Question 1

The so-called Euro Zone refers to:

Accepted Answer

A)  All members of the European Union 
B)  The EU nations that have adopted a common currency 
C)  The combined Eastern and Western Europe 
D)  Nations in Europe where the U.S. has military bases 
A)  All members of the European Union 
B)  The EU nations that have adopted a common currency 
C)  The combined Eastern and Western Europe 
D)  Nations in Europe where the U.S. has military bases

Question 2

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Accepted Answer

A)  It spawned a global trade war 
B)  It triggered the Great Depression 
C)  It favored imports over domestic producers 
D)  It is a classic example of the dumping argument 
A)  It spawned a global trade war 
B)  It triggered the Great Depression 
C)  It favored imports over domestic producers 
D)  It is a classic example of the dumping argument

Question 3

A key difference between import quotas and voluntary export restraints (VERs) is that the:

Accepted Answer

A)  Domestic government administers the former, whereas the foreign government administers the latter 
B)  Foreign government administers the former, whereas the domestic government administers the latter 
C)  One is a tax, whereas the other is a quantity limit 
D)  One raises the price of the imported product involved, whereas the other one does not 
A)  Domestic government administers the former, whereas the foreign government administers the latter 
B)  Foreign government administers the former, whereas the domestic government administers the latter 
C)  One is a tax, whereas the other is a quantity limit 
D)  One raises the price of the imported product involved, whereas the other one does not

Question 4

Nation Alpha has a comparative advantage in product X and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if:

Accepted Answer

A)  The exchange ratio of X for Y is fixed 
B)  The terms of trade increase in both nations 
C)  There is excess capacity in both economies 
D)  The prices charged for X and Y reflect their domestic opportunity costs 
A)  The exchange ratio of X for Y is fixed 
B)  The terms of trade increase in both nations 
C)  There is excess capacity in both economies 
D)  The prices charged for X and Y reflect their domestic opportunity costs

Question 5

Use the following table for Country X to answer the question below. Column 1 of the table is the price of a product. Column 2 is the quantity demanded domestically (Qdd) and Column 3 is the quantity supplied domestically (Qsd).   Refer to the table above. If Country X opens itself up to international trade, at what world price will it begin importing some units of the product?

Accepted Answer

A)  Any price below $5.00 
B)  Any price above $5.00 
C)  Any price below $3.00 
D)  Any price above $3.00 
A)  Any price below $5.00 
B)  Any price above $5.00 
C)  Any price below $3.00 
D)  Any price above $3.00

Question 6

Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?

Accepted Answer

A)  Canada 
B)  France 
C)  United Kingdom 
D)  United States 
A)  Canada 
B)  France 
C)  United Kingdom 
D)  United States

Question 7

From an economic perspective, studies of the costs of trade barriers show that they:

Accepted Answer

A)  Are outweighed by the reduction in foreign competition provided by the barriers 
B)  Are much less than benefits for domestic producers and workers 
C)  Are about equal to the benefits from trade barriers 
D)  Far exceed their benefits for society 
A)  Are outweighed by the reduction in foreign competition provided by the barriers 
B)  Are much less than benefits for domestic producers and workers 
C)  Are about equal to the benefits from trade barriers 
D)  Far exceed their benefits for society

Question 8

An excise tax that is applied to an imported product which is not at all produced domestically is called a(n):

Accepted Answer

A)  Protective tariff 
B)  Revenue tariff 
C)  Import quota 
D)  Nontariff barrier 
A)  Protective tariff 
B)  Revenue tariff 
C)  Import quota 
D)  Nontariff barrier

Question 9

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Accepted Answer

A)  Trade barriers protect the development of new technology, but the new technology eliminates jobs 
B)  Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment 
C)  The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment 
D)  Major American firms have produced many products in other countries, and would not hire more domestic labor when trade barriers are imposed 
A)  Trade barriers protect the development of new technology, but the new technology eliminates jobs 
B)  Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment 
C)  The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment 
D)  Major American firms have produced many products in other countries, and would not hire more domestic labor when trade barriers are imposed

Question 10

When a tariff or quota on a product is removed, this policy action:

Accepted Answer

A)  Benefits domestic producers of the product 
B)  Benefits consumers of the product 
C)  Benefits the government 
D)  Hurts nations exporting the product 
A)  Benefits domestic producers of the product 
B)  Benefits consumers of the product 
C)  Benefits the government 
D)  Hurts nations exporting the product

Question 11

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50% of its GDP.

Accepted Answer

A) True 
 B)False

Question 12

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Accepted Answer

A)  Specialization in production 
B)  Nationalization of industries 
C)  Regulation of production and trade 
D)  Spreading out of resources in more industries 
A)  Specialization in production 
B)  Nationalization of industries 
C)  Regulation of production and trade 
D)  Spreading out of resources in more industries

Question 13

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade:

Accepted Answer

A)  India should export rice to Canada and import Canadian wheat 
B)  India should export wheat to Canada and import Canadian rice 
C)  Canada should produce both wheat and rice and not trade with India 
D)  India cannot offer any benefits to Canada from trading with her 
A)  India should export rice to Canada and import Canadian wheat 
B)  India should export wheat to Canada and import Canadian rice 
C)  Canada should produce both wheat and rice and not trade with India 
D)  India cannot offer any benefits to Canada from trading with her

Question 14

Specialization and trade between individuals or between nations leads to:

Accepted Answer

A)  Greater self-sufficiency 
B)  Higher product prices 
C)  Higher utilization of resources 
D)  Higher total output 
A)  Greater self-sufficiency 
B)  Higher product prices 
C)  Higher utilization of resources 
D)  Higher total output

Question 15

Refer to the graph above, where Sd and Dd are the domestic supply and demand for a product. The world price of the product is $6. What would be the difference in the total revenue received by foreign producers after a quota of 20 units is imposed compared with the total revenue received by foreign producers when a $4 per unit tariff is imposed?

Accepted Answer

A)  $0 revenue difference 
B)  $80 more revenue with a quota than with a tariff 
C)  $200 more revenue with a quota than with a tariff 
D)  $120 more revenue with a tariff than with a quota 
A)  $0 revenue difference 
B)  $80 more revenue with a quota than with a tariff 
C)  $200 more revenue with a quota than with a tariff 
D)  $120 more revenue with a tariff than with a quota

Question 16

An export subsidy for a product will benefit:

Accepted Answer

A)  Domestic consumers of the product 
B)  Foreign producers of the product 
C)  Foreign consumers of the product 
D)  The domestic taxpayers 
A)  Domestic consumers of the product 
B)  Foreign producers of the product 
C)  Foreign consumers of the product 
D)  The domestic taxpayers

Question 17

Dumping is the sale of a product in a foreign market:

Accepted Answer

A)  At a price below its domestic price or cost of production 
B)  That does not meet the quality standards in the domestic market 
C)  And is the principal means used to enforce nontariff barriers 
D)  And is encouraged by voluntary export restraints 
A)  At a price below its domestic price or cost of production 
B)  That does not meet the quality standards in the domestic market 
C)  And is the principal means used to enforce nontariff barriers 
D)  And is encouraged by voluntary export restraints

Question 18

In a world with two products, wheat (W) and coffee (C), nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation:

Accepted Answer

A)  Alpha will prevail if world demand for coffee is great relative to its supply 
B)  Alpha will prevail if world demand for wheat is weak relative to its supply 
C)  Beta will prevail if world demand for coffee is great relative to its supply 
D)  Beta will prevail if world demand for wheat is great relative to its supply 
A)  Alpha will prevail if world demand for coffee is great relative to its supply 
B)  Alpha will prevail if world demand for wheat is weak relative to its supply 
C)  Beta will prevail if world demand for coffee is great relative to its supply 
D)  Beta will prevail if world demand for wheat is great relative to its supply

Question 19

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of:

Accepted Answer

A)  An import quota 
B)  A revenue tariff 
C)  A protective tariff 
D)  A voluntary export restriction 
A)  An import quota 
B)  A revenue tariff 
C)  A protective tariff 
D)  A voluntary export restriction

Question 20

A voluntary export restraint (VER) is similar to an import quota; except that the former benefits the foreign producers while the latter benefits the domestic producers.

Accepted Answer

A) True 
 B)False

The so-called Euro Zone refers to:

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

A key difference between import quotas and voluntary export restraints (VERs) is that the:

Nation Alpha has a comparative advantage in product X and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if:

Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?

From an economic perspective, studies of the costs of trade barriers show that they:

An excise tax that is applied to an imported product which is not at all produced domestically is called a(n):

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

When a tariff or quota on a product is removed, this policy action:

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50% of its GDP.

What other economic process needs to accompany international trade, for nations to benefit from such trade?

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade:

Specialization and trade between individuals or between nations leads to:

An export subsidy for a product will benefit:

Dumping is the sale of a product in a foreign market:

In a world with two products, wheat (W) and coffee (C), nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation:

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of:

A voluntary export restraint (VER) is similar to an import quota; except that the former benefits the foreign producers while the latter benefits the domestic producers.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters

Exam 20: International Trade

The so-called Euro Zone refers to:

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

A key difference between import quotas and voluntary export restraints (VERs) is that the:

Nation Alpha has a comparative advantage in product X and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if:

Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?

From an economic perspective, studies of the costs of trade barriers show that they:

An excise tax that is applied to an imported product which is not at all produced domestically is called a(n):

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

When a tariff or quota on a product is removed, this policy action:

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50% of its GDP.

What other economic process needs to accompany international trade, for nations to benefit from such trade?

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade:

Specialization and trade between individuals or between nations leads to:

An export subsidy for a product will benefit:

Dumping is the sale of a product in a foreign market:

In a world with two products, wheat (W) and coffee (C), nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation:

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of:

A voluntary export restraint (VER) is similar to an import quota; except that the former benefits the foreign producers while the latter benefits the domestic producers.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters