Question 1

Which of the following is true?

Accepted Answer

A)  In recent decades, the volume of U.S. international trade has been declining as a share of the economy. 
B)  Most of the textile products produced in the United States are exported abroad. 
C)  The volume of U.S. trade with Canada is larger than for any other country. 
D)  If one party to an international exchange gains, the other party must lose a similar amount. 
A)  In recent decades, the volume of U.S. international trade has been declining as a share of the economy. 
B)  Most of the textile products produced in the United States are exported abroad. 
C)  The volume of U.S. trade with Canada is larger than for any other country. 
D)  If one party to an international exchange gains, the other party must lose a similar amount. C

Question 2

Figure 17-12   If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area

Accepted Answer

A)  c + i + e + f 
B)  i + f 
C)  i 
D)  f 
E)  b + d 
A)  c + i + e + f 
B)  i + f 
C)  i 
D)  f 
E)  b + d B

Question 3

A tariff differs from a quota in that a tariff is

Accepted Answer

A)  levied on imports, whereas a quota is imposed on exports. 
B)  levied on exports, whereas a quota is imposed on imports. 
C)  a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D)  a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. 
A)  levied on imports, whereas a quota is imposed on exports. 
B)  levied on exports, whereas a quota is imposed on imports. 
C)  a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. 
D)  a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. D

Question 4

If the U.S. imposed an import quota on sugar, then in the U.S.

Accepted Answer

A)  exports and imports would rise. 
B)  exports and imports would fall. 
C)  exports would rise and imports would fall. 
D)  exports would fall and imports would rise. 
A)  exports and imports would rise. 
B)  exports and imports would fall. 
C)  exports would rise and imports would fall. 
D)  exports would fall and imports would rise.

Question 5

Figure 17-8   Refer to Figure 17-8. The horizontal line at the world price of wagons represents the

Accepted Answer

A)  demand for wagons from the rest of the world. 
B)  supply of wagons from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic wagon market. 
A)  demand for wagons from the rest of the world. 
B)  supply of wagons from the rest of the world. 
C)  level of inefficiency in the domestic market caused by trade. 
D)  surplus in the domestic wagon market.

Question 6

Which of the following is a partially valid economic argument for restricting free trade?

Accepted Answer

A)  Restrictions on foreign trade will increase employment and permanently reduce unemployment. 
B)  Removal of restrictions that have existed for years will initially cause inflation. 
C)  Infant industries need permanent protection to develop and gain productive efficiency. 
D)  A nation needs to protect industries that are vital to national defense in case of future international conflict. 
A)  Restrictions on foreign trade will increase employment and permanently reduce unemployment. 
B)  Removal of restrictions that have existed for years will initially cause inflation. 
C)  Infant industries need permanent protection to develop and gain productive efficiency. 
D)  A nation needs to protect industries that are vital to national defense in case of future international conflict.

Question 7

Figure 17-10   Refer to Figure 17-10. Producer surplus with the tariff is

Accepted Answer

A)  G. 
B)  C + G. 
C)  A + C + G. 
D)  A + B + C + G. 
A)  G. 
B)  C + G. 
C)  A + C + G. 
D)  A + B + C + G.

Question 8

Figure 17-9   Refer to Figure 17-9. Before the tariff is imposed, this country

Accepted Answer

A)  imports 200 carnations. 
B)  imports 400 carnations. 
C)  exports 200 carnations. 
D)  exports 400 carnations. 
A)  imports 200 carnations. 
B)  imports 400 carnations. 
C)  exports 200 carnations. 
D)  exports 400 carnations.

Question 9

The following table indicates the production possibilities of food and clothing per worker day in the United States and Japan.   Which of the following is true?

Accepted Answer

A)  No gains from trade are possible. 
B)  Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food. 
C)  Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production. 
D)  The Japanese are the high-cost producers of both food and clothing. 
A)  No gains from trade are possible. 
B)  Joint output would be maximized if the United States specialized in producing clothing and Japan in producing food. 
C)  Mutual gains from trade could be realized if the United States specialized in food production and Japan in clothing production. 
D)  The Japanese are the high-cost producers of both food and clothing.

Question 10

According to international trade theory, a country can gain

Accepted Answer

A)  if it protects domestic industries from low-wage foreign producers. 
B)  only if the trade harms its trading partners. 
C)  by importing goods when they can be obtained more economically from foreign producers. 
D)  if it maximizes the employment in domestic industries that face competition from foreign producers who have lower costs. 
A)  if it protects domestic industries from low-wage foreign producers. 
B)  only if the trade harms its trading partners. 
C)  by importing goods when they can be obtained more economically from foreign producers. 
D)  if it maximizes the employment in domestic industries that face competition from foreign producers who have lower costs.

Question 11

Figure 17-13   In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will be purchased in the United States?

Accepted Answer

A)  4,000 
B)  6,000 
C)  8,000 
D)  10,000 
E)  12,000 
A)  4,000 
B)  6,000 
C)  8,000 
D)  10,000 
E)  12,000

Question 12

What is the law of comparative advantage, and why is it important in international trade?

Accepted Answer

The law of comparative advantage states

Question 13

Figure 17-9   Refer to Figure 17-9. The amount of revenue collected by the government from the tariff is

Accepted Answer

A)  $200. 
B)  $400. 
C)  $500. 
D)  $600. 
A)  $200. 
B)  $400. 
C)  $500. 
D)  $600.

Question 14

Figure 17-4   In Figure 17-4, the equilibrium price of Dominican pesos is Pe. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at Pf (below equilibrium), what does the quantity Qd through Qs represent?

Accepted Answer

A)  the quantity of Dominican exports 
B)  a shortage of foreign exchange 
C)  the quantity of Dominican imports 
D)  a surplus of foreign exchange 
A)  the quantity of Dominican exports 
B)  a shortage of foreign exchange 
C)  the quantity of Dominican imports 
D)  a surplus of foreign exchange

Question 15

The primary benefits derived from tariffs usually accrue to the

Accepted Answer

A)  domestic consumers of goods protected by the tariffs. 
B)  foreign producers of goods protected by the tariffs. 
C)  domestic producers of export goods. 
D)  domestic suppliers of goods protected by the tariffs. 
A)  domestic consumers of goods protected by the tariffs. 
B)  foreign producers of goods protected by the tariffs. 
C)  domestic producers of export goods. 
D)  domestic suppliers of goods protected by the tariffs.

Question 16

Which of the following is true?

Accepted Answer

A)  In recent decades, the volume of U.S. international trade has been increasing as a share of the economy. 
B)  As transportation costs decline, the volume of international trade will also tend to decline. 
C)  Most international trade is between the governments of different nations. 
D)  If one party to an international exchange gains, the other party must lose a similar amount. 
A)  In recent decades, the volume of U.S. international trade has been increasing as a share of the economy. 
B)  As transportation costs decline, the volume of international trade will also tend to decline. 
C)  Most international trade is between the governments of different nations. 
D)  If one party to an international exchange gains, the other party must lose a similar amount.

Question 17

Opportunity costs differ among nations primarily because

Accepted Answer

A)  nations employ different currencies. 
B)  nations have different endowments of land, labor skills, capital, and technology. 
C)  nations have different political institutions. 
D)  work-leisure preferences vary considerably from one nation to another. 
A)  nations employ different currencies. 
B)  nations have different endowments of land, labor skills, capital, and technology. 
C)  nations have different political institutions. 
D)  work-leisure preferences vary considerably from one nation to another.

Question 18

Economists consider tariffs to be

Accepted Answer

A)  necessary for the protection of domestic industries and the achievement of full employment. 
B)  harmful to domestic consumers. 
C)  obstacles that hinder voluntary exchange and gains from trade. 
D)  both b and c above 
A)  necessary for the protection of domestic industries and the achievement of full employment. 
B)  harmful to domestic consumers. 
C)  obstacles that hinder voluntary exchange and gains from trade. 
D)  both b and c above

Question 19

The law of comparative advantage indicates that

Accepted Answer

A)  specialization and exchange will permit trading partners to maximize their joint output. 
B)  a nation can gain from trade only if it is not at an absolute disadvantage in producing all goods. 
C)  a nation can gain from trade only when its trading partners are not low-wage countries. 
D)  countries should export products for which they are high-opportunity cost producers. 
A)  specialization and exchange will permit trading partners to maximize their joint output. 
B)  a nation can gain from trade only if it is not at an absolute disadvantage in producing all goods. 
C)  a nation can gain from trade only when its trading partners are not low-wage countries. 
D)  countries should export products for which they are high-opportunity cost producers.

Question 20

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

Accepted Answer

A)  trade between the United States and Mexico increased. 
B)  trade between the United States and Canada increased. 
C)  the joint output of the United States, Mexico, and Canada has increased. 
D)  all of the above are correct. 
A)  trade between the United States and Mexico increased. 
B)  trade between the United States and Canada increased. 
C)  the joint output of the United States, Mexico, and Canada has increased. 
D)  all of the above are correct.

Which of the following is true?

Figure 17-12 If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area

A tariff differs from a quota in that a tariff is

If the U.S. imposed an import quota on sugar, then in the U.S.

Figure 17-8 Refer to Figure 17-8. The horizontal line at the world price of wagons represents the

Which of the following is a partially valid economic argument for restricting free trade?

Figure 17-10 Refer to Figure 17-10. Producer surplus with the tariff is

Figure 17-9 Refer to Figure 17-9. Before the tariff is imposed, this country

The following table indicates the production possibilities of food and clothing per worker day in the United States and Japan. Which of the following is true?

According to international trade theory, a country can gain

Figure 17-13 In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will be purchased in the United States?

What is the law of comparative advantage, and why is it important in international trade?

Figure 17-9 Refer to Figure 17-9. The amount of revenue collected by the government from the tariff is

Figure 17-4 In Figure 17-4, the equilibrium price of Dominican pesos is P_e. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at P_f (below equilibrium), what does the quantity Q_d through Q_s represent?

The primary benefits derived from tariffs usually accrue to the

Which of the following is true?

Opportunity costs differ among nations primarily because

Economists consider tariffs to be

The law of comparative advantage indicates that

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Special Topics

Filters

Exam 18: Gaining From International Trade

Which of the following is true?

Figure 17-12 If the country illustrated in Figure 17-12 is initially trading without restrictions at a world price of $1.00, net welfare loss as a result of a tariff of $0.50 per unit is represented by area

A tariff differs from a quota in that a tariff is

If the U.S. imposed an import quota on sugar, then in the U.S.

Figure 17-8 Refer to Figure 17-8. The horizontal line at the world price of wagons represents the

Which of the following is a partially valid economic argument for restricting free trade?

Figure 17-10 Refer to Figure 17-10. Producer surplus with the tariff is

Figure 17-9 Refer to Figure 17-9. Before the tariff is imposed, this country

The following table indicates the production possibilities of food and clothing per worker day in the United States and Japan. Which of the following is true?

According to international trade theory, a country can gain

Figure 17-13 In Figure 17-13, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, how many baseballs will be purchased in the United States?

What is the law of comparative advantage, and why is it important in international trade?

Figure 17-9 Refer to Figure 17-9. The amount of revenue collected by the government from the tariff is

Figure 17-4 In Figure 17-4, the equilibrium price of Dominican pesos is Pe. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at Pf (below equilibrium), what does the quantity Qd through Qs represent?

The primary benefits derived from tariffs usually accrue to the

Which of the following is true?

Opportunity costs differ among nations primarily because

Economists consider tariffs to be

The law of comparative advantage indicates that

Which of the following has resulted from the North American Free Trade Agreement (NAFTA)?

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

International Finance and the Foreign Exchange Market

Special Topics

Filters

Figure 17-4 In Figure 17-4, the equilibrium price of Dominican pesos is P_e. If the Dominican Republic government fixes the price of foreign currency in terms of domestic currency at P_f (below equilibrium), what does the quantity Q_d through Q_s represent?