Question 1

According to the theory of comparative advantage, a country

Accepted Answer

A)  exports the goods in which its has a comparative advantage. 
B)  imposes tariffs on goods in which it does not have comparative advantage. 
C)  imports the goods in which it has a comparative advantage. 
D)  exports goods in which it has absolute advantage. 
A)  exports the goods in which its has a comparative advantage. 
B)  imposes tariffs on goods in which it does not have comparative advantage. 
C)  imports the goods in which it has a comparative advantage. 
D)  exports goods in which it has absolute advantage.

Question 2

Refer to the information provided in Table 18.1 below to answer the questions that follow.
Table 18.1  
-Refer to Table 18.1. In Mexico, the opportunity cost of 1 bushel of oranges is

Accepted Answer

A)  1/2 bushel of bananas. 
B)  1 bushels of bananas. 
C)  2 bushel of bananas. 
D)  5 bushels of bananas. 
A)  1/2 bushel of bananas. 
B)  1 bushels of bananas. 
C)  2 bushel of bananas. 
D)  5 bushels of bananas.

Question 3

Refer to the information provided in Table 18.3 below to answer the questions that follow.
Table 18.3  
-Refer to Table 18.3. If the exchange rate is $1 = 3 euros, then

Accepted Answer

A)  the United States will import both raspberries and chocolate. 
B)  Belgium will import both raspberries and chocolate. 
C)  the United States will import chocolate and Belgium will import raspberries. 
D)  the United States will import raspberries and Belgium will import chocolate. 
A)  the United States will import both raspberries and chocolate. 
B)  Belgium will import both raspberries and chocolate. 
C)  the United States will import chocolate and Belgium will import raspberries. 
D)  the United States will import raspberries and Belgium will import chocolate.

Question 4

If a country has a trade surplus of $60 billion, which of the following can be true?

Accepted Answer

A)  The country's exports are $180 billion, and its imports are $120 billion. 
B)  The country's exports are $110 billion, and its imports are $190 billion. 
C)  The country's exports are $120 billion, and its imports are $180 billion. 
D)  The country's exports are $160 billion, and its imports are $60 billion. 
A)  The country's exports are $180 billion, and its imports are $120 billion. 
B)  The country's exports are $110 billion, and its imports are $190 billion. 
C)  The country's exports are $120 billion, and its imports are $180 billion. 
D)  The country's exports are $160 billion, and its imports are $60 billion.

Question 5

Refer to the information provided in Figure 18.4 below to answer the questions that follow.   Figure 18.4
-Refer to Figure 18.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. If the tariff is changed so that it is now ________, tariff revenue in this country will be zero.

Accepted Answer

A)  $1 
B)  between $1 and $5 
C)  between $5 and $10 
D)  $10 
A)  $1 
B)  between $1 and $5 
C)  between $5 and $10 
D)  $10

Question 6

If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then

Accepted Answer

A)  it is reasonable to expect that specialization and trade will benefit both countries. 
B)  it is reasonable to expect that specialization will benefit both countries, but trade will not. 
C)  neither country has anything to gain from specialization and trade. 
D)  it is reasonable to expect that trade will benefit both countries, but specialization will not. 
A)  it is reasonable to expect that specialization and trade will benefit both countries. 
B)  it is reasonable to expect that specialization will benefit both countries, but trade will not. 
C)  neither country has anything to gain from specialization and trade. 
D)  it is reasonable to expect that trade will benefit both countries, but specialization will not.

Question 7

A tariff imposed on imported shoes will cause the domestic price of shoes to ________ and the domestic production of shoes to ________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 8

Which of the following is true?

Accepted Answer

A)  An import quota generates government revenue. 
B)  Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff. 
C)  Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff. 
D)  Tariffs on imports never generate government revenue. 
A)  An import quota generates government revenue. 
B)  Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff. 
C)  Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff. 
D)  Tariffs on imports never generate government revenue.

Question 9

If Mexico has a exports of 40 billion pesos and imports of 50 billion pesos, it is running a trade surplus.

Accepted Answer

A) True 
 B)False

Question 10

The quantity and quality of a country's labor, land, and natural resources are that country's factor endowments.

Accepted Answer

A) True 
 B)False

Question 11

A quota is a tax on imports.

Accepted Answer

A) True 
 B)False

Question 12

-Refer to Table 18.4. For both countries to benefit from trade, the terms of trade must be between ________ case(s) of beer to case(s) of wine.

Accepted Answer

A)  1:1/2 and 1:4 
B)  1:1 and 1:2 
C)  1:1 and 1:1/2 
D)  2:3 and 2:1 
A)  1:1/2 and 1:4 
B)  1:1 and 1:2 
C)  1:1 and 1:1/2 
D)  2:3 and 2:1

Question 13

Refer to the information provided in Table 18.6 below to answer the questions that follow.
Table 18.6  
-Refer to Table 18.6. If the exchange rate is $1 = 2 euros, then

Accepted Answer

A)  the United States will import both peas and carrots. 
B)  France will import both peas and carrots. 
C)  the United States will import peas and France will import carrots. 
D)  France will import peas. 
A)  the United States will import both peas and carrots. 
B)  France will import both peas and carrots. 
C)  the United States will import peas and France will import carrots. 
D)  France will import peas.

Question 14

The quantity and quality of ________ of a country are its factor endowments.

Accepted Answer

A)  imports and exports 
B)  deficits and surpluses 
C)  labor, land, and natural resources 
D)  commodity money and fiat money 
A)  imports and exports 
B)  deficits and surpluses 
C)  labor, land, and natural resources 
D)  commodity money and fiat money

Question 15

Refer to the information provided in Figure 18.1 below to answer the questions that follow.   Figure 18.1
-Refer to Figure 18.1. Canada has ________ advantage in the production of soybeans and ________ advantage in the production of alfalfa.

Accepted Answer

A)  a comparative; an absolute 
B)  a comparative; neither a comparative nor absolute 
C)  neither a comparative nor absolute; neither a comparative nor absolute 
D)  an absolute; a comparative 
A)  a comparative; an absolute 
B)  a comparative; neither a comparative nor absolute 
C)  neither a comparative nor absolute; neither a comparative nor absolute 
D)  an absolute; a comparative

Question 16

According to some environmental groups, free trade policies are potentially harmful to the environment.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is false?

Accepted Answer

A)  An import quota does not generate government revenue. 
B)  Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff. 
C)  Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff. 
D)  Tariffs on imports generate revenue for the government. 
A)  An import quota does not generate government revenue. 
B)  Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff. 
C)  Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff. 
D)  Tariffs on imports generate revenue for the government.

Question 18

A country has a trade deficit when

Accepted Answer

A)  its exports exceed its imports. 
B)  its exports equal its imports. 
C)  its exports are less than its imports. 
D)  government spending is greater than tax receipts. 
A)  its exports exceed its imports. 
B)  its exports equal its imports. 
C)  its exports are less than its imports. 
D)  government spending is greater than tax receipts.

Question 19

When a nation's exports are less than its imports, it has a

Accepted Answer

A)  trade surplus. 
B)  balanced trade. 
C)  trade shortage. 
D)  trade embargo. 
A)  trade surplus. 
B)  balanced trade. 
C)  trade shortage. 
D)  trade embargo.

Question 20

Refer to the information provided in Table 18.1 below to answer the questions that follow.
Table 18.1  
-Refer to Table 18.1. Before specialization, Mexico produces 120 bushels of oranges and 80 bushels of bananas, and Guatemala produces 40 bushels of oranges and 20 bushels of bananas. After specialization, the increase in orange production is

Accepted Answer

A)  10 bushels of oranges. 
B)  20 bushels of oranges. 
C)  25 bushels of oranges. 
D)  40 bushels of oranges. 
A)  10 bushels of oranges. 
B)  20 bushels of oranges. 
C)  25 bushels of oranges. 
D)  40 bushels of oranges.

According to the theory of comparative advantage, a country

Refer to the information provided in Table 18.1 below to answer the questions that follow. Table 18.1 -Refer to Table 18.1. In Mexico, the opportunity cost of 1 bushel of oranges is

Refer to the information provided in Table 18.3 below to answer the questions that follow. Table 18.3 -Refer to Table 18.3. If the exchange rate is $1 = 3 euros, then

If a country has a trade surplus of $60 billion, which of the following can be true?

If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then

A tariff imposed on imported shoes will cause the domestic price of shoes to and the domestic production of shoes to .

Which of the following is true?

If Mexico has a exports of 40 billion pesos and imports of 50 billion pesos, it is running a trade surplus.

The quantity and quality of a country's labor, land, and natural resources are that country's factor endowments.

A quota is a tax on imports.

-Refer to Table 18.4. For both countries to benefit from trade, the terms of trade must be between ________ case(s) of beer to case(s) of wine.

Refer to the information provided in Table 18.6 below to answer the questions that follow. Table 18.6 -Refer to Table 18.6. If the exchange rate is $1 = 2 euros, then

The quantity and quality of ________ of a country are its factor endowments.

Refer to the information provided in Figure 18.1 below to answer the questions that follow. Figure 18.1 -Refer to Figure 18.1. Canada has advantage in the production of soybeans and advantage in the production of alfalfa.

According to some environmental groups, free trade policies are potentially harmful to the environment.

Which of the following is false?

A country has a trade deficit when

When a nation's exports are less than its imports, it has a

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 18: International Trade, Comparative Advantage, and Protectionism

According to the theory of comparative advantage, a country

Refer to the information provided in Table 18.1 below to answer the questions that follow. Table 18.1 -Refer to Table 18.1. In Mexico, the opportunity cost of 1 bushel of oranges is

Refer to the information provided in Table 18.3 below to answer the questions that follow. Table 18.3 -Refer to Table 18.3. If the exchange rate is $1 = 3 euros, then

If a country has a trade surplus of $60 billion, which of the following can be true?

If Argentina has an absolute advantage in the production of beef and Guatemala has an absolute advantage in the production of bananas, then

A tariff imposed on imported shoes will cause the domestic price of shoes to ________ and the domestic production of shoes to ________.

Which of the following is true?

If Mexico has a exports of 40 billion pesos and imports of 50 billion pesos, it is running a trade surplus.

The quantity and quality of a country's labor, land, and natural resources are that country's factor endowments.

A quota is a tax on imports.

-Refer to Table 18.4. For both countries to benefit from trade, the terms of trade must be between ________ case(s) of beer to case(s) of wine.

Refer to the information provided in Table 18.6 below to answer the questions that follow. Table 18.6 -Refer to Table 18.6. If the exchange rate is $1 = 2 euros, then

The quantity and quality of ________ of a country are its factor endowments.

Refer to the information provided in Figure 18.1 below to answer the questions that follow. Figure 18.1 -Refer to Figure 18.1. Canada has ________ advantage in the production of soybeans and ________ advantage in the production of alfalfa.

According to some environmental groups, free trade policies are potentially harmful to the environment.

Which of the following is false?

A country has a trade deficit when

When a nation's exports are less than its imports, it has a

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

A tariff imposed on imported shoes will cause the domestic price of shoes to and the domestic production of shoes to .

Refer to the information provided in Figure 18.1 below to answer the questions that follow. Figure 18.1 -Refer to Figure 18.1. Canada has advantage in the production of soybeans and advantage in the production of alfalfa.