Question 1

In 1992 the EEC was replaced by the EU with an agreement to:

Accepted Answer

A) reduce trade barriers among the member countries. 
B) reduce trade barriers against nonmember countries. 
C) mutually restrict imports from nonmember countries. 
D) create a single market for goods and services in western Europe. 
E) enable the countries of Western Europe to emerge as major world powers. 
A) reduce trade barriers among the member countries. 
B) reduce trade barriers against nonmember countries. 
C) mutually restrict imports from nonmember countries. 
D) create a single market for goods and services in western Europe. 
E) enable the countries of Western Europe to emerge as major world powers.

Question 2

Tariff accounts for 32% of the total government revenue in the U.K.and only 1.2% in India.

Accepted Answer

A) True 
 B)False

Question 3

The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 20.3   In Figure 20.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?

Accepted Answer

A) $4 
B) $6 
C) $8 
D) $10 
E) $12 
A) $4 
B) $6 
C) $8 
D) $10 
E) $12

Question 4

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

Accepted Answer

A) True 
 B)False

Question 5

The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 20.4   According to Figure 20.4, the no-trade equilibrium price and quantity of cocoa in the U.S.market are:

Accepted Answer

A) $8 and 150 pounds. 
B) $10 and 250 pounds. 
C) $4 and 200 pounds. 
D) $10 and 200 pounds. 
E) $6 and 300 pounds. 
A) $8 and 150 pounds. 
B) $10 and 250 pounds. 
C) $4 and 200 pounds. 
D) $10 and 200 pounds. 
E) $6 and 300 pounds.

Question 6

If the average costs of production decline with increases in output, then the larger a firm is, the lower its per unit costs will be.

Accepted Answer

A) True 
 B)False

Question 7

When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses.

Accepted Answer

A) True 
 B)False

Question 8

According to empirical observations, the cost of restricting international trade in the U.S.is much greater than the benefits generated from restriction.In the light of the above observation, which of the following statements is true?

Accepted Answer

A) The benefits of protecting domestic jobs typically outweigh the costs. 
B) Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer. 
C) U.S.GDP would be over $14 billion higher with import restrictions than without restrictions. 
D) Protection of the U.S.textile and sugar industries means that all consumers pay a lower price for clothing and sugar. 
E) Protection of the domestic industries enable the producers to charge lower prices for their products. 
A) The benefits of protecting domestic jobs typically outweigh the costs. 
B) Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer. 
C) U.S.GDP would be over $14 billion higher with import restrictions than without restrictions. 
D) Protection of the U.S.textile and sugar industries means that all consumers pay a lower price for clothing and sugar. 
E) Protection of the domestic industries enable the producers to charge lower prices for their products.

Question 9

One important unintended consequence of the Smoot-Hawley Tariff Act was to:

Accepted Answer

A) lessen the severity of the Great Depression by increasing exports. 
B) provide the federal government with an effective tool for exercising monetary policy. 
C) increase the efficiency of domestic automobile production. 
D) increase the severity of the Great Depression by causing other countries to retaliate, and thus leading to a decline in exports. 
E) increase the U.S.government budget deficit by $15 million. 
A) lessen the severity of the Great Depression by increasing exports. 
B) provide the federal government with an effective tool for exercising monetary policy. 
C) increase the efficiency of domestic automobile production. 
D) increase the severity of the Great Depression by causing other countries to retaliate, and thus leading to a decline in exports. 
E) increase the U.S.government budget deficit by $15 million.

Question 10

Which of the following would result from a tariff?

Accepted Answer

A) An increase in government budget deficit 
B) An increase in domestic production 
C) A greater volume of international trade 
D) Increased domestic consumption 
E) Decrease in prices of the imported goods 
A) An increase in government budget deficit 
B) An increase in domestic production 
C) A greater volume of international trade 
D) Increased domestic consumption 
E) Decrease in prices of the imported goods

Question 11

Which of the following statements is true of the impact of trade restrictions on domestic employment?

Accepted Answer

A) Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers. 
B) Beside the protected industry, other industries will also benefit in terms of employment. 
C) Domestic consumers will be required to pay lower prices for the output of the protected industry. 
D) Restrictions imposed on trade simply redistribute jobs by creating employment in the protected industry and reducing employment elsewhere. 
E) If other countries retaliate by restricting the entry of the domestic exports, the output of domestic firms that produce for export will rise. 
A) Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers. 
B) Beside the protected industry, other industries will also benefit in terms of employment. 
C) Domestic consumers will be required to pay lower prices for the output of the protected industry. 
D) Restrictions imposed on trade simply redistribute jobs by creating employment in the protected industry and reducing employment elsewhere. 
E) If other countries retaliate by restricting the entry of the domestic exports, the output of domestic firms that produce for export will rise.

Question 12

The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 20.4   Refer to Figure 20.4.If cocoa sells for $6 per pound in the world market, determine the volume of U.S.cocoa imports.

Accepted Answer

A) 250 pounds 
B) 350 pounds 
C) 300 pounds 
D) 150 pounds 
E) 200 pounds 
A) 250 pounds 
B) 350 pounds 
C) 300 pounds 
D) 150 pounds 
E) 200 pounds

Question 13

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2   In Figure 20.2, if the world price per bushel of wheat is $25, how much wheat will be imported?

Accepted Answer

A) 450 bushels 
B) 350 bushels 
C) 200 bushels 
D) 150 bushels 
E) 300 bushels 
A) 450 bushels 
B) 350 bushels 
C) 200 bushels 
D) 150 bushels 
E) 300 bushels

Question 14

If international trade is restricted by the government:

Accepted Answer

A) domestic consumers are benefited. 
B) domestic producers are adversely affected. 
C) consumers in the importing country are required to pay higher prices for the goods. 
D) consumers can access to better quality product at lower prices. 
E) the resources are allocated to their highest paid uses. 
A) domestic consumers are benefited. 
B) domestic producers are adversely affected. 
C) consumers in the importing country are required to pay higher prices for the goods. 
D) consumers can access to better quality product at lower prices. 
E) the resources are allocated to their highest paid uses.

Question 15

In order to protect key industries, some countries impose taxes on their exports instead of imports, mainly because it is easier to collect taxes from the export industry.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following probably best explains why trade restrictions are imposed even if the costs to consumers are greater than the benefits to protected industries?

Accepted Answer

A) Indifference on the government's part to the interests of domestic workers 
B) A desire to make other countries suffer 
C) Successful lobbying by consumers 
D) Successful lobbying by employers and workers 
E) The government's preference to safeguard the interest of the producers at the expense of the consumers 
A) Indifference on the government's part to the interests of domestic workers 
B) A desire to make other countries suffer 
C) Successful lobbying by consumers 
D) Successful lobbying by employers and workers 
E) The government's preference to safeguard the interest of the producers at the expense of the consumers

Question 17

A customs union is an organization of nations whose members:

Accepted Answer

A) have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers. 
B) have no trade barriers among themselves but impose common trade barriers on nonmembers. 
C) have no trade barriers among themselves but each member country chooses its own trade policies toward nonmember countries. 
D) retaliate each other by raising reciprocal tariffs. 
E) neither have trade barriers among themselves nor impose any restriction on the nonmember countries. 
A) have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers. 
B) have no trade barriers among themselves but impose common trade barriers on nonmembers. 
C) have no trade barriers among themselves but each member country chooses its own trade policies toward nonmember countries. 
D) retaliate each other by raising reciprocal tariffs. 
E) neither have trade barriers among themselves nor impose any restriction on the nonmember countries.

Question 18

In a free trade area, member nations have no trade barriers among themselves but are free to set their own trade policies toward nonmembers.

Accepted Answer

A) True 
 B)False

Question 19

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

Accepted Answer

A) True 
 B)False

Question 20

One danger associated with calls for fairness based on reciprocity is that, calls for fair trade may be invoked in cases where, foreign restrictions on U.S.imports do not actually exist.

Accepted Answer

A) True 
 B)False

Exam 37: International Trade Restrictions

In 1992 the EEC was replaced by the EU with an agreement to:

Tariff accounts for 32% of the total government revenue in the U.K.and only 1.2% in India.

The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 20.3 In Figure 20.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 20.4 According to Figure 20.4, the no-trade equilibrium price and quantity of cocoa in the U.S.market are:

If the average costs of production decline with increases in output, then the larger a firm is, the lower its per unit costs will be.

When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses.

According to empirical observations, the cost of restricting international trade in the U.S.is much greater than the benefits generated from restriction.In the light of the above observation, which of the following statements is true?

One important unintended consequence of the Smoot-Hawley Tariff Act was to:

Which of the following would result from a tariff?

Which of the following statements is true of the impact of trade restrictions on domestic employment?

The figure below shows the demand (D)and supply (S)curves of cocoa in the U.S. Figure 20.4 Refer to Figure 20.4.If cocoa sells for $6 per pound in the world market, determine the volume of U.S.cocoa imports.

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 20.2 In Figure 20.2, if the world price per bushel of wheat is $25, how much wheat will be imported?

If international trade is restricted by the government:

In order to protect key industries, some countries impose taxes on their exports instead of imports, mainly because it is easier to collect taxes from the export industry.

Which of the following probably best explains why trade restrictions are imposed even if the costs to consumers are greater than the benefits to protected industries?

A customs union is an organization of nations whose members:

In a free trade area, member nations have no trade barriers among themselves but are free to set their own trade policies toward nonmembers.

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

One danger associated with calls for fairness based on reciprocity is that, calls for fair trade may be invoked in cases where, foreign restrictions on U.S.imports do not actually exist.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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