Question 1

How have U.S.imports and exports,as a fraction of GDP,changed from 1970 to the present?

Accepted Answer

The answer of How have U.S.imports and exports,as a fraction...

Question 2

Figure 19-12
 
-Refer to Figure 19-12.Consider the market for U.S.dollars against the Japanese yen shown above.An event which could have caused the changes shown in the graph would be

Accepted Answer

A)  an increase in U.S. real income. 
B)  speculators expect the dollar to depreciate in value in the near future. 
C)  an economic expansion in the United States. 
D)  a decrease in Japanese interest rates.

Question 3

Holding all else constant,an economic expansion in Mexico should decrease the demand for U.S.dollars.

Accepted Answer

A) True 
 B)False

Question 4

The concept of ________ explains how trade between two countries can make each better off.

Accepted Answer

A)  absolute advantage 
B)  comparative advantage 
C)  autarky 
D)  trade barriers

Question 5

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the ________ curve for the yen to shift to the ________,increasing the exchange rate and the value of the yen.

Accepted Answer

A)  supply; right 
B)  supply; left 
C)  demand; right 
D)  demand; left

Question 6

An economic principle that explains why people pursue different occupations is

Accepted Answer

A)  absolute advantage. 
B)  international trade. 
C)  comparative advantage. 
D)  NAFTA.

Question 7

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

Accepted Answer

A)  China also has an absolute advantage in producing corn relative to Japan. 
B)  China has a lower opportunity cost of producing corn relative to Japan. 
C)  Japan has an absolute disadvantage in producing corn relative to China. 
D)  Labor costs are higher for corn producers in Japan than in China.

Question 8

One of the main sources of comparative advantage is natural resources.

Accepted Answer

A) True 
 B)False

Question 9

Figure 19-4
  Figure 19-4 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 19-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

Accepted Answer

A)  Q₀ 
B)  Q₁ 
C)  Q₂ 
D)  Q₂ - Q₀

Question 10

A tariff is the same as a quota.

Accepted Answer

A) True 
 B)False

Question 11

In the 1930s,the United States charged an average tariff rate ________.Today,the rate is ________.

Accepted Answer

A)  of 100 percent; 20 percent 
B)  above 50 percent; less than 1.5 percent 
C)  of less than 10 percent; over 40 percent 
D)  of 17 percent; 33 percent

Question 12

Table 19-11
Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|l|c|c|c|c|c|c|}
\hline & \text { Clocks } & \text { Hats } & \text { Clocks } & \text { Hats } & \text { Clocks } & \text { Hats } \
\hline \text { Denmark } & 6 & 3 & 900 & 150 & 1,200 & 0 \
\hline \text { Belize } & 1 & 2 & 150 & 100 & 0 & 400 \
\hline
\end{array}$ Denmark and Belize can produce both clocks and hats. Each country has a total of 200 available labor hours for the production of clocks and hats. Table 19-11 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-11.Which country has a comparative advantage in producing clocks?

Accepted Answer

A)  Denmark 
B)  Belize 
C)  both countries 
D)  neither country

Question 13

Figure 19-2
  Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 19-2 shows the impact of this tariff.
-Refer to Figure 19-2.As a result of the tariff,domestic producers increase their quantity supplied by

Accepted Answer

A)  31 million pounds of rice. 
B)  22 million pounds of rice. 
C)  15 million pounds or rice. 
D)  6 million pounds of rice.

Question 14

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

Accepted Answer

A) True 
 B)False

Question 15

How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?

Accepted Answer

A)  The demand for the yen will fall, and the supply of the yen will increase. 
B)  The demand for the yen will increase, and the supply of the yen will fall. 
C)  The demand for the yen will fall, and the supply of the yen will fall. 
D)  The demand for the yen will increase, and the supply of the yen will increase.

Question 16

If the exchange rate between the Mexican peso and the U.S.dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar,what is the exchange rate when expressed in terms of dollars per peso?

Accepted Answer

The answer of If the exchange rate between the Mexican...

Question 17

Table 19-12
Output per hour Production and Production
of work Consumption without Trade with Trade
 $\begin{array}{|c|c|c|c|c|c|c|}
\hline & \text { Swords } & \text { Belts } & \text { Swords } & \text { Belts } & \text { Swords } & \text { Belts } \
\hline \text { Estonia } & 5 & 3 & 100 & 40 & 200 & 0 \
\hline \text { Morocco } & 2 & 2 & 60 & 60 & 0 & 120 \
\hline
\end{array}$ Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 19-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 19-12.Which country has an absolute advantage in producing swords?

Accepted Answer

A)  Estonia 
B)  Morocco 
C)  both countries 
D)  neither country

Question 18

a.Distinguish between a tariff and a quota.
b.In what ways are tariffs and quotas similar?
c.In what ways are tariffs and quotas different?
d.Why might a foreign producer prefer a quota rather than a tariff?

Accepted Answer

The answer of a.Distinguish between a tariff and a quota.
b.In...

Question 19

Figure 19-1
  Figure 19-1 shows the U.S. demand and supply for leather footwear.
-Refer to Figure 19-1.Under autarky,the producer surplus is

Accepted Answer

A)  $40. 
B)  $105. 
C)  $195. 
D)  $285.

Question 20

Table 19-7
Output Per Hour of Work
 $\begin{array}{|l|c|c|}
\hline & \text { Handbags } & \text { Jackets } \
\hline \text { Cambodia } & 15 & 3 \
\hline \text { Thailand } & 24 & 6 \
\hline
\end{array}$ Table 19-7 shows the output per hour of work for handbags and jackets in Cambodia and in Thailand.
-Refer to Table 19-7.
a.Which country has an absolute advantage in the production of handbags and jackets?
b.Which country has a comparative advantage in the production of handbags?
c.Which country has a comparative advantage in the production of jackets?

Accepted Answer

The answer of Table 19-7
Output Per Hour of Work
 \(\begin{array}{|l|c|c|}
\hline...

Exam 19: Comparative Advantage, International Trade, and Exchange Rates

How have U.S.imports and exports,as a fraction of GDP,changed from 1970 to the present?

Figure 19-12 -Refer to Figure 19-12.Consider the market for U.S.dollars against the Japanese yen shown above.An event which could have caused the changes shown in the graph would be

Holding all else constant,an economic expansion in Mexico should decrease the demand for U.S.dollars.

The concept of ________ explains how trade between two countries can make each better off.

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the curve for the yen to shift to the ,increasing the exchange rate and the value of the yen.

An economic principle that explains why people pursue different occupations is

Assume that China has a comparative advantage in producing corn and exports corn to Japan.We can conclude that

One of the main sources of comparative advantage is natural resources.

Figure 19-4 Figure 19-4 shows the U.S. demand and supply for leather footwear. -Refer to Figure 19-4.Suppose the government allows imports of leather footwear into the United States.What will be the quantity demanded?

A tariff is the same as a quota.

In the 1930s,the United States charged an average tariff rate .Today,the rate is .

Figure 19-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 19-2 shows the impact of this tariff. -Refer to Figure 19-2.As a result of the tariff,domestic producers increase their quantity supplied by

One reason a country does not specialize completely in production is that not all goods and services are traded internationally.

How will contractionary monetary policy in Japan affect the demand and supply of the yen in the foreign exchange market?

If the exchange rate between the Mexican peso and the U.S.dollar expressed in terms of pesos per dollar is 13.5 pesos = 1 dollar,what is the exchange rate when expressed in terms of dollars per peso?

a.Distinguish between a tariff and a quota. b.In what ways are tariffs and quotas similar? c.In what ways are tariffs and quotas different? d.Why might a foreign producer prefer a quota rather than a tariff?

Figure 19-1 Figure 19-1 shows the U.S. demand and supply for leather footwear. -Refer to Figure 19-1.Under autarky,the producer surplus is