Question 1

An official agreement with another country in which it agrees to import more from the United States is

Accepted Answer

A) a regional trade bloc. 
B) the quota system. 
C) a voluntary import expansion. 
D) a voluntary restraint agreement. 
A) a regional trade bloc. 
B) the quota system. 
C) a voluntary import expansion. 
D) a voluntary restraint agreement.

Question 2

Dumping typically occurs because

Accepted Answer

A) the exporting country raises its prices to increase profits. 
B) the exporting country usually is experiencing a recession and has excess production. 
C) the importing country is experiencing a recession. 
D) the importing country has assessed significant tariffs. 
A) the exporting country raises its prices to increase profits. 
B) the exporting country usually is experiencing a recession and has excess production. 
C) the importing country is experiencing a recession. 
D) the importing country has assessed significant tariffs.

Question 3

According to the Swiss Institute for Management Development, the top country in terms of productive efficiency is

Accepted Answer

A) Germany. 
B) Japan. 
C) Switzerland. 
D) the United States. 
A) Germany. 
B) Japan. 
C) Switzerland. 
D) the United States.

Question 4

Maximum Feasible Hourly Production Rates for Either
Food or Cloth Using All Available Resources  
-Using the data in the above table, and assuming constant opportunity costs, it is likely that

Accepted Answer

A) the United States will export food. 
B) Mexico will import cloth. 
C) the United States will import both cloth and food. 
D) Mexico will import both cloth and food. 
A) the United States will export food. 
B) Mexico will import cloth. 
C) the United States will import both cloth and food. 
D) Mexico will import both cloth and food.

Question 5

In international trade the term "dumping" means

Accepted Answer

A) price discrimination by domestic producers. 
B) selling goods in a foreign market for a price less than on the home market. 
C) selling goods in a home market for a price less than on the foreign market. 
D) selling goods on the black market to avoid paying taxes. 
A) price discrimination by domestic producers. 
B) selling goods in a foreign market for a price less than on the home market. 
C) selling goods in a home market for a price less than on the foreign market. 
D) selling goods on the black market to avoid paying taxes.

Question 6

During the Great Depression, many industrial countries tried protecting domestic jobs by raising tariffs. Economic theory would suggest that the result would be

Accepted Answer

A) success for only the countries that raised tariffs first. 
B) success for firms that had a comparative advantage in manufactured goods rather than agricultural goods. 
C) reduced exports and volume of trade for everyone. 
D) increased incomes in the countries that pursued this policy. 
A) success for only the countries that raised tariffs first. 
B) success for firms that had a comparative advantage in manufactured goods rather than agricultural goods. 
C) reduced exports and volume of trade for everyone. 
D) increased incomes in the countries that pursued this policy.

Question 7

A group of nations that grants member special trade privileges is

Accepted Answer

A) World Trade Organization. 
B) European Union. 
C) General Agreement on Tariffs and Trade. 
D) North American Free Trade Agreement. 
A) World Trade Organization. 
B) European Union. 
C) General Agreement on Tariffs and Trade. 
D) North American Free Trade Agreement.

Question 8

Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is

Accepted Answer

A) the infant industry argument. 
B) comparative advantage argument. 
C) dumping. 
D) a regional trade bloc. 
A) the infant industry argument. 
B) comparative advantage argument. 
C) dumping. 
D) a regional trade bloc.

Question 9

Maximum Feasible Hourly Production Rates of Either
Product A or Product B Using All Available Resources
Product Country X Country Y
A 4 8
B 4 4
-Refer to the above table. If opportunity costs are constant, each nation produces only the one good for which it has a comparative advantage, and trade can occur between the two countries,

Accepted Answer

A) country X will produce product A and country Y will produce product B. 
B) country X will produce product B and country Y will produce product A. 
C) country X will refuse to trade with country Y since country X has a comparative advantage in both products. 
D) country Y will refuse to trade with country X since country Y has a comparative advantage in both products. 
A) country X will produce product A and country Y will produce product B. 
B) country X will produce product B and country Y will produce product A. 
C) country X will refuse to trade with country Y since country X has a comparative advantage in both products. 
D) country Y will refuse to trade with country X since country Y has a comparative advantage in both products.

Question 10

Why do free trade proponents dislike rules of origin in trade agreements?

Accepted Answer

A) It decreases the amount of international trade in the world. 
B) It increases the amount of international trade in the world. 
C) It decreases incentives for trade diversion. 
D) It increases incentives for trade deflection. 
A) It decreases the amount of international trade in the world. 
B) It increases the amount of international trade in the world. 
C) It decreases incentives for trade diversion. 
D) It increases incentives for trade deflection.

Question 11

What must a government know for the infant industry argument to be a valid reason for imposing tariffs?

Accepted Answer

The government must be able to determine

Question 12

Restrictions on imports

Accepted Answer

A) eventually reduce exports, too. 
B) enhance economic welfare by encouraging more exports. 
C) are the quickest way for a country in recession to start on a path of economic recovery. 
D) usually have no long-run effects on an economy. 
A) eventually reduce exports, too. 
B) enhance economic welfare by encouraging more exports. 
C) are the quickest way for a country in recession to start on a path of economic recovery. 
D) usually have no long-run effects on an economy.

Question 13

A significant advantage to being a member of a trade bloc is

Accepted Answer

A) higher tariff collections from member countries. 
B) reduced or eliminated tariffs among member countries. 
C) reduced tariff rates only for the largest member countries. 
D) None of the above; there is no economic advantage to a trade bloc. 
A) higher tariff collections from member countries. 
B) reduced or eliminated tariffs among member countries. 
C) reduced tariff rates only for the largest member countries. 
D) None of the above; there is no economic advantage to a trade bloc.

Question 14

Protection of a new industry until it becomes strong enough to compete is called

Accepted Answer

A) the national defense argument. 
B) the government indirect tax argument. 
C) the leveling-the-playing-field argument. 
D) the infant-industry argument. 
A) the national defense argument. 
B) the government indirect tax argument. 
C) the leveling-the-playing-field argument. 
D) the infant-industry argument.

Question 15

The Number of Worker Days to Produce One
Cuckoo Clock or Movie Using All Available Resources
U.S. Switzerland
Product (Worker-Days)(Worker-Days)
Cuckoo Clocks 8 6
Movies 12 4
-Benefits of free trade include all of the following EXCEPT

Accepted Answer

A) increased world production. 
B) higher standards of living. 
C) transmission of new ideas. 
D) increased international mobility of labor. 
A) increased world production. 
B) higher standards of living. 
C) transmission of new ideas. 
D) increased international mobility of labor.

Question 16

-Which of the following is counted as a benefit from international trade?

Accepted Answer

A) New production processes developed in one nation are transmitted to others. 
B) Intellectual property such as music and computer applications is introduced throughout the world. 
C) New goods have been introduced to other parts of the world. 
D) All of the above are benefits from international trade. 
A) New production processes developed in one nation are transmitted to others. 
B) Intellectual property such as music and computer applications is introduced throughout the world. 
C) New goods have been introduced to other parts of the world. 
D) All of the above are benefits from international trade.

Question 17

Maximum Feasible Hourly Production Rates of Either
Cuckoo Clocks or Movies Using All Available Resources
Product United States Switzerland
Cuckoo Clocks 4 2
Movies 10 4
-Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of producing movies in the United States is ________, and the opportunity cost of producing movies in Switzerland is ________.

Accepted Answer

A) 2 movies; 2 cuckoo clocks 
B) 2.5 movies; 0.4 cuckoo clocks 
C) 0.4 cuckoo clocks; 0.5 cuckoo clocks 
D) 2.5 cuckoo clocks; 2 cuckoo clocks 
A) 2 movies; 2 cuckoo clocks 
B) 2.5 movies; 0.4 cuckoo clocks 
C) 0.4 cuckoo clocks; 0.5 cuckoo clocks 
D) 2.5 cuckoo clocks; 2 cuckoo clocks

Question 18

Why is it impossible to make everyone better off in the long run by imposing import restrictions?

Accepted Answer

In the long run, any import restriction

Question 19

Using trade restrictions to protect special interests such as the U.S. auto industry

Accepted Answer

A) results in lower prices for U.S. auto consumers. 
B) raises the prices that U.S. consumers must pay for autos. 
C) is a very cost-efficient way of dealing with trade problems. 
D) is the best long-term solution for threatened U.S. jobs. 
A) results in lower prices for U.S. auto consumers. 
B) raises the prices that U.S. consumers must pay for autos. 
C) is a very cost-efficient way of dealing with trade problems. 
D) is the best long-term solution for threatened U.S. jobs.

Question 20

The maximum amount of a good that may be imported during a specified period of time is

Accepted Answer

A) an infant industry agreement. 
B) an import quota. 
C) dumping. 
D) comparative advantage. 
A) an infant industry agreement. 
B) an import quota. 
C) dumping. 
D) comparative advantage.

An official agreement with another country in which it agrees to import more from the United States is

Dumping typically occurs because

According to the Swiss Institute for Management Development, the top country in terms of productive efficiency is

Maximum Feasible Hourly Production Rates for Either Food or Cloth Using All Available Resources -Using the data in the above table, and assuming constant opportunity costs, it is likely that

In international trade the term "dumping" means

During the Great Depression, many industrial countries tried protecting domestic jobs by raising tariffs. Economic theory would suggest that the result would be

A group of nations that grants member special trade privileges is

Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is

Why do free trade proponents dislike rules of origin in trade agreements?

What must a government know for the infant industry argument to be a valid reason for imposing tariffs?

Restrictions on imports

A significant advantage to being a member of a trade bloc is

Protection of a new industry until it becomes strong enough to compete is called

The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources U.S. Switzerland Product (Worker-Days)(Worker-Days) Cuckoo Clocks 8 6 Movies 12 4 -Benefits of free trade include all of the following EXCEPT

-Which of the following is counted as a benefit from international trade?

Why is it impossible to make everyone better off in the long run by imposing import restrictions?

Using trade restrictions to protect special interests such as the U.S. auto industry

The maximum amount of a good that may be imported during a specified period of time is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

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Exam 32: Comparative Advantage and the Open Economy

An official agreement with another country in which it agrees to import more from the United States is

Dumping typically occurs because

According to the Swiss Institute for Management Development, the top country in terms of productive efficiency is

Maximum Feasible Hourly Production Rates for Either Food or Cloth Using All Available Resources -Using the data in the above table, and assuming constant opportunity costs, it is likely that

In international trade the term "dumping" means

During the Great Depression, many industrial countries tried protecting domestic jobs by raising tariffs. Economic theory would suggest that the result would be

A group of nations that grants member special trade privileges is

Country X subsidizes industry A. A worldwide recession has hit and Country X has decided to export Good A worldwide, selling the product for less than it costs to produce it. This is

Why do free trade proponents dislike rules of origin in trade agreements?

What must a government know for the infant industry argument to be a valid reason for imposing tariffs?

Restrictions on imports

A significant advantage to being a member of a trade bloc is

Protection of a new industry until it becomes strong enough to compete is called

The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources U.S. Switzerland Product (Worker-Days)(Worker-Days) Cuckoo Clocks 8 6 Movies 12 4 -Benefits of free trade include all of the following EXCEPT

-Which of the following is counted as a benefit from international trade?

Why is it impossible to make everyone better off in the long run by imposing import restrictions?

Using trade restrictions to protect special interests such as the U.S. auto industry

The maximum amount of a good that may be imported during a specified period of time is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

Filters