Question 1

The U.S.Constitution

Accepted Answer

A)  prohibits tariffs on trade between Arkansas and New York but allows tariffs on trade between Hawaii and Alaska. 
B)  prohibits tariffs on all trade. 
C)  allows tariffs on trade with other countries,but not on trade between the states. 
D)  allows tariffs only on goods purchased from the communist nations.

Question 2

Figure 22-9 
-In Figure 22-9,at price OC

Accepted Answer

A)  quantity supplied of pasta exceeds quantity demanded so price will fall. 
B)  quantity demanded for pasta exceeds quantity supplied so price will rise. 
C)  exports of pasta equal XY. 
D)  imports of pasta equal XY.

Question 3

A country that must inhibit imports should give preference to

Accepted Answer

A)  quotas over tariffs because quotas are less likely to distort trade patterns between nations. 
B)  tariffs over quotas because,unlike quotas,tariffs offer no special benefits to inefficient exporters. 
C)  export subsidies over quotas or tariffs because export subsidies can protect a nation's domestic producers. 
D)  an embargo wherever possible because an embargo can serve as a political weapon in addition to being a "trade stopper."

Question 4

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

Accepted Answer

A) True 
 B)False

Question 5

How does the imposition of a tariff reduce the price of imports?

Accepted Answer

A)  At the lower quantity supplied,the price to the importer is lower than if there were free trade. 
B)  At the lower quantity demanded,the price to the importer is lower than if there were free trade. 
C)  Supply of the product is increased from domestic production,reducing the price of the imports. 
D)  Demand for the product is decreased,so that price must fall.

Question 6

Figure 22-7 
-In Figure 22-7,it is probably true that wages are

Accepted Answer

A)  equal in Pestoland and Pastaland. 
B)  greater in Pestoland than Pastaland. 
C)  greater in Pastaland than in Pestoland. 
D)  higher in pasta production than in pesto production in both countries.

Question 7

In the long run,foreign labor remains cheap when and if

Accepted Answer

A)  it becomes highly efficient and competes successfully internationally. 
B)  countries erect barriers to trade between poor countries. 
C)  productivity increases more rapidly in poor countries than in rich countries. 
D)  it remains inefficient compared to other countries' labor.

Question 8

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

Accepted Answer

A) True 
 B)False

Question 9

____ is a doctrine that holds that exports are good for a country,whereas imports are harmful.

Accepted Answer

A)  Supply-side economics 
B)  Mercantilism 
C)  Free trade 
D)  Monetarism

Question 10

Even though international trade is more complicated,supply and demand are still at the center of the price determination mechanism.

Accepted Answer

A) True 
 B)False

Question 11

A complicating factor in international trade is that

Accepted Answer

A)  barter is the basis for trade between countries; money is not used. 
B)  gold is used for payments; there are no international payments without gold. 
C)  many other countries prefer to use the U.S.dollar as currency,causing monetary shortage in the United States. 
D)  trade between countries requires different currencies rather than one currency.

Question 12

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Accepted Answer

A) True 
 B)False

Question 13

A tariff is a limitation on the amount of a good that can be imported.

Accepted Answer

A) True 
 B)False

Question 14

In discussing trade,it is ____ that matters rather than ____.

Accepted Answer

A)  absolute advantage: elastic advantage 
B)  comparative advantage; absolute advantage 
C)  entire advantage; comparative advantage 
D)  elastic advantage; entire advantage 
E)  declarative advantage; absolute advantage

Question 15

International trade usually benefits one trading partner while making the other trading partner worse off.

Accepted Answer

A) True 
 B)False

Question 16

Using the data from Table 22-2,suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Accepted Answer

A)  16 wine,8 cloth. 
B)  16 wine,16 cloth. 
C)  12 wine,12 cloth. 
D)  8 wine,16 cloth.

Question 17

Strategic trade policy relies on threats of protectionism to protect free trade.

Accepted Answer

A) True 
 B)False

Question 18

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,then England has a comparative advantage in the production of cloth.

Accepted Answer

A) True 
 B)False

Question 19

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

A)  No,because protection has no place in industrial development. 
B)  No,protection is always improper. 
C)  Uncertain,economic theory has no answer to this question. 
D)  Yes,although it can be overstated and abused.

Question 20

A quota brings a more serious misallocation of resources than a tariff.

Accepted Answer

A) True 
 B)False

Exam 18: International Trade and Comparative Advantage

The U.S.Constitution

Figure 22-9 -In Figure 22-9,at price OC

A country that must inhibit imports should give preference to

Quotas and tariffs provide the same outcome: restriction of international trade and higher prices for consumers.

How does the imposition of a tariff reduce the price of imports?

Figure 22-7 -In Figure 22-7,it is probably true that wages are

In the long run,foreign labor remains cheap when and if

A tariff has one distinct advantage over a quota.It increases tax revenues to the government.

____ is a doctrine that holds that exports are good for a country,whereas imports are harmful.

Even though international trade is more complicated,supply and demand are still at the center of the price determination mechanism.

A complicating factor in international trade is that

Many countries impose tariffs or quotas to protect the domestic industry from competition.

A tariff is a limitation on the amount of a good that can be imported.

In discussing trade,it is that matters rather than .

International trade usually benefits one trading partner while making the other trading partner worse off.

Using the data from Table 22-2,suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine.The combined production of wine and cloth will be increased by

Strategic trade policy relies on threats of protectionism to protect free trade.

If England uses one week's time to produce ten yards of cloth or two barrels of wine and Portugal uses one week's time to produce twelve yards of cloth or six barrels of wine,then England has a comparative advantage in the production of cloth.

Is the call for protection on the basis of "infant industry" valid?

A quota brings a more serious misallocation of resources than a tariff.