to you, arguing that his industry is important for national security and has important spillover benefits. Why might you be suspicious of his claims?

Lobbyists for many industries argue each of the following, EXCEPT:

Economic theory supports the existence of specialized majors in college.

Use the following to answer questions: Figure: Trade 2 -(Figure: Trade 2) Refer to the figure. In this figure representing the market for oil, by how much will domestic oil consumption increase or decrease following a tariff on imported oil?

Strategic trade protectionism makes:

Use the following to answer questions: Figure: Foreign Trade -(Figure: Foreign Trade) Refer to the figure. What quantity would be produced domestically?

Use the following to answer questions: Figure: World Imports -(Figure: World Imports) Refer to the figure. The imposition of a $20 tariff would generate a value of lost gains from trade of:

Which statement provides an explanation for tariffs decreasing market efficiency?

Protectionism acts to encourage trade.

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. With the tariff in this figure, the domestic quantity demanded is ______, and the quantity supplied domestically is ______.

Who does protectionism hurt?

Why does economic growth require job destruction?

A trade quota is:

Which of the following decreases the volume of international trade?

Economic benefits to tariffs and import quotas include: more jobs in the protected industry, lower prices to consumers, and increased gains from trade.

Eliminating tariffs on imported sugar would:

The Big Ideas

The Power of Trade and Comparative

Supply and Demand

Equilibrium

Elasticity and Its Applications

Taxes and Subsidies

The Price System

Price Ceilings and Floors

Externalities- When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination

Oligopoly and Game Theory

Competing for Monopoly

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Price Discrimination

Consumer Choice

Filters

Use the following to answer questions: Figure: International Trade 2 -(Figure: International Trade 2) Refer to the figure. With the tariff in this figure, the domestic quantity demanded is , and the quantity supplied domestically is .