Question 1

Protectionism refers to government policies that:

Accepted Answer

A)  restrict imports of foreign products. 
B)  give foreign producers tax credits in an effort to increase their exports. 
C)  stimulate trade between countries and increase domestic producers profit. 
D)  restrict the output of domestic producers to keep their prices high. 
A)  restrict imports of foreign products. 
B)  give foreign producers tax credits in an effort to increase their exports. 
C)  stimulate trade between countries and increase domestic producers profit. 
D)  restrict the output of domestic producers to keep their prices high.

Question 2

When the world price is below the domestic price, the elimination of a tariff decreases domestic production and provides a benefit because:

Accepted Answer

A)  it causes unemployment when workers are laid off. 
B)  it makes producers better off. 
C)  no one is harmed by the decreased production, and everybody pays lower prices. 
D)  it frees up resources that can be used to produce other goods and services. 
A)  it causes unemployment when workers are laid off. 
B)  it makes producers better off. 
C)  no one is harmed by the decreased production, and everybody pays lower prices. 
D)  it frees up resources that can be used to produce other goods and services.

Question 3

The real cause of child labor is:

Accepted Answer

A)  free trade agreements. 
B)  impoverished circumstances in the child's life. 
C)  multinational corporations that are only concerned about profit maximization. 
D)  poor enforcement of existing international child labor treaties. 
A)  free trade agreements. 
B)  impoverished circumstances in the child's life. 
C)  multinational corporations that are only concerned about profit maximization. 
D)  poor enforcement of existing international child labor treaties.

Question 4

The United States is not competitive with Brazil in sugar production partly because:

Accepted Answer

A)  the average United States climate is not ideal for sugar production. 
B)  the average Brazilian climate is not ideal for sugar production. 
C)  the United States does not focus on sugar production. 
D)  Brazil does not focus on sugar production. 
A)  the average United States climate is not ideal for sugar production. 
B)  the average Brazilian climate is not ideal for sugar production. 
C)  the United States does not focus on sugar production. 
D)  Brazil does not focus on sugar production.

Question 5

The benefits of trade include:
I. greater productivity due to specialization.
II. higher output due to specialization according to comparative advantage.
III. increased welfare when preferences differ.

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III 
A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III

Question 6

One of the costs of protectionism is:

Accepted Answer

A)  increases in total national output. 
B)  a reduction in the variety of goods in domestic markets. 
C)  greater competition. 
D)  lower opportunity costs of domestic production. 
A)  increases in total national output. 
B)  a reduction in the variety of goods in domestic markets. 
C)  greater competition. 
D)  lower opportunity costs of domestic production.

Question 7

Suppose a government is facing accusations of allowing domestic jobs to be lost to foreign labor in other countries. How can the government address these concerns?
I. Governments can ensure that unemployment insurance and strong education programs exist to help workers retrain for new jobs.
II. Governments can stress the importance of job creation in those industries that benefit from international trade, and encourage job creation in those industries.
III. Governments can set up extensive trade restrictions to limit the impact of foreign firms on domestic production.

Accepted Answer

A)  I only 
B)  II and III only 
C)  I and II only 
D)  I, II, and III 
A)  I only 
B)  II and III only 
C)  I and II only 
D)  I, II, and III

Question 8

Use the following to answer questions:
Figure: Bananas  
-(Figure: Bananas) If there is a $3 tariff on bananas, what is the total tariff revenue?

Accepted Answer

A)  $135,000 
B)  $180,000 
C)  $270,000 
D)  $360,000 
A)  $135,000 
B)  $180,000 
C)  $270,000 
D)  $360,000

Question 9

Use the following to answer questions:
Figure: Costs of Tariffs  
-(Figure: Costs of Tariffs) Refer to the figure. In the figure representing the market for leather, domestic suppliers are the high-cost producers of leather. However, import restrictions push domestic prices up to $100. Which area represents the value of wasted resources?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 10

According to the text, the sugar tariff wastes ______ worth of resources.

Accepted Answer

A)  $0.9 billion 
B)  $1.0 billion 
C)  $1.1 billion 
D)  $1.2 billion 
A)  $0.9 billion 
B)  $1.0 billion 
C)  $1.1 billion 
D)  $1.2 billion

Question 11

The United States is the only government that engages in protectionist policies.

Accepted Answer

A) True 
 B)False

Question 12

Use the following to answer questions:
Figure: Shirts  
-(Figure: Shirts) Refer to the figure. If a tariff raised the world price to $4 a shirt, how much deadweight loss would it create?

Accepted Answer

A)  $5,000,000 
B)  $10,000,000 
C)  $120,000,000 
D)  $200,000,000 
A)  $5,000,000 
B)  $10,000,000 
C)  $120,000,000 
D)  $200,000,000

Question 13

Restrictions on trade:

Accepted Answer

A)  reduce income, increasing the necessity of child labor. 
B)  reduce child labor by making countries more reliant on adult labor. 
C)  will allow children to leave jobs in agriculture for higher-paying jobs in manufacturing. 
D)  lead to higher income for developing countries but not industrialized countries. 
A)  reduce income, increasing the necessity of child labor. 
B)  reduce child labor by making countries more reliant on adult labor. 
C)  will allow children to leave jobs in agriculture for higher-paying jobs in manufacturing. 
D)  lead to higher income for developing countries but not industrialized countries.

Question 14

Taxes and quotas on imports can ______ jobs in industries that import and ________ jobs in industries that export.

Accepted Answer

A)  decrease; increase 
B)  increase; increase 
C)  increase; decrease 
D)  decrease; decrease 
A)  decrease; increase 
B)  increase; increase 
C)  increase; decrease 
D)  decrease; decrease

Question 15

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

Accepted Answer

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

Question 16

When a country adopts free trade and becomes a net exporter of a good, that good:

Accepted Answer

A)  becomes cheaper for domestic consumers. 
B)  becomes more expensive for domestic consumers. 
C)  does not change in price. 
D)  may get cheaper or more expensive for domestic consumers. 
A)  becomes cheaper for domestic consumers. 
B)  becomes more expensive for domestic consumers. 
C)  does not change in price. 
D)  may get cheaper or more expensive for domestic consumers.

Question 17

Because of pressure from Western countries, garment producers in Bangladesh quit employing 30,000 to 50,000 child workers. What happened to these children?

Accepted Answer

A)  The majority of children found higher-paying jobs, with better labor protections. 
B)  Many children went to work in jobs with worse conditions and lower pay, many in prostitution. 
C)  Almost all the children went back to school to learn a more lucrative trade. 
D)  The majority of the children went back to being children: playing in parks, hanging out with friends, going to the mall, and so forth. 
A)  The majority of children found higher-paying jobs, with better labor protections. 
B)  Many children went to work in jobs with worse conditions and lower pay, many in prostitution. 
C)  Almost all the children went back to school to learn a more lucrative trade. 
D)  The majority of the children went back to being children: playing in parks, hanging out with friends, going to the mall, and so forth.

Question 18

Briefly discuss any benefits of "protectionism".

Accepted Answer

Protectionism can allow a new industry t

Question 19

The paradox of trade restrictions on countries with child labor is that:

Accepted Answer

A)  these restrictions aim to reduce child labor, but because they make the countries poorer, they actually cause more child labor. 
B)  children from those countries are actually more efficient than the adults. 
C)  children can be hired at lower wages than adults. 
D)  restrictions on trade cause losses in consumer surplus. 
A)  these restrictions aim to reduce child labor, but because they make the countries poorer, they actually cause more child labor. 
B)  children from those countries are actually more efficient than the adults. 
C)  children can be hired at lower wages than adults. 
D)  restrictions on trade cause losses in consumer surplus.

Question 20

Free trade has reduced the number of jobs in U.S. manufacturing as well as the overall number of jobs in the U.S. economy.

Accepted Answer

A) True 
 B)False

Exam 9: International Trade

Protectionism refers to government policies that:

When the world price is below the domestic price, the elimination of a tariff decreases domestic production and provides a benefit because:

The real cause of child labor is:

The United States is not competitive with Brazil in sugar production partly because:

The benefits of trade include: I. greater productivity due to specialization. II. higher output due to specialization according to comparative advantage. III. increased welfare when preferences differ.

One of the costs of protectionism is:

Use the following to answer questions: Figure: Bananas -(Figure: Bananas) If there is a $3 tariff on bananas, what is the total tariff revenue?

According to the text, the sugar tariff wastes ______ worth of resources.

The United States is the only government that engages in protectionist policies.

Use the following to answer questions: Figure: Shirts -(Figure: Shirts) Refer to the figure. If a tariff raised the world price to $4 a shirt, how much deadweight loss would it create?

Restrictions on trade:

Taxes and quotas on imports can ______ jobs in industries that import and ________ jobs in industries that export.

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

When a country adopts free trade and becomes a net exporter of a good, that good:

Because of pressure from Western countries, garment producers in Bangladesh quit employing 30,000 to 50,000 child workers. What happened to these children?

Briefly discuss any benefits of "protectionism".

The paradox of trade restrictions on countries with child labor is that:

Free trade has reduced the number of jobs in U.S. manufacturing as well as the overall number of jobs in the U.S. economy.

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

Taxes and quotas on imports can jobs in industries that import and __ jobs in industries that export.