Question 1

Which country is the United States' largest trading partner in terms of volume of trade?

Accepted Answer

A)  Mexico 
B)  Japan 
C)  China 
D)  Canada 
A)  Mexico 
B)  Japan 
C)  China 
D)  Canada

Question 2

With constant costs in production, specialization tends to proceed to complete-specialization; but with increasing costs, specialization will not be complete.

Accepted Answer

A) True 
 B)False

Question 3

In which of the following countries did exports account for the biggest percent of GDP in 2011?

Accepted Answer

A)  Japan 
B)  United States 
C)  Netherlands 
D)  Germany 
A)  Japan 
B)  United States 
C)  Netherlands 
D)  Germany

Question 4

A maximum limit set on the amount of a specific good that may be imported into a country over a given period of time is called a:

Accepted Answer

A)  Tariff 
B)  Quota 
C)  Nontariff barrier 
D)  Voluntary export restriction 
A)  Tariff 
B)  Quota 
C)  Nontariff barrier 
D)  Voluntary export restriction

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 the world price is $5.00, there will be:

Accepted Answer

A)  A domestic surplus of 100 units that will be exported 
B)  A domestic shortage of 100 units that will be imported 
C)  A domestic surplus of 200 units that will be exported 
D)  Neither a domestic surplus nor a shortage 
A)  A domestic surplus of 100 units that will be exported 
B)  A domestic shortage of 100 units that will be imported 
C)  A domestic surplus of 200 units that will be exported 
D)  Neither a domestic surplus nor a shortage

Question 6

Refer to the table above for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the total revenue (after tariff) going to domestic producers would be:

Accepted Answer

A)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,800 
B)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,400 
C)  $8,400, and the total revenue (after tariff) going to foreign producers would be $2,800 
D)  $13,200, and the total revenue (after tariff) going to foreign producers would be $2,400 
A)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,800 
B)  $11,200, and the total revenue (after tariff) going to foreign producers would be $2,400 
C)  $8,400, and the total revenue (after tariff) going to foreign producers would be $2,800 
D)  $13,200, and the total revenue (after tariff) going to foreign producers would be $2,400

Question 7

If Countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the production possibilities schedules below:   In country A the opportunity cost of 1 paper clip is:

Accepted Answer

A)  2 rubber bands 
B)  1 rubber band 
C)  1/2 rubber band 
D)  1/4 rubber band 
A)  2 rubber bands 
B)  1 rubber band 
C)  1/2 rubber band 
D)  1/4 rubber band

Question 8

When tariffs on imported products are removed by a nation, it will result in:

Accepted Answer

A)  Higher prices and lower quantities consumed in that nation 
B)  Higher prices and higher quantities consumed in that nation 
C)  Lower prices and lower quantities consumed in that nation 
D)  Lower prices and higher quantities consumed in that nation 
A)  Higher prices and lower quantities consumed in that nation 
B)  Higher prices and higher quantities consumed in that nation 
C)  Lower prices and lower quantities consumed in that nation 
D)  Lower prices and higher quantities consumed in that nation

Question 9

One main point of Frederic Bastiat's satire is that:

Accepted Answer

A)  Employment and jobs is the single most important measure of the standard of living 
B)  We should not try to produce what we can get from others at a lower cost 
C)  Some industries may reasonably require protection in order to grow 
D)  Exporting is always a worthwhile activity to be supported and enhanced 
A)  Employment and jobs is the single most important measure of the standard of living 
B)  We should not try to produce what we can get from others at a lower cost 
C)  Some industries may reasonably require protection in order to grow 
D)  Exporting is always a worthwhile activity to be supported and enhanced

Question 10

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

Accepted Answer

A)  Taiwan in both goods 
B)  Taiwan in clocks and Germany in mugs 
C)  Germany in clocks and Taiwan in mugs 
D)  Germany in both goods 
A)  Taiwan in both goods 
B)  Taiwan in clocks and Germany in mugs 
C)  Germany in clocks and Taiwan in mugs 
D)  Germany in both goods

Question 11

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs below.   Refer to the graphs and information above. It can be deduced that:

Accepted Answer

A)  Greece has a comparative advantage in chemicals 
B)  Greece has the absolute advantage in both products 
C)  Italy has a comparative advantage in chemicals 
D)  It is more costly in terms of resources to produce steel in Italy 
A)  Greece has a comparative advantage in chemicals 
B)  Greece has the absolute advantage in both products 
C)  Italy has a comparative advantage in chemicals 
D)  It is more costly in terms of resources to produce steel in Italy

Question 12

The NAFTA established a free-trade area and eliminated trade barriers between:

Accepted Answer

A)  The U.S. and Canada only 
B)  The U.S., Mexico, and China 
C)  The U.S., Mexico, and Canada 
D)  The U.S., China, and Canada 
A)  The U.S. and Canada only 
B)  The U.S., Mexico, and China 
C)  The U.S., Mexico, and Canada 
D)  The U.S., China, and Canada

Question 13

The table below shows labor-productivity figures in two countries facing constant costs:   Refer to the table above. Based on the data provided, it can be deduced that:

Accepted Answer

A)  Country A has the absolute advantage in producing both meat and houses 
B)  Country B has the absolute advantage in producing both meat and houses 
C)  Country A has a comparative advantage in producing both meat and houses 
D)  Country B has a comparative advantage in producing both meat and houses 
A)  Country A has the absolute advantage in producing both meat and houses 
B)  Country B has the absolute advantage in producing both meat and houses 
C)  Country A has a comparative advantage in producing both meat and houses 
D)  Country B has a comparative advantage in producing both meat and houses

Question 14

Which of the following product-groups is a leading export of the United States?

Accepted Answer

A)  Home appliances 
B)  Metals 
C)  Agricultural products 
D)  Computers 
A)  Home appliances 
B)  Metals 
C)  Agricultural products 
D)  Computers

Question 15

An excise tax on imported items is known as a(n):

Accepted Answer

A)  Quota 
B)  Tariff 
C)  Export restriction 
D)  Price ceiling 
A)  Quota 
B)  Tariff 
C)  Export restriction 
D)  Price ceiling

Question 16

If the world price of a product rises relative to the domestic price in a trading nation, then for that product:

Accepted Answer

A)  Exports and imports will increase 
B)  Exports and imports will decrease 
C)  Exports will increase and imports will decrease 
D)  Imports will increase and exports will decrease 
A)  Exports and imports will increase 
B)  Exports and imports will decrease 
C)  Exports will increase and imports will decrease 
D)  Imports will increase and exports will decrease

Question 17

Which of the following is a valid counterargument to a call for higher tariffs "to save U.S. jobs"?

Accepted Answer

A)  The need to protect U.S. workers from the dumping of foreign products 
B)  Strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions 
C)  U.S. firms and workers must be protected from the ruinous competition of nations where wages for workers are low 
D)  Imports may eliminate some U.S. jobs, but they create others, so they may have little or no effect on employment 
A)  The need to protect U.S. workers from the dumping of foreign products 
B)  Strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions 
C)  U.S. firms and workers must be protected from the ruinous competition of nations where wages for workers are low 
D)  Imports may eliminate some U.S. jobs, but they create others, so they may have little or no effect on employment

Question 18

A tariff is a:

Accepted Answer

A)  Tax 
B)  Price ceiling 
C)  Quantity limit 
D)  Subsidy 
A)  Tax 
B)  Price ceiling 
C)  Quantity limit 
D)  Subsidy

Question 19

When a nation starts opening up to international trade, it will see falling prices for:

Accepted Answer

A)  Goods that it exports 
B)  Goods that it imports 
C)  Goods that it has a comparative advantage in 
D)  All goods traded 
A)  Goods that it exports 
B)  Goods that it imports 
C)  Goods that it has a comparative advantage in 
D)  All goods traded

Question 20

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Accepted Answer

A)  A decrease in consumer prices 
B)  A decrease in the tariff rates of foreign nations 
C)  An increase in the number of jobs 
D)  An increase in the possibility of retaliatory tariffs 
A)  A decrease in consumer prices 
B)  A decrease in the tariff rates of foreign nations 
C)  An increase in the number of jobs 
D)  An increase in the possibility of retaliatory tariffs

Exam 20: International Trade

Which country is the United States' largest trading partner in terms of volume of trade?

With constant costs in production, specialization tends to proceed to complete-specialization; but with increasing costs, specialization will not be complete.

In which of the following countries did exports account for the biggest percent of GDP in 2011?

A maximum limit set on the amount of a specific good that may be imported into a country over a given period of time is called a:

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 the world price is $5.00, there will be:

Refer to the table above for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the total revenue (after tariff) going to domestic producers would be:

If Countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the production possibilities schedules below: In country A the opportunity cost of 1 paper clip is:

When tariffs on imported products are removed by a nation, it will result in:

One main point of Frederic Bastiat's satire is that:

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

The NAFTA established a free-trade area and eliminated trade barriers between:

The table below shows labor-productivity figures in two countries facing constant costs: Refer to the table above. Based on the data provided, it can be deduced that:

Which of the following product-groups is a leading export of the United States?

An excise tax on imported items is known as a(n):

If the world price of a product rises relative to the domestic price in a trading nation, then for that product:

Which of the following is a valid counterargument to a call for higher tariffs "to save U.S. jobs"?

A tariff is a:

When a nation starts opening up to international trade, it will see falling prices for:

Which of the following is a likely result of imposing tariffs to increase domestic employment?

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

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 (Q_dd) and Column 3 is the quantity supplied domestically (Q_sd). Refer to the table above. If the world price is $5.00, there will be: