Question 1

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Accepted Answer

A) True 
 B)False

Question 2

The World Trade Organization is the successor to the:

Accepted Answer

A)  General Agreement on Tariffs and Trade (GATT) 
B)  United Nations Commission on Trade Law (UNCTL) 
C)  World Customs Organization 
D)  United Nations Conference on Trade and Development (UNCTA
D)  
A)  General Agreement on Tariffs and Trade (GATT) 
B)  United Nations Commission on Trade Law (UNCTL) 
C)  World Customs Organization 
D)  United Nations Conference on Trade and Development (UNCTA
D)

Question 3

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the:

Accepted Answer

A)  Price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported) will increase 
B)  Prices of wristwatches in Switzerland would rise and that's how Switzerland would be hurt by the quota 
C)  Price of wristwatches in the United States would remain the same, but the quantity will fall as imports fall 
D)  Total quantity of wristwatches (domestic and imported) purchased would decline as prices rise 
A)  Price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported) will increase 
B)  Prices of wristwatches in Switzerland would rise and that's how Switzerland would be hurt by the quota 
C)  Price of wristwatches in the United States would remain the same, but the quantity will fall as imports fall 
D)  Total quantity of wristwatches (domestic and imported) purchased would decline as prices rise

Question 4

In a two-nation two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have:

Accepted Answer

A)  No comparative advantage over the other nation 
B)  A comparative advantage in one good and a comparative disadvantage in the other good 
C)  No absolute advantage over the other nation 
D)  An absolute advantage in one good and an absolute disadvantage in the other good 
A)  No comparative advantage over the other nation 
B)  A comparative advantage in one good and a comparative disadvantage in the other good 
C)  No absolute advantage over the other nation 
D)  An absolute advantage in one good and an absolute disadvantage in the other good

Question 5

Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

Accepted Answer

A)  $6 and the quantity consumed 80 units 
B)  $8 and the quantity consumed 70 units 
C)  $10 and the quantity consumed 60 units 
D)  $12 and the quantity consumed 50 units 
A)  $6 and the quantity consumed 80 units 
B)  $8 and the quantity consumed 70 units 
C)  $10 and the quantity consumed 60 units 
D)  $12 and the quantity consumed 50 units

Question 6

Autos and chemicals are in million of units in the following production possibilities tables:   Refer to the tables above. Suppose that each nation specialized in producing the product for which it has a comparative advantage, and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and:

Accepted Answer

A)  12 million units of chemicals 
B)  24 million units of chemicals 
C)  36 million units of chemicals 
D)  48 million units of chemicals 
A)  12 million units of chemicals 
B)  24 million units of chemicals 
C)  36 million units of chemicals 
D)  48 million units of chemicals

Question 7

Use the following table to answer the question below for Country Y. Column 1 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 of the product is $6, then Country Y will:

Accepted Answer

A)  Export 100 units of the product 
B)  Import 100 units of the product 
C)  Exports of 300 units of the product 
D)  Imports of 400 units of the product 
A)  Export 100 units of the product 
B)  Import 100 units of the product 
C)  Exports of 300 units of the product 
D)  Imports of 400 units of the product

Question 8

The U.S. has a sizable trade surplus in services.

Accepted Answer

A) True 
 B)False

Question 9

In terms of trade volume, China is the largest trading partner of the United States.

Accepted Answer

A) True 
 B)False

Question 10

In a two-nation, two-good world, which of the following statements is true?

Accepted Answer

A)  One nation cannot possibly have an absolute advantage over the other nation in both products 
B)  If one nation as the comparative advantage in one product, then the other nation would have the comparative advantage in the other product 
C)  One nation will always have the comparative advantage over the other nation in one of the products 
D)  If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product 
A)  One nation cannot possibly have an absolute advantage over the other nation in both products 
B)  If one nation as the comparative advantage in one product, then the other nation would have the comparative advantage in the other product 
C)  One nation will always have the comparative advantage over the other nation in one of the products 
D)  If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other product

Question 11

The ratio at which nations will exchange one product for another is known as the:

Accepted Answer

A)  Exchange rate 
B)  Discount rate 
C)  Terms of trade 
D)  Balance of trade 
A)  Exchange rate 
B)  Discount rate 
C)  Terms of trade 
D)  Balance of trade

Question 12

Which organization meets regularly to establish rules and settle disputes related to international trade?

Accepted Answer

A)  The United Nations Commission on Trade Law 
B)  The United Nations Conference on Trade and Development 
C)  The World Trade Organization 
D)  The World Economic Forum 
A)  The United Nations Commission on Trade Law 
B)  The United Nations Conference on Trade and Development 
C)  The World Trade Organization 
D)  The World Economic Forum

Question 13

Tariffs and import quotas would benefit the following groups, except:

Accepted Answer

A)  Consumers of the product 
B)  Domestic producers of the product 
C)  Workers in domestic firms producing the product 
D)  The government of the importing country 
A)  Consumers of the product 
B)  Domestic producers of the product 
C)  Workers in domestic firms producing the product 
D)  The government of the importing country

Question 14

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Accepted Answer

A)  The benefits of such tariff policy will go to consumers, not workers 
B)  The benefits of such tariff policy will go to businesses, not workers 
C)  Wage rates in a nation are largely determined by productivity, not trade tariffs 
D)  The economy may become overheated, thus increasing inflation 
A)  The benefits of such tariff policy will go to consumers, not workers 
B)  The benefits of such tariff policy will go to businesses, not workers 
C)  Wage rates in a nation are largely determined by productivity, not trade tariffs 
D)  The economy may become overheated, thus increasing inflation

Question 15

Trade protection in most instances transfers wealth from consumers to domestic producers.

Accepted Answer

A) True 
 B)False

Question 16

The "Buy American" policy is equivalent to a(n):

Accepted Answer

A)  Tariff 
B)  Quota 
C)  Export subsidy 
D)  Voluntary export restriction 
A)  Tariff 
B)  Quota 
C)  Export subsidy 
D)  Voluntary export restriction

Question 17

Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

Accepted Answer

A)  $600, but only $240 if the domestic market were open to international trade 
B)  $600, but only $120 if the domestic market were open to international trade 
C)  $500, but only $240 if the domestic market were open to international trade 
D)  $240, but only $120 if the domestic market were open to international trade 
A)  $600, but only $240 if the domestic market were open to international trade 
B)  $600, but only $120 if the domestic market were open to international trade 
C)  $500, but only $240 if the domestic market were open to international trade 
D)  $240, but only $120 if the domestic market were open to international trade

Question 18

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 exporting some units of the product?

Accepted Answer

A)  Any price below $1.00 
B)  Any price above $1.00 
C)  Any price below $3.00 
D)  Any price above $3.00 
A)  Any price below $1.00 
B)  Any price above $1.00 
C)  Any price below $3.00 
D)  Any price above $3.00

Question 19

The principal concept behind comparative advantage is that a nation should:

Accepted Answer

A)  Maximize its volume of trade with other nations 
B)  Use tariffs and quotas to protect the production of vital products for the nation 
C)  Concentrate production on those products for which it has the lowest domestic opportunity cost 
D)  Strive to be self-sufficient in the production of essential goods and services 
A)  Maximize its volume of trade with other nations 
B)  Use tariffs and quotas to protect the production of vital products for the nation 
C)  Concentrate production on those products for which it has the lowest domestic opportunity cost 
D)  Strive to be self-sufficient in the production of essential goods and services

Question 20

Which is a valid counter-argument to the infant industry argument for protective tariffs?

Accepted Answer

A)  It results in too many benefits for domestic firms that export goods and services 
B)  It is difficult to determine which infant industries will become mature industries with a comparative advantage 
C)  The objective would be better achieved through strategic trade policy 
D)  The objective would be better achieved by import quotas and nontariff barriers 
A)  It results in too many benefits for domestic firms that export goods and services 
B)  It is difficult to determine which infant industries will become mature industries with a comparative advantage 
C)  The objective would be better achieved through strategic trade policy 
D)  The objective would be better achieved by import quotas and nontariff barriers

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

The World Trade Organization is the successor to the:

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the:

In a two-nation two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have:

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

The U.S. has a sizable trade surplus in services.

In terms of trade volume, China is the largest trading partner of the United States.

In a two-nation, two-good world, which of the following statements is true?

The ratio at which nations will exchange one product for another is known as the:

Which organization meets regularly to establish rules and settle disputes related to international trade?

Tariffs and import quotas would benefit the following groups, except:

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Trade protection in most instances transfers wealth from consumers to domestic producers.

The "Buy American" policy is equivalent to a(n):

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

The principal concept behind comparative advantage is that a nation should:

Which is a valid counter-argument to the infant industry argument for protective tariffs?

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

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

The World Trade Organization is the successor to the:

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the:

In a two-nation two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have:

Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

The U.S. has a sizable trade surplus in services.

In terms of trade volume, China is the largest trading partner of the United States.

In a two-nation, two-good world, which of the following statements is true?

The ratio at which nations will exchange one product for another is known as the:

Which organization meets regularly to establish rules and settle disputes related to international trade?

Tariffs and import quotas would benefit the following groups, except:

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Trade protection in most instances transfers wealth from consumers to domestic producers.

The "Buy American" policy is equivalent to a(n):

Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

The principal concept behind comparative advantage is that a nation should:

Which is a valid counter-argument to the infant industry argument for protective tariffs?

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

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be: