Question 1

Which of the following would be a credit in the U.S.balance of payments?

Accepted Answer

A) the purchase of a German car by an American 
B) the purchase of insurance from Lloyds of London by a U.S. resident 
C) a trip to Japan by an American student 
D) a short-term loan extended to a South American country by the United States government 
A) the purchase of a German car by an American 
B) the purchase of insurance from Lloyds of London by a U.S. resident 
C) a trip to Japan by an American student 
D) a short-term loan extended to a South American country by the United States government

Question 2

Under a system of fixed exchange rates, what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

Accepted Answer

A nation whose currency is overvalued wi

Question 3

A tariff on a good increases the domestic price of the good, increases domestic production of the good, reduces the amount of the good sold, and decreases imports of the good.

Accepted Answer

A) True 
 B)False

Question 4

The dollar appreciates when U.S.demands for foreign currencies decrease.

Accepted Answer

A) True 
 B)False

Question 5

What is the law of comparative advantage, and why is it important in international trade?

Accepted Answer

The law of comparative advantage states

Question 6

Fact Pattern 18-B
Refer to the following data:
Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples.
-Refer to Fact Pattern 18-B.Which of the following is true?

Accepted Answer

A) Adam has an absolute advantage in oranges and a comparative advantage in apples. 
B) Karl has an absolute advantage in oranges and a comparative advantage in oranges. 
C) Karl has an absolute advantage in both apples and oranges. 
D) Karl has an absolute advantage and a comparative advantage in apples. 
E) Adam has an absolute advantage in both apples and oranges. 
A) Adam has an absolute advantage in oranges and a comparative advantage in apples. 
B) Karl has an absolute advantage in oranges and a comparative advantage in oranges. 
C) Karl has an absolute advantage in both apples and oranges. 
D) Karl has an absolute advantage and a comparative advantage in apples. 
E) Adam has an absolute advantage in both apples and oranges.

Question 7

In Artland the opportunity cost of producing 1 ton of wheat is 2 tons of corn, while in Scienceland, the opportunity cost of producing 2 tons of wheat is 3 tons of corn.Both countries would be better off if:

Accepted Answer

A) Artland sells 4 tons of wheat to Scienceland in return for 7 tons of corn. 
B) Artland sells 4 tons of wheat to Scienceland in return for 10 tons of corn. 
C) Scienceland sells 4 tons of wheat to Artland in return for 7 tons of corn. 
D) Scienceland sells 4 tons of wheat to Artland in return for 4 tons of corn. 
E) No trade takes place. 
A) Artland sells 4 tons of wheat to Scienceland in return for 7 tons of corn. 
B) Artland sells 4 tons of wheat to Scienceland in return for 10 tons of corn. 
C) Scienceland sells 4 tons of wheat to Artland in return for 7 tons of corn. 
D) Scienceland sells 4 tons of wheat to Artland in return for 4 tons of corn. 
E) No trade takes place.

Question 8

Imposing a quota on metal softball bats shipped into the United States would likely:

Accepted Answer

A) increase the price of the bats but decrease the total quantity of bats purchased in the United States. 
B) increase the price of the bats and the total quantity of bats purchased in the United States. 
C) leave the price of the bats unchanged but decrease the quantity purchased in the United States. 
D) leave both the price of bats and the quantity purchased in the United States unchanged. 
A) increase the price of the bats but decrease the total quantity of bats purchased in the United States. 
B) increase the price of the bats and the total quantity of bats purchased in the United States. 
C) leave the price of the bats unchanged but decrease the quantity purchased in the United States. 
D) leave both the price of bats and the quantity purchased in the United States unchanged.

Question 9

Figure 18-B  
-Refer to Figure 18-B.The change in total surplus from free trade is area:

Accepted Answer

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

Question 10

The intended gains from U.S.tariffs and other trade restrictions can backfire if foreign governments retaliate by imposing additional trade restrictions on U.S.goods sold in their countries.

Accepted Answer

A) True 
 B)False

Question 11

Major U.S.exporters would be likely to oppose the sort of protectionist policies favored by domestic producers that compete with imports.

Accepted Answer

A) True 
 B)False

Question 12

Economically speaking, tariffs:

Accepted Answer

A) protect domestic consumers of goods. 
B) protect foreign producers of goods. 
C) limit voluntary exchanges. 
D) protect domestic producers of exported goods. 
A) protect domestic consumers of goods. 
B) protect foreign producers of goods. 
C) limit voluntary exchanges. 
D) protect domestic producers of exported goods.

Question 13

Which of the following arguments in favor of trade restrictions is of questionable validity?

Accepted Answer

A) total domestic employment 
B) national security 
C) infant industries 
D) all of the above 
A) total domestic employment 
B) national security 
C) infant industries 
D) all of the above

Question 14

The net loss in welfare from a quota is proportionately larger than for a tariff because:

Accepted Answer

A) it does not result in government revenue. 
B) the loss in consumer surplus is greater than the gain to producers and the government. 
C) it prevents nations from fully realizing their competitive advantage. 
D) it brings about higher prices and revenues to domestic producers. 
A) it does not result in government revenue. 
B) the loss in consumer surplus is greater than the gain to producers and the government. 
C) it prevents nations from fully realizing their competitive advantage. 
D) it brings about higher prices and revenues to domestic producers.

Question 15

The world price of a commodity will settle at the level where

Accepted Answer

A) supply and demand are equal within each country. 
B) the excess demand of the importing country is just equal to the excess supply of the exporting country. 
C) the excess demand in the exporting country is equal to the excess demand in the importing country. 
D) there is no excess demand in the exporting country. 
A) supply and demand are equal within each country. 
B) the excess demand of the importing country is just equal to the excess supply of the exporting country. 
C) the excess demand in the exporting country is equal to the excess demand in the importing country. 
D) there is no excess demand in the exporting country.

Question 16

After the U.S.introduces of a tariff in the market for widgets, the price of widgets in the U.S.will

Accepted Answer

A) decrease 
B) increase 
C) remain the same 
D) change in an indeterminate manner 
A) decrease 
B) increase 
C) remain the same 
D) change in an indeterminate manner

Question 17

Relative to a no-international-trade initial situation, if the United States imported wine, the U.S.domestic price of wine:

Accepted Answer

A) would rise, but domestic output would fall. 
B) would fall, but domestic output would rise. 
C) would rise, and domestic output would rise. 
D) would fall, and domestic output would fall. 
A) would rise, but domestic output would fall. 
B) would fall, but domestic output would rise. 
C) would rise, and domestic output would rise. 
D) would fall, and domestic output would fall.

Question 18

Suppose that the exchange rate between British pounds and U.S.dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound, exports of U.S.goods to Britain will tend to:

Accepted Answer

A) rise. 
B) fall. 
C) stay the same. 
D) change in an indeterminate direction. 
A) rise. 
B) fall. 
C) stay the same. 
D) change in an indeterminate direction.

Question 19

Compared to the no-trade situation, when a country exports a good:

Accepted Answer

A) domestic consumers gain, domestic producers lose, and the gains outweigh the losses. 
B) domestic consumers lose, domestic producers gain, and the gains outweigh the losses. 
C) domestic consumers gain, domestic producers lose, and the losses outweigh the gains. 
D) domestic consumers gain, domestic producers lose, an equal amount. 
A) domestic consumers gain, domestic producers lose, and the gains outweigh the losses. 
B) domestic consumers lose, domestic producers gain, and the gains outweigh the losses. 
C) domestic consumers gain, domestic producers lose, and the losses outweigh the gains. 
D) domestic consumers gain, domestic producers lose, an equal amount.

Question 20

Assume that one day's labor in England can produce either 20 units of cloth or 2 units of wine, while in Portugal, one day's labor can produce either 24 units of cloth or 12 units of wine.If England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit of labor from cloth to wine, the increase in combined output by those two workers will be

Accepted Answer

A) 16 wine, 8 cloth 
B) 16 wine, 16 cloth 
C) 12 wine, 12 cloth 
D) 8 wine, 16 cloth 
A) 16 wine, 8 cloth 
B) 16 wine, 16 cloth 
C) 12 wine, 12 cloth 
D) 8 wine, 16 cloth

Which of the following would be a credit in the U.S.balance of payments?

Under a system of fixed exchange rates, what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

A tariff on a good increases the domestic price of the good, increases domestic production of the good, reduces the amount of the good sold, and decreases imports of the good.

The dollar appreciates when U.S.demands for foreign currencies decrease.

What is the law of comparative advantage, and why is it important in international trade?

Fact Pattern 18-B Refer to the following data: Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. -Refer to Fact Pattern 18-B.Which of the following is true?

In Artland the opportunity cost of producing 1 ton of wheat is 2 tons of corn, while in Scienceland, the opportunity cost of producing 2 tons of wheat is 3 tons of corn.Both countries would be better off if:

Imposing a quota on metal softball bats shipped into the United States would likely:

Figure 18-B -Refer to Figure 18-B.The change in total surplus from free trade is area:

The intended gains from U.S.tariffs and other trade restrictions can backfire if foreign governments retaliate by imposing additional trade restrictions on U.S.goods sold in their countries.

Major U.S.exporters would be likely to oppose the sort of protectionist policies favored by domestic producers that compete with imports.

Economically speaking, tariffs:

Which of the following arguments in favor of trade restrictions is of questionable validity?

The net loss in welfare from a quota is proportionately larger than for a tariff because:

The world price of a commodity will settle at the level where

After the U.S.introduces of a tariff in the market for widgets, the price of widgets in the U.S.will

Relative to a no-international-trade initial situation, if the United States imported wine, the U.S.domestic price of wine:

Suppose that the exchange rate between British pounds and U.S.dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound, exports of U.S.goods to Britain will tend to:

Compared to the no-trade situation, when a country exports a good:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

Filters

Exam 18: International Economics

Which of the following would be a credit in the U.S.balance of payments?

Under a system of fixed exchange rates, what will happen if the price of a currency is set above market equilibrium? How can this be remedied?

A tariff on a good increases the domestic price of the good, increases domestic production of the good, reduces the amount of the good sold, and decreases imports of the good.

The dollar appreciates when U.S.demands for foreign currencies decrease.

What is the law of comparative advantage, and why is it important in international trade?

Fact Pattern 18-B Refer to the following data: Karl can produce either 10 tons of oranges or 5 tons of apples in a year, while Adam can produce either 5 tons of oranges or 10 tons of apples. -Refer to Fact Pattern 18-B.Which of the following is true?

In Artland the opportunity cost of producing 1 ton of wheat is 2 tons of corn, while in Scienceland, the opportunity cost of producing 2 tons of wheat is 3 tons of corn.Both countries would be better off if:

Imposing a quota on metal softball bats shipped into the United States would likely:

Figure 18-B -Refer to Figure 18-B.The change in total surplus from free trade is area:

The intended gains from U.S.tariffs and other trade restrictions can backfire if foreign governments retaliate by imposing additional trade restrictions on U.S.goods sold in their countries.

Major U.S.exporters would be likely to oppose the sort of protectionist policies favored by domestic producers that compete with imports.

Economically speaking, tariffs:

Which of the following arguments in favor of trade restrictions is of questionable validity?

The net loss in welfare from a quota is proportionately larger than for a tariff because:

The world price of a commodity will settle at the level where

After the U.S.introduces of a tariff in the market for widgets, the price of widgets in the U.S.will

Relative to a no-international-trade initial situation, if the United States imported wine, the U.S.domestic price of wine:

Suppose that the exchange rate between British pounds and U.S.dollars is originally $2.50 per pound.If it then changes to $3 for 1 pound, exports of U.S.goods to Britain will tend to:

Compared to the no-trade situation, when a country exports a good:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Using Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

Filters