Question 1

Which is a better outcome for income and standard of living
Levels for large nations?

Accepted Answer

A) no tariffs 
B) low tariffs 
C) high tariffs 
D) equal tariffs for all nations 
A) no tariffs 
B) low tariffs 
C) high tariffs 
D) equal tariffs for all nations

Question 2

SCENARIO: ELECTRIC FAN TRADE
u.S.firms can produce and sell electric fans for $25.The United
States can also import electric fans from China at $40 each and
From Canada at $45 each.Electric fans made in the United
States, China, and Canada are identical.Currently, the United
States imposes a 30% tariff on imported electric fans.
Reference: Ref 11­2
(Scenario: Electric Fan Trade) Suppose that the United States
Levied a 10% tariff on imported electric fans (rather than the
30% tariff described in the scenario).For the United States,
Would there be trade diversion losses, trade creation gains, or
Both as a result of the formation of NAFTA?

Accepted Answer

A) There would be only trade diversions losses. 
B) There would be only trade creation gains. 
C) There would be neither trade creation gains nor trade diversion losses. 
D) There would be both trade creation gains and trade diversion losses. 
A) There would be only trade diversions losses. 
B) There would be only trade creation gains. 
C) There would be neither trade creation gains nor trade diversion losses. 
D) There would be both trade creation gains and trade diversion losses.

Question 3

Figure U.S.Imports from Mexico and Asia   (Figure: U.S.Imports from Mexico and Asia) The combined
Welfare of the United States and Mexico is _______ by ______.

Accepted Answer

A) lower; $7,500 
B) higher; $10,000 
C) lower; $25,000 
D) higher; $25,000 
A) lower; $7,500 
B) higher; $10,000 
C) lower; $25,000 
D) higher; $25,000

Question 4

SCENARIO: PAYOFF MATRIX
The following payoff matrix shows outcomes of various
strategies that the countries of Home and Foreign can follow to
decide to regulate or not regulate pollution.The columns show
Foreign's actions, and the rows show Home's actions.The values
in the upper right­hand side of each element give Foreign's net
benefits; the values in the lower left­hand side of each element
give Home's net benefits.Net benefits are the environmental
benefits from regulation minus costs associated with installing
pollution control equipment.   
A) Using the payoff matrix, what is likely to happen if there are
no international agreements to limit pollution?
B) In the payoff matrix, which element represents a Nash
equilibrium?
C) Why is the element you selected in B a Nash equilibrium?

Accepted Answer

A) Neither country will regulate polluti

Question 5

Do the provisions of the GATT and WTO permit countries to
Apply their own environmental regulations against imports?

Accepted Answer

A) No; environmental regulations applying to domestic production and imports need to be negotiated internationally
Under treaties such as the Kyoto Protocol. 
B) No; environmental regulations applying only to imports need to be negotiated internationally under treaties such as the Kyoto
Agreement. 
C) Yes; and countries may require stricter environmental regulations for imports than for domestic production. 
D) Yes; as long as environmental regulations apply uniformly to domestic production and imports. 
A) No; environmental regulations applying to domestic production and imports need to be negotiated internationally
Under treaties such as the Kyoto Protocol. 
B) No; environmental regulations applying only to imports need to be negotiated internationally under treaties such as the Kyoto
Agreement. 
C) Yes; and countries may require stricter environmental regulations for imports than for domestic production. 
D) Yes; as long as environmental regulations apply uniformly to domestic production and imports.

Question 6

To be able to enforce the rules of a free­trade area, goods from
Outside the region imported into the lowest­tariff nation cannot
Be shipped ________ into another nation in the area.

Accepted Answer

A) with no transportation costs 
B) without a labor certificate 
C) with no customs inspection 
D) duty free 
A) with no transportation costs 
B) without a labor certificate 
C) with no customs inspection 
D) duty free

Question 7

SCENARIO: PAYOFF MATRIX
The payoff matrix shows outcomes of various strategies that a
Home and Foreign country can follow to decide to regulate or not
Regulate pollution.The columns give Foreign's actions, and the
Rows give Home's actions.The values in the upper right­hand
Side of each element give Foreign's net benefits; the values in
The lower left­hand side of each element give Home's net
Benefits.Net benefits are the environmental benefits from
Regulation minus costs associated with installing pollution control
Equipment.  
(Scenario: Payoff Matrix) Which of the following elements
Represents a Nash equilibrium?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 8

What is the effect of the high (15.3%) U.S.tariff on garments
Imported from Bangladesh on the Bangladesh economy?

Accepted Answer

A) It has no effect on the Bangladesh economy, since U.S. consumers ultimately pay the tariff. 
B) It acts as a hidden tax of $4.61 on Bangladeshi citizens. 
C) It improves Bangladesh's terms of trade with the United States. 
D) It has a very small effect on the Bangladeshi economy, since only 10% of its exports to the United States are subject to the
Tariff. 
A) It has no effect on the Bangladesh economy, since U.S. consumers ultimately pay the tariff. 
B) It acts as a hidden tax of $4.61 on Bangladeshi citizens. 
C) It improves Bangladesh's terms of trade with the United States. 
D) It has a very small effect on the Bangladeshi economy, since only 10% of its exports to the United States are subject to the
Tariff.

Question 9

A study of consumers' attitudes toward labor standards for the
Products they buy revealed that consumers:

Accepted Answer

A) just do not care. 
B) would completely change their buying patterns and want to be 100% sure that products they buy are made in foreign factories
With good working conditions. 
C) would pay a slight premium to ensure good working conditions. 
D) are more concerned about the prices they pay than working conditions overseas. 
A) just do not care. 
B) would completely change their buying patterns and want to be 100% sure that products they buy are made in foreign factories
With good working conditions. 
C) would pay a slight premium to ensure good working conditions. 
D) are more concerned about the prices they pay than working conditions overseas.

Question 10

International agreements to limit pollution can lead to:

Accepted Answer

A) a Nash equilibrium where no countries face the full cost of pollution that they generate. 
B) a Nash equilibrium where countries that regulate pollution gain more than countries that do not regulate pollution. 
C) a Nash equilibrium where countries that regulate pollution lose more than countries that do not regulate pollution. 
D) a Nash equilibrium where no country regulates pollution. 
A) a Nash equilibrium where no countries face the full cost of pollution that they generate. 
B) a Nash equilibrium where countries that regulate pollution gain more than countries that do not regulate pollution. 
C) a Nash equilibrium where countries that regulate pollution lose more than countries that do not regulate pollution. 
D) a Nash equilibrium where no country regulates pollution.

Question 11

Trade diversion may be such that the combined welfare of two
Nations in the agreement actually ____ because of ____, not
Completely offset by the _____.

Accepted Answer

A) falls; loss of tariff revenue for the importing nation; gain in the exporting nation's producer surplus 
B) rises; gains from trade; loss of jobs in the importing industry 
C) rises; gain in tariff revenue; gain in jobs 
D) remains the same; loss of tariff revenue; gains from product variety 
A) falls; loss of tariff revenue for the importing nation; gain in the exporting nation's producer surplus 
B) rises; gains from trade; loss of jobs in the importing industry 
C) rises; gain in tariff revenue; gain in jobs 
D) remains the same; loss of tariff revenue; gains from product variety

Question 12

The tragedy of the commons refers to:

Accepted Answer

A) the plight of the common people, who are doomed to low­ paying jobs and discrimination. 
B) the fact that public resources are becoming scarce. 
C) the idea that what we have in common is often not why we trade. 
D) the idea that when everyone has free access to a resource, it will be overused and depleted. 
A) the plight of the common people, who are doomed to low­ paying jobs and discrimination. 
B) the fact that public resources are becoming scarce. 
C) the idea that what we have in common is often not why we trade. 
D) the idea that when everyone has free access to a resource, it will be overused and depleted.

Question 13

Because of the relationship among ethanol production, sugar,
And corn the authors of your text have concluded that:

Accepted Answer

A) the corn subsidy is a big problem for ethanol exports. 
B) the sugar quota makes sugar so cheap in the United States that ethanol producers are using it instead of corn. 
C) due to the sugar quota and its high price, there is a huge demand for less environmentally friendly corn as a substitute in
Food products and for ethanol. 
D) ethanol should be imported rather than exported. 
A) the corn subsidy is a big problem for ethanol exports. 
B) the sugar quota makes sugar so cheap in the United States that ethanol producers are using it instead of corn. 
C) due to the sugar quota and its high price, there is a huge demand for less environmentally friendly corn as a substitute in
Food products and for ethanol. 
D) ethanol should be imported rather than exported.

Question 14

The WTO (under the GATT agreement) provides that nations may
Enter into regional trade agreements as long as they:

Accepted Answer

A) limit such agreements to one. 
B) extend the provisions to all other nations in the WTO. 
C) do not jointly increase tariffs against outside countries. 
D) make sure they include smaller nations in their regions. 
A) limit such agreements to one. 
B) extend the provisions to all other nations in the WTO. 
C) do not jointly increase tariffs against outside countries. 
D) make sure they include smaller nations in their regions.

Question 15

WTO rulings with respect to environmental issues have:

Accepted Answer

A) generally had very adverse effects on the environment. 
B) generally increased regard for environmental protection. 
C) caused substantial decreases in international trade. 
D) caused countries to adopt more stringent laws more affecting imports than domestic producers. 
A) generally had very adverse effects on the environment. 
B) generally increased regard for environmental protection. 
C) caused substantial decreases in international trade. 
D) caused countries to adopt more stringent laws more affecting imports than domestic producers.

Question 16

SCENARIO: PAYOFF MATRIX
The payoff matrix shows outcomes of various strategies that a
Home and Foreign country can follow to decide to regulate or not
Regulate pollution.The columns give Foreign's actions, and the
Rows give Home's actions.The values in the upper right­hand
Side of each element give Foreign's net benefits; the values in
The lower left­hand side of each element give Home's net
Benefits.Net benefits are the environmental benefits from
Regulation minus costs associated with installing pollution control
Equipment.  
(Scenario: Payoff Matrix) How can you tell that the governments
Of each country favor producer profits over consumer well­being
When net benefits are calculated?

Accepted Answer

A) A country's net benefits are higher when the other country regulates pollution. 
B) A country's net benefits are lower when the other country regulates pollution. 
C) A country's net benefits are lower when it regulates pollution than when it does not. 
D) A country's net benefits are higher when it regulates pollution than when it does not. 
A) A country's net benefits are higher when the other country regulates pollution. 
B) A country's net benefits are lower when the other country regulates pollution. 
C) A country's net benefits are lower when it regulates pollution than when it does not. 
D) A country's net benefits are higher when it regulates pollution than when it does not.

Question 17

Most economists are opposed to the "living wage" concept in
Foreign labor agreements because:

Accepted Answer

A) it is barely enough for survival. 
B) most workers in low­income nations already earn more. 
C) workers should never earn more than the managers. 
D) it is well above the market wage, and many workers in poor nations would lose the opportunity to be employed. 
A) it is barely enough for survival. 
B) most workers in low­income nations already earn more. 
C) workers should never earn more than the managers. 
D) it is well above the market wage, and many workers in poor nations would lose the opportunity to be employed.

Question 18

The WTO is considered _________, whereas NAFTA and the
European Union are __________.

Accepted Answer

A) a free­trade area; cartels 
B) a cartel; multilateral agreements 
C) a free­trade area; multilateral agreements 
D) a multilateral agreement; regional trade agreements 
A) a free­trade area; cartels 
B) a cartel; multilateral agreements 
C) a free­trade area; multilateral agreements 
D) a multilateral agreement; regional trade agreements

Question 19

Automobiles imported from Canada or Mexico must have 60%
North American content to be eligible for tariff elimination under
NAFTA rules.This is an example of:

Accepted Answer

A) a rules of origin requirement. 
B) an environmental standard. 
C) a health and safety requirement. 
D) a preferential trade agreement. 
A) a rules of origin requirement. 
B) an environmental standard. 
C) a health and safety requirement. 
D) a preferential trade agreement.

Question 20

When does an externality occur?

Accepted Answer

A) when one person's production or consumption of a good affects another person 
B) when a producers long­run average costs fall 
C) when a consumer's marginal utility from consuming a good increases 
D) when international trade leads to improvement in a country's economic welfare 
A) when one person's production or consumption of a good affects another person 
B) when a producers long­run average costs fall 
C) when a consumer's marginal utility from consuming a good increases 
D) when international trade leads to improvement in a country's economic welfare

Which is a better outcome for income and standard of living Levels for large nations?

Figure U.S.Imports from Mexico and Asia (Figure: U.S.Imports from Mexico and Asia) The combined Welfare of the United States and Mexico is _ by .

Do the provisions of the GATT and WTO permit countries to Apply their own environmental regulations against imports?

To be able to enforce the rules of a freetrade area, goods from Outside the region imported into the lowesttariff nation cannot Be shipped ________ into another nation in the area.

What is the effect of the high (15.3%) U.S.tariff on garments Imported from Bangladesh on the Bangladesh economy?

A study of consumers' attitudes toward labor standards for the Products they buy revealed that consumers:

International agreements to limit pollution can lead to:

Trade diversion may be such that the combined welfare of two Nations in the agreement actually because of , not Completely offset by the _.

The tragedy of the commons refers to:

Because of the relationship among ethanol production, sugar, And corn the authors of your text have concluded that:

The WTO (under the GATT agreement) provides that nations may Enter into regional trade agreements as long as they:

WTO rulings with respect to environmental issues have:

Most economists are opposed to the "living wage" concept in Foreign labor agreements because:

The WTO is considered _, whereas NAFTA and the European Union are __.

Automobiles imported from Canada or Mexico must have 60% North American content to be eligible for tariff elimination under NAFTA rules.This is an example of:

When does an externality occur?

The Global Economy

Trade and Technology: the Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

International Agreements: Trade, Labor, and the Environment

Introduction to Exchange Rates and the Foreign Exchange Market

Filters

Exam 11: Exchange Rates I: the Monetary Approach in the Long Run

Which is a better outcome for income and standard of living Levels for large nations?

Figure U.S.Imports from Mexico and Asia (Figure: U.S.Imports from Mexico and Asia) The combined Welfare of the United States and Mexico is _______ by ______.

Do the provisions of the GATT and WTO permit countries to Apply their own environmental regulations against imports?

To be able to enforce the rules of a free­trade area, goods from Outside the region imported into the lowest­tariff nation cannot Be shipped ________ into another nation in the area.

What is the effect of the high (15.3%) U.S.tariff on garments Imported from Bangladesh on the Bangladesh economy?

A study of consumers' attitudes toward labor standards for the Products they buy revealed that consumers:

International agreements to limit pollution can lead to:

Trade diversion may be such that the combined welfare of two Nations in the agreement actually ____ because of ____, not Completely offset by the _____.

The tragedy of the commons refers to:

Because of the relationship among ethanol production, sugar, And corn the authors of your text have concluded that:

The WTO (under the GATT agreement) provides that nations may Enter into regional trade agreements as long as they:

WTO rulings with respect to environmental issues have:

Most economists are opposed to the "living wage" concept in Foreign labor agreements because:

The WTO is considered _________, whereas NAFTA and the European Union are __________.

Automobiles imported from Canada or Mexico must have 60% North American content to be eligible for tariff elimination under NAFTA rules.This is an example of:

When does an externality occur?

The Global Economy

Trade and Technology: the Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

International Agreements: Trade, Labor, and the Environment

Introduction to Exchange Rates and the Foreign Exchange Market

Filters

Figure U.S.Imports from Mexico and Asia (Figure: U.S.Imports from Mexico and Asia) The combined Welfare of the United States and Mexico is _ by .

To be able to enforce the rules of a freetrade area, goods from Outside the region imported into the lowesttariff nation cannot Be shipped ________ into another nation in the area.

Trade diversion may be such that the combined welfare of two Nations in the agreement actually because of , not Completely offset by the _.

The WTO is considered _, whereas NAFTA and the European Union are __.