Question 1

As a percentage of GDP, imports are greater than exports for which of the following countries?

Accepted Answer

A)  Germany 
B)  Italy 
C)  the Netherlands 
D)  the United States 
A)  Germany 
B)  Italy 
C)  the Netherlands 
D)  the United States

Question 2

A tariff

Accepted Answer

A)  makes domestic consumers worse off. 
B)  makes both domestic producers and consumers worse off. 
C)  makes everyone better off. 
D)  makes domestic producers worse off. 
A)  makes domestic consumers worse off. 
B)  makes both domestic producers and consumers worse off. 
C)  makes everyone better off. 
D)  makes domestic producers worse off.

Question 3

The United States is a leading exporter of wheat. What explains the source of the comparative advantage of the United States in wheat production?

Accepted Answer

A)  positive externalities 
B)  investment by multinational firms such as Archer-Daniels-Midland and Tyson Foods Inc. 
C)  climate and soil conditions in the United States which are well-suited for wheat production 
D)  a large supply of unskilled labor 
A)  positive externalities 
B)  investment by multinational firms such as Archer-Daniels-Midland and Tyson Foods Inc. 
C)  climate and soil conditions in the United States which are well-suited for wheat production 
D)  a large supply of unskilled labor

Question 4

Which of the following is an example of a trade restriction?

Accepted Answer

A)  Japan places a tax on all Korean automobiles. 
B)  Domestic wine is more expensive than wine imported from Chile. 
C)  The United States, Canada, and Mexico sign the NAFTA agreement. 
D)  Consumers prefer German beer to domestic beer. 
A)  Japan places a tax on all Korean automobiles. 
B)  Domestic wine is more expensive than wine imported from Chile. 
C)  The United States, Canada, and Mexico sign the NAFTA agreement. 
D)  Consumers prefer German beer to domestic beer.

Question 5

Is the value of U.S. exports typically larger or smaller than the value of U.S. imports?

Accepted Answer

As a percentage of G

Question 6

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

Question 7

Figure 9-2   Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff.
-Refer to Figure 9-2. 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. 
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 8

Table 9-12
Output per hour Production and Production
of work Consumption without Trade with Trade
   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 9-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many belts will Morocco gain compared to the "without trade" numbers?

Accepted Answer

A)  0 
B)  10 
C)  50 
D)  60 
A)  0 
B)  10 
C)  50 
D)  60

Question 9

Which of the following statements about the importance of trade to the U.S. economy is true?

Accepted Answer

A)  Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product. 
B)  Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the second largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product. 
A)  Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product. 
B)  Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the second largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product.

Question 10

All of the following are sources of comparative advantage except

Accepted Answer

A)  climate and natural resources. 
B)  relative abundance of labor and capital. 
C)  a strong foreign currency exchange rate. 
D)  technology. 
A)  climate and natural resources. 
B)  relative abundance of labor and capital. 
C)  a strong foreign currency exchange rate. 
D)  technology.

Question 11

Table 9-6
   Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Celeste has a comparative advantage in making saddles. 
B)  Mateo has an absolute advantage in making spurs. 
C)  Mateo has a comparative advantage in making saddles. 
D)  Mateo has a comparative advantage in making saddles and making spurs. 
A)  Celeste has a comparative advantage in making saddles. 
B)  Mateo has an absolute advantage in making spurs. 
C)  Mateo has a comparative advantage in making saddles. 
D)  Mateo has a comparative advantage in making saddles and making spurs.

Question 12

Table 9-12
Output per hour Production and Production
of work Consumption without Trade with Trade
   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 9-12 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 9-12. If the actual terms of trade are 1 belt for 1.5 swords and 50 belts are traded, how many swords will Estonia gain compared to the "without trade" numbers?

Accepted Answer

A)  25 
B)  75 
C)  100 
D)  125 
A)  25 
B)  75 
C)  100 
D)  125

Question 13

Table 9-10
   Table 9-10 shows the output per week for pens and pencils by Tran and Farah.
-Refer to Table 9-10.
a. Which person has an absolute advantage in the production of pens? pencils?
b. Which person has a comparative advantage in the production of pens?
c. Which person has a comparative advantage in the production of pencils?

Accepted Answer

a. Farah has an absolute advantage in th

Question 14

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Accepted Answer

A)  a non-tariff trade barrier. 
B)  an export quota. 
C)  an import quota. 
D)  a voluntary export restraint. 
A)  a non-tariff trade barrier. 
B)  an export quota. 
C)  an import quota. 
D)  a voluntary export restraint.

Question 15

Table 9-6
   Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

Accepted Answer

A)  Mateo has an absolute advantage in making saddles and spurs. 
B)  Celeste has an absolute advantage in making saddles and spurs. 
C)  Neither Mateo nor Celeste has an absolute advantage in making saddles. 
D)  Neither Mateo nor Celeste has an absolute advantage in making spurs. 
A)  Mateo has an absolute advantage in making saddles and spurs. 
B)  Celeste has an absolute advantage in making saddles and spurs. 
C)  Neither Mateo nor Celeste has an absolute advantage in making saddles. 
D)  Neither Mateo nor Celeste has an absolute advantage in making spurs.

Question 16

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Accepted Answer

A)  Absolute advantage 
B)  Specialization 
C)  Autarky 
D)  Comparative advantage 
A)  Absolute advantage 
B)  Specialization 
C)  Autarky 
D)  Comparative advantage

Question 17

Eliminating a tariff on running shoes would ________ businesses that sell running shoes and ________ consumers who purchase them.

Accepted Answer

A)  benefit; benefit 
B)  benefit; harm 
C)  harm; benefit 
D)  harm; harm 
A)  benefit; benefit 
B)  benefit; harm 
C)  harm; benefit 
D)  harm; harm

Question 18

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. The "Buy American" provision would ________ consumer surplus and ________ producer surplus for industries that produced protected products in the United States.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 19

The textbook refers to the following quotation from a Federal Reserve publication: "Trade is a win-win situation for all countries that participate." But many firms and workers oppose free-trade policies and protests against globalization have become a regular occurrence at meetings of the World Trade Organization. If trade is a "win-win" situation, why is there strong opposition to free trade and globalization?

Accepted Answer

Free trade between any two countries can

Question 20

Members of Congress promising to support each other's legislation is known as

Accepted Answer

A)  logrolling. 
B)  implicit collusion. 
C)  explicit collusion. 
D)  protectionism. 
A)  logrolling. 
B)  implicit collusion. 
C)  explicit collusion. 
D)  protectionism.

Exam 9: Comparative Advantage and the Gains From International Trade

As a percentage of GDP, imports are greater than exports for which of the following countries?

A tariff

The United States is a leading exporter of wheat. What explains the source of the comparative advantage of the United States in wheat production?

Which of the following is an example of a trade restriction?

Is the value of U.S. exports typically larger or smaller than the value of U.S. imports?

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

Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. -Refer to Figure 9-2. As a result of the tariff, domestic producers increase their quantity supplied by

Which of the following statements about the importance of trade to the U.S. economy is true?

All of the following are sources of comparative advantage except

Table 9-6 Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

An agreement negotiated by two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is called

Table 9-6 Mateo and Celeste produce custom saddles and spurs. Table 9-6 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 9-6. Select the statement that accurately interprets the data in the table.

________ is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors.

Eliminating a tariff on running shoes would ________ businesses that sell running shoes and ________ consumers who purchase them.

Members of Congress promising to support each other's legislation is known as

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Eliminating a tariff on running shoes would businesses that sell running shoes and consumers who purchase them.