Question 1

At one time,it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible.More money would flow into a country than out of a country.Is this really a sound economic strategy? What is the relationship between exports and imports?

Accepted Answer

The answer of At one time,it was believed that the...

Question 2

I Robot starring Will Smith was filmed in Vancouver.Explain how the export of movies affects our GDP.

Accepted Answer

The answer of I Robot starring Will Smith was filmed...

Question 3

Table 14-2
Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour.
-Refer to Table 14-2.What are the opportunity costs of producing 1 orange for Alpha and Omega?

Accepted Answer

A) 0.25 apples for Alpha and 0.5 apples for Omega 
B) 0.5 apples for Alpha and 0.25 apples for Omega 
C) 2 apples for Alpha and 4 apples for Omega 
D) 9 apples for Alpha and 4 apples for Omega

Question 4

What impact would introducing a tariff on vitamin E have?

Accepted Answer

A) It would increase total Canadian consumption of vitamin E. 
B) It would increase Canadian consumption of domestically produced vitamin E. 
C) It would reduce exports of vitamin E. 
D) It would decrease domestic production of vitamin E.

Question 5

What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?

Accepted Answer

The answer of What benefits are to be gained from...

Question 6

What basic concept related to international trade is the most important?

Accepted Answer

A) comparative advantage 
B) absolute advantage 
C) resource cost 
D) the total amount of the good producible

Question 7

Which of the following statements most accurately describes the amount of international trade?

Accepted Answer

A) Canadian international trade represents about 5 percent of Canadian GDP. 
B) Less than 5 percent of world output is sold in a country different from the one in which it is produced. 
C) The volume of international trade has grown rapidly in Canada over the past 50 years. 
D) U.S. exports and imports as a percentage of GDP were much higher in 2010 than were Canadian exports and imports as a percentage of GDP.

Question 8

A country with relatively abundant supplies of labour is unlikely to have a comparative advantage in the production of labour-intensive goods as a result.

Accepted Answer

A) True 
 B)False

Question 9

Import quotas generate more government revenue than a tariff that is designed to allow the same level of imports.

Accepted Answer

A) True 
 B)False

Question 10

Cheap labour is by far the primary source of comparative advantage.

Accepted Answer

A) True 
 B)False

Question 11

In Bangladesh,one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore,one person can produce 400 pounds of rice or 200 shirts in one year.What is the result?

Accepted Answer

A) Bangladesh has an absolute advantage in the production of rice. 
B) Bangladesh has a comparative advantage in the production of rice. 
C) Singapore has both an absolute and comparative advantage in the production of rice. 
D) Singapore has a comparative advantage in the production of rice.

Question 12

The fact that some foreign nations are able to use less expensive labour to compete in Canadian product markets proves that foreign workers are exploited.

Accepted Answer

A) True 
 B)False

Question 13

What is the effect of opening trade between countries?

Accepted Answer

A) Living standards rise in the country with more productive, higher-paid workers. 
B) Total world production reduces, as both countries specialize in specific goods. 
C) Living standards fall in the country with less productive, lower-paid workers. 
D) Both countries can exploit absolute advantage and increase productivity.

Question 14

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 36 units of food per person per year or 18 units of clothing per person per year.Which of the following statements is the most accurate?

Accepted Answer

A) Lavaland has both an absolute and a comparative advantage in producing clothing. 
B) Iceland has both an absolute and a comparative advantage in producing food. 
C) Iceland has an absolute, but not a comparative advantage, in producing food. 
D) Lavaland has an absolute, but not a comparative advantage, in producing clothing.

Question 15

Politicians often argue for tariff increases in order to reduce the size of a balance of trade deficit.If tariffs are increased,what is the long-run effect most likely to be?

Accepted Answer

A) a decrease in Canadian imports and an increase in Canadian exports 
B) an increase in both Canadian imports and exports 
C) an increase in Canadian imports and a decrease in Canadian exports 
D) a decrease in both Canadian imports and exports

Question 16

Suppose Edland can produce either 30 units of good A or 30 units of good Z,and Georgeland can produce either 150 units of good A or 200 units of good Z.For them both to benefit from trade,how much will each unit of Z exchange for?

Accepted Answer

A) more than 1 unit of A 
B) between 0.75 of a unit and 1 unit of A 
C) between 0.1 of a unit and 0.75 of a unit of A 
D) 0 units of A since only if the good Z is free will there be mutual benefit.

Question 17

If Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year,under what circumstances can there be mutual gains from trade?

Accepted Answer

A) there can be no mutual gains from trade in this situation 
B) if Canada specializes in potatoes because of its comparative advantage in producing potatoes 
C) if Canada specializes in wheat because of its absolute advantage in producing wheat 
D) if Canada specializes in wheat because of its comparative advantage in producing wheat

Question 18

In Samoa,the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam,the opportunity cost of producing 1 coconut is 5 pineapples.What can we conclude in this situation?

Accepted Answer

A) If trade occurs, both countries will be able to consume beyond their original production possibilities frontiers. 
B) Mutually beneficial trade cannot occur. 
C) Guam will be better off if it exports coconuts and imports pineapples. 
D) Both Samoa and Guam will be better off if Samoa produces both coconuts and pineapples.

Question 19

If it can be shown that a tariff on steel imports will increase employment in the steel industry,we can be sure the effect of the tariff on Canadian employment will be positive.

Accepted Answer

A) True 
 B)False

Question 20

Why does trade make all parties better off?

Accepted Answer

A) It encourages consumption rather than saving. 
B) It always expands the amount of domestic production of each good and service, and more is preferred to less. 
C) It guarantees everyone gets a job. 
D) It permits all parties to acquire some items better suited to their tastes.

Exam 14: International Trade

At one time,it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible.More money would flow into a country than out of a country.Is this really a sound economic strategy? What is the relationship between exports and imports?

I Robot starring Will Smith was filmed in Vancouver.Explain how the export of movies affects our GDP.

Table 14-2 Alpha can produce either 18 oranges or 9 apples an hour, while Omega can produce either 16 oranges or 4 apples an hour. -Refer to Table 14-2.What are the opportunity costs of producing 1 orange for Alpha and Omega?

What impact would introducing a tariff on vitamin E have?

What benefits are to be gained from countries producing according to the law of comparative advantage? What if a country is absolutely more productive in all goods?

What basic concept related to international trade is the most important?

Which of the following statements most accurately describes the amount of international trade?

A country with relatively abundant supplies of labour is unlikely to have a comparative advantage in the production of labour-intensive goods as a result.

Import quotas generate more government revenue than a tariff that is designed to allow the same level of imports.

Cheap labour is by far the primary source of comparative advantage.

In Bangladesh,one person can produce 330 pounds of rice or 110 shirts in one year.In Singapore,one person can produce 400 pounds of rice or 200 shirts in one year.What is the result?

The fact that some foreign nations are able to use less expensive labour to compete in Canadian product markets proves that foreign workers are exploited.

What is the effect of opening trade between countries?

Suppose that Iceland can produce 32 units of food per person per year or 16 units of clothing per person per year,but Lavaland can produce 36 units of food per person per year or 18 units of clothing per person per year.Which of the following statements is the most accurate?

Politicians often argue for tariff increases in order to reduce the size of a balance of trade deficit.If tariffs are increased,what is the long-run effect most likely to be?

Suppose Edland can produce either 30 units of good A or 30 units of good Z,and Georgeland can produce either 150 units of good A or 200 units of good Z.For them both to benefit from trade,how much will each unit of Z exchange for?

If Canada could produce 1 tonne of potatoes or 0.5 tonnes of wheat per worker per year,while Ireland could produce 3 tonnes of potatoes or 2 tonnes of wheat per worker per year,under what circumstances can there be mutual gains from trade?

In Samoa,the opportunity cost of producing 1 coconut is 4 pineapples,while in Guam,the opportunity cost of producing 1 coconut is 5 pineapples.What can we conclude in this situation?

If it can be shown that a tariff on steel imports will increase employment in the steel industry,we can be sure the effect of the tariff on Canadian employment will be positive.

Why does trade make all parties better off?