Question 1

Which of the following statements is false?

Accepted Answer

A)  If the United States imposes a tariff on Japanese car imports, the price of cars in the United States is likely to increase. 
B)  If the United States imposes a quota on Japanese car imports, the price of cars in the United States is likely to increase. 
C)  If Japan imposes a subsidy on car exports to the United States, the price of cars in the United States is likely to increase. 
D)  If Japan imposes a "voluntary export restraint" on car exports to the United States, the price of cars in the United States is likely to increase. 
A)  If the United States imposes a tariff on Japanese car imports, the price of cars in the United States is likely to increase. 
B)  If the United States imposes a quota on Japanese car imports, the price of cars in the United States is likely to increase. 
C)  If Japan imposes a subsidy on car exports to the United States, the price of cars in the United States is likely to increase. 
D)  If Japan imposes a "voluntary export restraint" on car exports to the United States, the price of cars in the United States is likely to increase.

Question 2

The Heckscher-Ohlin theorem looks to ________ to explain trade flows.

Accepted Answer

A)  relative factor endowments 
B)  the existence of trade barriers 
C)  acquired comparative advantage 
D)  the differences in preferences among consumers 
A)  relative factor endowments 
B)  the existence of trade barriers 
C)  acquired comparative advantage 
D)  the differences in preferences among consumers

Question 3

In 1991, what group of countries began the process of forming the largest free-trade zone in the world?

Accepted Answer

A)  the European Community 
B)  the North Atlantic Treaty Organization 
C)  the United States, Canada, and Mexico 
D)  the Organization of Petroleum Exporting Countries 
A)  the European Community 
B)  the North Atlantic Treaty Organization 
C)  the United States, Canada, and Mexico 
D)  the Organization of Petroleum Exporting Countries

Question 4

A tax on imports is a(n)

Accepted Answer

A)  import quota. 
B)  tariff. 
C)  voluntary import restriction. 
D)  quality barrier. 
A)  import quota. 
B)  tariff. 
C)  voluntary import restriction. 
D)  quality barrier.

Question 5

The United States placed a limit on the amount of cars that can be imported into the United States. This is an example of

Accepted Answer

A)  a tariff. 
B)  an export subsidy. 
C)  a quota. 
D)  dumping. 
A)  a tariff. 
B)  an export subsidy. 
C)  a quota. 
D)  dumping.

Question 6

In the year ________, the United States switched from running a trade surplus to running a trade deficit.

Accepted Answer

A)  1950 
B)  1966 
C)  1976 
D)  1994 
A)  1950 
B)  1966 
C)  1976 
D)  1994

Question 7

When one country can produce a product at a ________ cost in terms of other goods, that country is said to have a(n) ________ advantage.

Accepted Answer

A)  higher; comparative 
B)  lower; comparative 
C)  lower; absolute 
D)  higher; absolute 
A)  higher; comparative 
B)  lower; comparative 
C)  lower; absolute 
D)  higher; absolute

Question 8

The ratio at which one country trades a domestic product for imported product is that country's

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  cost ratio. 
D)  terms of trade. 
A)  absolute advantage. 
B)  comparative advantage. 
C)  cost ratio. 
D)  terms of trade.

Question 9

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 = 3 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 carrots and France will import peas. 
D)  the United States will import peas and France will import carrots. 
A)  the United States will import both peas and carrots. 
B)  France will import both peas and carrots. 
C)  the United States will import carrots and France will import peas. 
D)  the United States will import peas and France will import carrots.

Question 10

If a country's imports are less than its exports, a country has a trade surplus.

Accepted Answer

A) True 
 B)False

Question 11

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 = 1 euro, 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 carrots and France will import peas. 
D)  France will import carrots. 
A)  the United States will import both peas and carrots. 
B)  France will import both peas and carrots. 
C)  the United States will import carrots and France will import peas. 
D)  France will import carrots.

Question 12

When one country can produce a product at a lower cost in terms of other goods, that country is said to have

Accepted Answer

A)  an absolute advantage. 
B)  a comparative advantage. 
C)  a productive advantage. 
D)  an unfair advantage. 
A)  an absolute advantage. 
B)  a comparative advantage. 
C)  a productive advantage. 
D)  an unfair advantage.

Question 13

Refer to the information provided in Table 18.1 below to answer the questions that follow.
Table 18.1  
-Refer to Table 18.1. Guatemala has

Accepted Answer

A)  a comparative advantage but not an absolute advantage in orange production. 
B)  a comparative advantage but not an absolute advantage in banana production. 
C)  an absolute advantage and a comparative advantage in banana production. 
D)  an absolute advantage and a comparative advantage in orange production. 
A)  a comparative advantage but not an absolute advantage in orange production. 
B)  a comparative advantage but not an absolute advantage in banana production. 
C)  an absolute advantage and a comparative advantage in banana production. 
D)  an absolute advantage and a comparative advantage in orange production.

Question 14

Assume that Down Slope specializes in producing snow boards and Seven Seas specializes in producing scuba tanks. After trade, Down Slope exports 2,000 snow boards and imports 400 scuba tanks. The terms of trade

Accepted Answer

A)  are 1/5:1 snow boards to scuba tanks. 
B)  are 5:1 snow boards to scuba tanks. 
C)  are 1:5 snow boards to scuba tanks. 
D)  cannot be determined from this information. 
A)  are 1/5:1 snow boards to scuba tanks. 
B)  are 5:1 snow boards to scuba tanks. 
C)  are 1:5 snow boards to scuba tanks. 
D)  cannot be determined from this information.

Question 15

Refer to the information provided in Table 18.5 below to answer the questions that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 18.5  
-Refer to Table 18.5. The most that India will be willing to pay for a lb. of tea is

Accepted Answer

A)  1/10 of a bushel of cashews. 
B)  1/5 of a bushel of cashews. 
C)  1/4 of a bushel of cashews. 
D)  1/2 of a bushel of cashews. 
A)  1/10 of a bushel of cashews. 
B)  1/5 of a bushel of cashews. 
C)  1/4 of a bushel of cashews. 
D)  1/2 of a bushel of cashews.

Question 16

If the United States increases the tariff on imported salmon, this will

Accepted Answer

A)  reduce the amount of salmon imported into the United States and reduce production of salmon in the United States. 
B)  increase the amount of salmon imported in the United States and increase the production of salmon in the United States. 
C)  reduce the amount of salmon imported in the United States and increase the production of salmon in the United States. 
D)  increase the amount of salmon imported in the United States and reduce the production of salmon in the United States. 
A)  reduce the amount of salmon imported into the United States and reduce production of salmon in the United States. 
B)  increase the amount of salmon imported in the United States and increase the production of salmon in the United States. 
C)  reduce the amount of salmon imported in the United States and increase the production of salmon in the United States. 
D)  increase the amount of salmon imported in the United States and reduce the production of salmon in the United States.

Question 17

Dumping involves a country selling its exports

Accepted Answer

A)  at a price lower than its cost of production. 
B)  to nations without a comparative advantage in producing the products. 
C)  to nations that regularly impose tariffs. 
D)  to nations that have no need for the products. 
A)  at a price lower than its cost of production. 
B)  to nations without a comparative advantage in producing the products. 
C)  to nations that regularly impose tariffs. 
D)  to nations that have no need for the products.

Question 18

Refer to the information provided in Figure 18.1 below to answer the questions that follow.   Figure 18.1
-Refer to Figure 18.1. The opportunity cost of producing a bushel of soybeans in Canada is

Accepted Answer

A)  half a bushel of alfalfa. 
B)  1 bushel of alfalfa. 
C)  2 bushels of alfalfa. 
D)  zero. 
A)  half a bushel of alfalfa. 
B)  1 bushel of alfalfa. 
C)  2 bushels of alfalfa. 
D)  zero.

Question 19

Refer to the information provided in Table 18.1 below to answer the questions that follow.
Table 18.1  
-Refer to Table 18.1. For both countries to benefit from trade, the terms of trade must be between ________ bushel(s) of oranges to bushel(s) of bananas.

Accepted Answer

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

Question 20

In 1991, the European Union began the process of forming the

Accepted Answer

A)  largest free-trade zone in the world. 
B)  only continental military force in the world. 
C)  first international trade agreement in the world. 
D)  first unified currency in the world. 
A)  largest free-trade zone in the world. 
B)  only continental military force in the world. 
C)  first international trade agreement in the world. 
D)  first unified currency in the world.

Exam 18: International Trade, Comparative Advantage, and Protectionism

Which of the following statements is false?

The Heckscher-Ohlin theorem looks to ________ to explain trade flows.

In 1991, what group of countries began the process of forming the largest free-trade zone in the world?

A tax on imports is a(n)

The United States placed a limit on the amount of cars that can be imported into the United States. This is an example of

In the year ________, the United States switched from running a trade surplus to running a trade deficit.

When one country can produce a product at a ________ cost in terms of other goods, that country is said to have a(n) ________ advantage.

The ratio at which one country trades a domestic product for imported product is that country's

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 = 3 euros, then

If a country's imports are less than its exports, a country has a trade surplus.

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 = 1 euro, then

When one country can produce a product at a lower cost in terms of other goods, that country is said to have

Refer to the information provided in Table 18.1 below to answer the questions that follow. Table 18.1 -Refer to Table 18.1. Guatemala has

Assume that Down Slope specializes in producing snow boards and Seven Seas specializes in producing scuba tanks. After trade, Down Slope exports 2,000 snow boards and imports 400 scuba tanks. The terms of trade

Refer to the information provided in Table 18.5 below to answer the questions that follow. Cashews are measured in bushels and tea is measured in pounds (lbs.) Table 18.5 -Refer to Table 18.5. The most that India will be willing to pay for a lb. of tea is

If the United States increases the tariff on imported salmon, this will

Dumping involves a country selling its exports

Refer to the information provided in Figure 18.1 below to answer the questions that follow. Figure 18.1 -Refer to Figure 18.1. The opportunity cost of producing a bushel of soybeans in Canada is

Refer to the information provided in Table 18.1 below to answer the questions that follow. Table 18.1 -Refer to Table 18.1. For both countries to benefit from trade, the terms of trade must be between ________ bushel(s) of oranges to bushel(s) of bananas.

In 1991, the European Union began the process of forming the

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

When one country can produce a product at a cost in terms of other goods, that country is said to have a(n) advantage.