Question 1

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 2

History has shown that one of the most effective tools against child labor is:

Accepted Answer

A)  regulations. 
B)  laws. 
C)  economic growth. 
D)  quotas. 
A)  regulations. 
B)  laws. 
C)  economic growth. 
D)  quotas.

Question 3

Use the following to answer questions 
Figure: Trade 2  
-(Figure: Trade 2)Refer to the figure.In this figure representing the market for oil,what are the total revenues generated by the tariff?

Accepted Answer

A)  $25,000 
B)  $20,000 
C)  $10,000 
D)  $5,000 
A)  $25,000 
B)  $20,000 
C)  $10,000 
D)  $5,000

Question 4

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 5

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 6

Although domestic consumers gain more from free trade than domestic producers lose,the matter may not be that simple.Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods?

Accepted Answer

A)  because foreign producers will be even worse off 
B)  because domestic prices are higher under free trade than under protectionism 
C)  because domestic producers also consume at least some imported goods that cost less 
D)  because the gains from free trade are random.It is impossible to say who will get them 
A)  because foreign producers will be even worse off 
B)  because domestic prices are higher under free trade than under protectionism 
C)  because domestic producers also consume at least some imported goods that cost less 
D)  because the gains from free trade are random.It is impossible to say who will get them

Question 7

In most cases,trade restrictions will:

Accepted Answer

A)  save jobs without any other costs. 
B)  save some jobs and destroy other jobs. 
C)  benefit both producers and consumers. 
D)  benefit only the government. 
A)  save jobs without any other costs. 
B)  save some jobs and destroy other jobs. 
C)  benefit both producers and consumers. 
D)  benefit only the government.

Question 8

Use the following to answer questions 
Figure: Foreign Trade 2  
-(Figure: Foreign Trade 2)Refer to the figure.What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Accepted Answer

A)  $30,000 
B)  $5,000 
C)  $2,500 
D)  $22,500 
A)  $30,000 
B)  $5,000 
C)  $2,500 
D)  $22,500

Question 9

Which of the following statements is TRUE about the removal of trade barriers?

Accepted Answer

A)  Consumers are harmed while some suppliers benefit. 
B)  Consumers benefit while some suppliers are harmed. 
C)  Everyone benefits. 
D)  Everyone is harmed. 
A)  Consumers are harmed while some suppliers benefit. 
B)  Consumers benefit while some suppliers are harmed. 
C)  Everyone benefits. 
D)  Everyone is harmed.

Question 10

Removing tariffs and quotas will ensure that goods are sold by the low-cost producers and increase the sum of consumer and producer surplus.

Accepted Answer

A) True 
 B)False

Question 11

In the case of sugar,moving from a situation of no trade to free trade causes both domestic consumption and production to increase.

Accepted Answer

A) True 
 B)False

Question 12

Use the following to answer questions 
Figure: Trade  
-(Figure: Trade)Refer to the figure.If the world price for the good in this figure were higher than the domestic price,a move to free international trade means that the domestic economy would become:

Accepted Answer

A)  a net importer of the good. 
B)  a net exporter of the good. 
C)  neither a net importer nor a net exporter of the good. 
D)  either a net importer or a net exporter of the good but it is impossible to say which. 
A)  a net importer of the good. 
B)  a net exporter of the good. 
C)  neither a net importer nor a net exporter of the good. 
D)  either a net importer or a net exporter of the good but it is impossible to say which.

Question 13

Use the following to answer questions 
Figure: International Trade 4  
-(Figure: International Trade 4)Refer to the figure.If,in this figure,the government eliminated free trade,producer surplus would:

Accepted Answer

A)  increase by $18. 
B)  increase by $50. 
C)  decrease by $36. 
D)  increase by $22.50. 
A)  increase by $18. 
B)  increase by $50. 
C)  decrease by $36. 
D)  increase by $22.50.

Question 14

A tariff ______ the amount of output produced by domestic firms and ______ the amount of goods bought by domestic consumers.

Accepted Answer

A)  increases;increases 
B)  increases;decreases 
C)  decreases;increases 
D)  decreases;decreases 
A)  increases;increases 
B)  increases;decreases 
C)  decreases;increases 
D)  decreases;decreases

Question 15

Use the following to answer questions 
Figure: Foreign Trade  
-(Figure: Foreign Trade)Refer to the figure.What quantity would be traded in the absence of any international trade?

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 the government increases tariffs:

Accepted Answer

A)  production switches from low-cost foreign producers to high-cost domestic producers,causing resources to be wasted. 
B)  domestic consumers buy more goods,increasing the gains from trade. 
C)  domestic producers produce more output,increasing the gains from trade. 
D)  deadweight losses are eliminated because foreign producers sell their product below cost. 
A)  production switches from low-cost foreign producers to high-cost domestic producers,causing resources to be wasted. 
B)  domestic consumers buy more goods,increasing the gains from trade. 
C)  domestic producers produce more output,increasing the gains from trade. 
D)  deadweight losses are eliminated because foreign producers sell their product below cost.

Question 17

Protectionism:

Accepted Answer

A)  benefits domestic consumers and foreign producers. 
B)  places a tax on exports. 
C)  restricts trade through policies that favor domestic producers. 
D)  restricts the quantity of goods that can be exported. 
A)  benefits domestic consumers and foreign producers. 
B)  places a tax on exports. 
C)  restricts trade through policies that favor domestic producers. 
D)  restricts the quantity of goods that can be exported.

Question 18

Use the following to answer questions 
Figure: International Trade 1  
-(Figure: International Trade 1)Refer to the figure.According to the figure,which of the following statements is TRUE?

Accepted Answer

A)  After international trade,price falls by $4 and consumption increases by 4 units. 
B)  After international trade,price falls by $4 and consumption decreases by 4 units. 
C)  After international trade,price rises by $4 and consumption increases by 8 units. 
D)  After international trade,price stays the same and consumption increases by 8 units. 
A)  After international trade,price falls by $4 and consumption increases by 4 units. 
B)  After international trade,price falls by $4 and consumption decreases by 4 units. 
C)  After international trade,price rises by $4 and consumption increases by 8 units. 
D)  After international trade,price stays the same and consumption increases by 8 units.

Question 19

In a demand and supply diagram,the effects of a tariff and a quota on the supply and demand curves are identical.

Accepted Answer

A) True 
 B)False

Question 20

Rising tariffs increase domestic production,but reduce domestic consumption.

Accepted Answer

A) True 
 B)False

Exam 19: International Trade

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

History has shown that one of the most effective tools against child labor is:

Use the following to answer questions Figure: Trade 2 -(Figure: Trade 2)Refer to the figure.In this figure representing the market for oil,what are the total revenues generated by the tariff?

Strategic trade protectionism makes:

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

Although domestic consumers gain more from free trade than domestic producers lose,the matter may not be that simple.Why might domestic producers also gain from free trade policies over those that impose tariffs on all goods?

In most cases,trade restrictions will:

Use the following to answer questions Figure: Foreign Trade 2 -(Figure: Foreign Trade 2)Refer to the figure.What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Which of the following statements is TRUE about the removal of trade barriers?

Removing tariffs and quotas will ensure that goods are sold by the low-cost producers and increase the sum of consumer and producer surplus.

In the case of sugar,moving from a situation of no trade to free trade causes both domestic consumption and production to increase.

Use the following to answer questions Figure: Trade -(Figure: Trade)Refer to the figure.If the world price for the good in this figure were higher than the domestic price,a move to free international trade means that the domestic economy would become:

Use the following to answer questions Figure: International Trade 4 -(Figure: International Trade 4)Refer to the figure.If,in this figure,the government eliminated free trade,producer surplus would:

A tariff ______ the amount of output produced by domestic firms and ______ the amount of goods bought by domestic consumers.

Use the following to answer questions Figure: Foreign Trade -(Figure: Foreign Trade)Refer to the figure.What quantity would be traded in the absence of any international trade?

When the government increases tariffs:

Protectionism:

Use the following to answer questions Figure: International Trade 1 -(Figure: International Trade 1)Refer to the figure.According to the figure,which of the following statements is TRUE?

In a demand and supply diagram,the effects of a tariff and a quota on the supply and demand curves are identical.

Rising tariffs increase domestic production,but reduce domestic consumption.

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Finance

Political Economy and Public Choice

Filters

A tariff the amount of output produced by domestic firms and the amount of goods bought by domestic consumers.