Question 1

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves imply that

Accepted Answer

A) both countries have a trade surplus that will result in economic growth. 
B) the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources. 
C) world resources will be allocated more efficiently if the two nations specialize and trade based on comparative advantage. 
D) both nations will be worse off as a result of international specialization and trade.

Question 2

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines

Accepted Answer

A) 5 and 6. 
B) 5 and 7. 
C) 6 and 8. 
D) 7 and 8.

Question 3

Which country is the United States' largest trading partner in terms of volume of trade?

Accepted Answer

A) Mexico 
B) Japan 
C) China 
D) Canada

Question 4

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qₛis domestic quantity supplied, and Qd is domestic quantity demanded. The domestic equilibrium prices of steel in Alpha and Beta are

Accepted Answer

A) $5 and $4, respectively. 
B) $2 and $4, respectively. 
C) $3 and $2, respectively. 
D) $1 and $2, respectively.

Question 5

What are the major imports and exports of the United States?

Accepted Answer

The answer of What are the major imports and exports...

Question 6

In order for mutually beneficial trade to occur between two otherwise isolated nations,

Accepted Answer

A) each nation must be able to produce at least one good absolutely cheaper than the other. 
B) each nation must be able to produce at least one good relatively cheaper than the other. 
C) each nation must face constant costs in the production of the good it exports. 
D) one nation's production must be labor-intensive, while the other nation's production is capital-intensive.

Question 7

The accompanying productivity table shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade,

Accepted Answer

A) India should export rice to Canada and import Canadian wheat. 
B) India should export wheat to Canada and import Canadian rice. 
C) Canada should produce both wheat and rice and not trade with India. 
D) India cannot offer any benefits to Canada from trading with her.

Question 8

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.  With a $1-per-unit tariff, price and total quantity sold will be

Accepted Answer

A) $3 and 7 units. 
B) $5 and 2 units. 
C) $1 and 16 units. 
D) $2 and 11 units.

Question 9

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

Accepted Answer

A) International Monetary Fund (IMF). 
B) World Trade Organization (WTO). 
C) Common Market Organization (CMO). 
D) International Trade Commission (IT
C) .

Question 10

If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 11

Common arguments often raised to justify trade barriers include the following, except

Accepted Answer

A) the need to protect foreign producers. 
B) the need for protecting against dumping. 
C) the need for military self-sufficiency. 
D) to diversify for stability.

Question 12

Refer to the diagram, which pertains to two nations and a specific product. Lines FC and GD are

Accepted Answer

A) domestic supply curves for two countries. 
B) domestic demand curves for two countries. 
C) import demand curves for two countries. 
D) export supply curves for two countries.

Question 13

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n)

Accepted Answer

A) protective tariff. 
B) revenue tariff. 
C) voluntary export restriction. 
D) import quota.

Question 14

If two nations specialize according to their respective comparative advantage, and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

Accepted Answer

A) True 
 B)False

Question 15

Import tariffs benefit the consumers of the product involved.

Accepted Answer

A) True 
 B)False

Question 16

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Accepted Answer

A) increase domestic employment 
B) protection against dumping 
C) strategic trade policy 
D) cheap foreign labor

Question 17

Which of the following is an example of a land-intensive commodity?

Accepted Answer

A) chemicals 
B) autos 
C) watches 
D) wool

Question 18

Globalization of resource markets has resulted in the business practice of offshoring, which involves

Accepted Answer

A) only an outflow of jobs away from the U.S. 
B) no possible expansion of jobs in the U.S. 
C) huge losses to consumers in the U.S. 
D) both an outflow as well as an inflow of jobs in the U.S.

Question 19

What is the Trade Adjustment Assistance Act?

Accepted Answer

The answer of What is the Trade Adjustment Assistance Act?...

Question 20

How can the United States compete successfully with a relatively low-wage nation such as Mexico?

Accepted Answer

The answer of How can the United States compete successfully...

Exam 26: International Trade

In the accompanying diagrams, solid lines are production possibilities curves, and the dashed lines are trading possibilities curves. The trading possibilities curves imply that

Refer to the graph, which shows the import demand and export supply curves for two nations that produce a certain product. The import demand curves for the two nations are represented by lines

Which country is the United States' largest trading partner in terms of volume of trade?

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qₛis domestic quantity supplied, and Q_d is domestic quantity demanded. The domestic equilibrium prices of steel in Alpha and Beta are

What are the major imports and exports of the United States?

In order for mutually beneficial trade to occur between two otherwise isolated nations,

The accompanying productivity table shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade,

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. With a $1-per-unit tariff, price and total quantity sold will be

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.

Common arguments often raised to justify trade barriers include the following, except

Refer to the diagram, which pertains to two nations and a specific product. Lines FC and GD are

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n)

If two nations specialize according to their respective comparative advantage, and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

Import tariffs benefit the consumers of the product involved.

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Which of the following is an example of a land-intensive commodity?

Globalization of resource markets has resulted in the business practice of offshoring, which involves

What is the Trade Adjustment Assistance Act?

How can the United States compete successfully with a relatively low-wage nation such as Mexico?