Question 1

As trade restrictions are eliminated,increased imports

Accepted Answer

A) Lower competition in product markets. 
B) Leave the composition of the GDP unchanged. 
C) Shift the allocation of resources away from import-competing industries. 
D) Redistribute income out of import-using industries.

Question 2

Which of the following is a gain from trade?

Accepted Answer

A) A higher standard of living for all trading countries. 
B) A shorter workweek for all trading countries. 
C) A level of self-sufficiency for all trading countries. 
D) A higher price level for all trading countries.

Question 3

Suppose the country of Maverick has specialized in the production of a good but has not yet entered into trade.At this point in time,Maverick has

Accepted Answer

A) Moved to a level of production outside its production possibilities curve. 
B) Shifted its production possibilities curve outward. 
C) Moved along its existing production possibilities curve. 
D) Moved to a level of consumption outside its production possibilities curve.

Question 4

Quotas are a much greater threat to competition than are tariffs because quotas preclude additional imports at any price.

Accepted Answer

A) True 
 B)False

Question 5

Suppose China can produce 200 TVs or 200 DVD players.South Korea can produce either 100 TVs or 200 DVD players.In terms of TV production,we can conclude that

Accepted Answer

A) China has an absolute advantage in TV production. 
B) South Korea has an absolute advantage in TV production. 
C) China has a comparative advantage in TV production. 
D) South Korea has a comparative advantage in TV production.

Question 6

The elimination of import restrictions will

Accepted Answer

A) Alter the mix of output from export industries toward domestic industries. 
B) Redistribute income from import-competing industries to export industries. 
C) Alter the mix of output from export industries to import-competing industries. 
D) Redistribute income from domestic to foreign producers.

Question 7

Assume Ireland can produce 4 units of good X or 2 units of good Y.France can produce 3 units of good X or 9 units of good Y.What would be the terms of trade between Ireland and France for 1 unit of good X?

Accepted Answer

A) Between 1/2 and 3 units of Y. 
B) Between 1/3 and 1/2 units of Y. 
C) Between 4 and 9 units of Y. 
D) Between 1/3 and 3 units of Y.

Question 8

Explain how it is possible for a country to consume a greater quantity of goods and services than it is actually capable of producing.

Accepted Answer

The answer of Explain how it is possible for a...

Question 9

Table 35.1 $$\begin{array} { | l | c | c | } 
\hline { \text { Country } } & \text { Tons of Soybeans } & \text { Computer } \
\hline \text { China } & 100 & 300 \
\hline \text { United States } & 150 & 750 \
\hline
\end{array}$$ Based on the information in Table 35.1,assume China and the United States have the same amount of resources with which to produce soybeans and computers and they produce no other goods.The opportunity cost of producing 1 computer in China is

Accepted Answer

A) 1/3 of a ton of soybeans. 
B) 1/4 of a ton of soybeans. 
C) 3 tons of soybeans. 
D) 4 tons of soybeans.

Question 10

Refer to Figure 35.4 for the production possibilities curve for Chile: Chile's production and consumption of wine and wheat without trade are represented by point A.Suppose that Chile has a comparative advantage in the production of wine compared to the United States and specialization and trade take place between the two countries.The most likely new combination of wine and wheat available to Chile would be

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D.

Question 11

If exports are being excluded unfairly from a market,the World Trade Organization (WTO)may authorize

Accepted Answer

A) Quotas. 
B) Retaliatory tariffs. 
C) Other nontariff barriers. 
D) Retaliatory comparative advantages.

Question 12

World output will be maximized when each country pursues its comparative advantage.

Accepted Answer

A) True 
 B)False

Question 13

If the two countries are at points A and B in Figure 35.1 and do not trade,what is the total number of motorcycles produced per year?

Accepted Answer

A) 1,000. 
B) 2,000. 
C) 3,000. 
D) 4,000.

Question 14

Assume the United States and Canada have the same amount of resources.In a given time period,the United States can produce 3 tons of steel or 300 tons of wheat.Canada can produce 4 tons of steel or 400 tons of wheat.This means that

Accepted Answer

A) The United States has a comparative advantage in steel. 
B) Canada has a comparative advantage in steel. 
C) The United States has an absolute advantage in steel. 
D) Canada has an absolute advantage in both steel and wheat.

Question 15

Assume Saudi Arabia can produce 4 units of good X or 3 units of good Y.Tunisia can produce 5 units of good X or 8 units of good Y.What would be the terms of trade between Saudi Arabia and Tunisia for 1 unit of good Y?

Accepted Answer

A) Between 3/4 and 8/5 units of X. 
B) Between 3 and 5 units of X. 
C) Between 4 and 8 units of X. 
D) Between 5/8 and 4/3 units of X.

Question 16

If the United States has a trade deficit,this means that

Accepted Answer

A) Exports exceed imports. 
B) The U.S.economy produces more than it consumes. 
C) The trade balance is negative. 
D) Trade activity is limited to just a few goods.

Question 17

A World View titled "Export Ratios" examines the openness of trade for several countries based on the trade to GDP ratio.According to the excerpt,which country exports the most as a percentage of GDP?

Accepted Answer

A) United Arab Emirates. 
B) Sweden. 
C) The United States. 
D) China.

Question 18

Specialization in production

Accepted Answer

A) Decreases total world output. 
B) Increases output. 
C) Reduces the standard of living. 
D) Makes a country weak.

Question 19

The ratio of exports to GDP in the United States is small relative to that of other countries.

Accepted Answer

A) True 
 B)False

Question 20

A country has a comparative advantage in a good if

Accepted Answer

A) It can produce more of the good than another country. 
B) It can produce a good at a lower opportunity cost relative to another country. 
C) It can specialize only in two goods. 
D) It always has an absolute advantage in the production of the good.

Exam 35: International Trade

As trade restrictions are eliminated,increased imports

Which of the following is a gain from trade?

Suppose the country of Maverick has specialized in the production of a good but has not yet entered into trade.At this point in time,Maverick has

Quotas are a much greater threat to competition than are tariffs because quotas preclude additional imports at any price.

Suppose China can produce 200 TVs or 200 DVD players.South Korea can produce either 100 TVs or 200 DVD players.In terms of TV production,we can conclude that

The elimination of import restrictions will

Assume Ireland can produce 4 units of good X or 2 units of good Y.France can produce 3 units of good X or 9 units of good Y.What would be the terms of trade between Ireland and France for 1 unit of good X?

Explain how it is possible for a country to consume a greater quantity of goods and services than it is actually capable of producing.

If exports are being excluded unfairly from a market,the World Trade Organization (WTO) may authorize

World output will be maximized when each country pursues its comparative advantage.

If the two countries are at points A and B in Figure 35.1 and do not trade,what is the total number of motorcycles produced per year?

Assume the United States and Canada have the same amount of resources.In a given time period,the United States can produce 3 tons of steel or 300 tons of wheat.Canada can produce 4 tons of steel or 400 tons of wheat.This means that

Assume Saudi Arabia can produce 4 units of good X or 3 units of good Y.Tunisia can produce 5 units of good X or 8 units of good Y.What would be the terms of trade between Saudi Arabia and Tunisia for 1 unit of good Y?

If the United States has a trade deficit,this means that

A World View titled "Export Ratios" examines the openness of trade for several countries based on the trade to GDP ratio.According to the excerpt,which country exports the most as a percentage of GDP?

Specialization in production

The ratio of exports to GDP in the United States is small relative to that of other countries.

A country has a comparative advantage in a good if