Question 1

American producers often complain about dumping.What is dumping,and should it be prohibited?

Accepted Answer

Dumping refers to selling exports at a price below what the product sells for in the home country.Consumers should cheer for low prices.Producers are unhappy,since they cannot compete or don't want low prices.We should allow dumping to take advantage of low prices and exporting goods in other industries to the dumper.However,we might also need to take into account the potential for predatory behavior through product dumping.If foreign producers sell products in the U.S.for an unreasonably low price,perhaps below their own cost,they could force competing U.S.producers out of business.Once the U.S.competition is eliminated,the foreign producers would be likely to exercise monopoly power and raise their prices.

Question 2

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

Accepted Answer

A) True 
 B)False  True

Question 3

"Dumping" means destroying goods to prevent driving down the price.

Accepted Answer

A) True 
 B)False  False

Question 4

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

Accepted Answer

A) True 
 B)False

Question 5

Figure 18-7
  
-In Figure 18-7,AB represents the production possibilities of Pestoland and CD that of Pastaland.The graph indicates Pestoland has an absolute

Accepted Answer

A)  advantage in both pesto and pasta. 
B)  and comparative advantage in both pesto and pasta. 
C)  advantage in both goods, but a comparative advantage only in pesto. 
D)  advantage in pesto only and a comparative advantage only in pasta. 
A)  advantage in both pesto and pasta. 
B)  and comparative advantage in both pesto and pasta. 
C)  advantage in both goods, but a comparative advantage only in pesto. 
D)  advantage in pesto only and a comparative advantage only in pasta.

Question 6

Trade adjustment assistance in the United States began in 1962.The program

Accepted Answer

A)  was designed to provide assistance to firms or workers who suffer idle facilities, unprofitability, and unemployment because of sharp increases in imports. 
B)  provided little assistance to victims of free trade before the 1970s. 
C)  was enlarged and worker benefits were extended in 1981 by the Reagan administration. 
D)  All of the above are correct. 
A)  was designed to provide assistance to firms or workers who suffer idle facilities, unprofitability, and unemployment because of sharp increases in imports. 
B)  provided little assistance to victims of free trade before the 1970s. 
C)  was enlarged and worker benefits were extended in 1981 by the Reagan administration. 
D)  All of the above are correct.

Question 7

When other nations Orient "dump" products on the U.S.market,they

Accepted Answer

A)  sell at prices that do not cover costs of production. 
B)  sell at prices lower than prices charged to their own domestic customers. 
C)  expect the United States to help pay any industrialists' losses. 
D)  All of the above are t. 
A)  sell at prices that do not cover costs of production. 
B)  sell at prices lower than prices charged to their own domestic customers. 
C)  expect the United States to help pay any industrialists' losses. 
D)  All of the above are t.

Question 8

Voluntary exchange is based on the principle that all parties must gain from trade.

Accepted Answer

A) True 
 B)False

Question 9

A program of protection that results in preserving jobs in certain industries

Accepted Answer

A)  maintains full employment at lower cost than any other program or policy. 
B)  lowers average pay in the protected industries. 
C)  improves living standards for the average person in that country. 
D)  often does so at a cost that is much higher than the average income of persons in those industries. 
A)  maintains full employment at lower cost than any other program or policy. 
B)  lowers average pay in the protected industries. 
C)  improves living standards for the average person in that country. 
D)  often does so at a cost that is much higher than the average income of persons in those industries.

Question 10

A tariff affects imports

Accepted Answer

A)  by limiting quantity and raising price to a higher level. 
B)  by reducing quantity demanded so that supply falls. 
C)  by increasing supply, raising price, and reducing demand. 
D)  by raising price and reducing quantity demanded. 
A)  by limiting quantity and raising price to a higher level. 
B)  by reducing quantity demanded so that supply falls. 
C)  by increasing supply, raising price, and reducing demand. 
D)  by raising price and reducing quantity demanded.

Question 11

If a nation imposes a tariff on imports,the portion of the tax paid by citizens depends upon

Accepted Answer

A)  elasticity of demand. 
B)  elasticity of supply. 
C)  how important the good is. 
D)  income elasticity. 
E)  cross elasticity of demand with domestic products. 
A)  elasticity of demand. 
B)  elasticity of supply. 
C)  how important the good is. 
D)  income elasticity. 
E)  cross elasticity of demand with domestic products.

Question 12

Wages in most other countries have increased as a percentage of U.S.wages in the past 33 years.

Accepted Answer

A) True 
 B)False

Question 13

A country has an absolute advantage over another in the production of widgets if it can produce

Accepted Answer

A)  widgets using smaller quantities of resources than can the other country. 
B)  more widgets than can the other country. 
C)  widgets more efficiently than can the other country. 
D)  widgets at a lower opportunity cost than can the other country. 
A)  widgets using smaller quantities of resources than can the other country. 
B)  more widgets than can the other country. 
C)  widgets more efficiently than can the other country. 
D)  widgets at a lower opportunity cost than can the other country.

Question 14

The main reason why one nation trades with another is to

Accepted Answer

A)  save its natural resources from rapid depletion. 
B)  exploit the advantages of specialization. 
C)  eliminate the danger of retaliation from other nations. 
D)  improve political alliances. 
A)  save its natural resources from rapid depletion. 
B)  exploit the advantages of specialization. 
C)  eliminate the danger of retaliation from other nations. 
D)  improve political alliances.

Question 15

After the American Civil War,many prominent Southerners lamented the fact that the South "overproduced" cotton and "underproduced" food.In fact,the South did import a very large percentage of its food.Nevertheless,rather than reduce cotton production and grow more food,Southern farmers did the opposite because

Accepted Answer

A)  they were irrational and distraught over the loss of slavery. 
B)  the South had a comparative advantage in cotton production. 
C)  the North had a comparative advantage in cotton production. 
D)  corn was absolutely cheaper to produce in the North. 
A)  they were irrational and distraught over the loss of slavery. 
B)  the South had a comparative advantage in cotton production. 
C)  the North had a comparative advantage in cotton production. 
D)  corn was absolutely cheaper to produce in the North.

Question 16

Figure 18-2
  
-In Figure 18-2,

Accepted Answer

A)  the opportunity cost of 1 unit of wheat in the United States is a 2/3 unit of petroleum. 
B)  the opportunity cost of 1 unit of wheat in Mexico is a 2/3 unit of petroleum. 
C)  the opportunity cost of wheat is higher in the United States than it is in Mexico. 
D)  the United States has a comparative advantage over Mexico in the production of petroleum. 
A)  the opportunity cost of 1 unit of wheat in the United States is a 2/3 unit of petroleum. 
B)  the opportunity cost of 1 unit of wheat in Mexico is a 2/3 unit of petroleum. 
C)  the opportunity cost of wheat is higher in the United States than it is in Mexico. 
D)  the United States has a comparative advantage over Mexico in the production of petroleum.

Question 17

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Accepted Answer

A) True 
 B)False

Question 18

Many fear that cheap foreign labor will destroy American jobs; in reality,wages in

Accepted Answer

A)  the United States have risen spectacularly in the last 33 years as trade grew. 
B)  countries that export to the United States are very low relative to the United States and show no sign of rising. 
C)  countries that export to the United States have risen spectacularly in the last 33 years. 
D)  United States export industries are very low relative to wages in the same industry in other countries. 
E)  All of the above are correct. 
A)  the United States have risen spectacularly in the last 33 years as trade grew. 
B)  countries that export to the United States are very low relative to the United States and show no sign of rising. 
C)  countries that export to the United States have risen spectacularly in the last 33 years. 
D)  United States export industries are very low relative to wages in the same industry in other countries. 
E)  All of the above are correct.

Question 19

An import quota on a product normally does all of the following except

Accepted Answer

A)  reduces the volume of that product traded. 
B)  raises the price in the importing country. 
C)  increases the price everywhere. 
D)  reduces the price in the exporting country. 
A)  reduces the volume of that product traded. 
B)  raises the price in the importing country. 
C)  increases the price everywhere. 
D)  reduces the price in the exporting country.

Question 20

In William Safire's 1983 essay,"Smoot-Hawley Lives," he argues that the United States should

Accepted Answer

A)  threaten retaliation if trading partners practice protectionism. 
B)  pursue a unilateral free trade policy regardless of what others do. 
C)  limit government's role in the economy. 
A)  threaten retaliation if trading partners practice protectionism. 
B)  pursue a unilateral free trade policy regardless of what others do. 
C)  limit government's role in the economy.

American producers often complain about dumping.What is dumping,and should it be prohibited?

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

"Dumping" means destroying goods to prevent driving down the price.

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

Figure 18-7 -In Figure 18-7,AB represents the production possibilities of Pestoland and CD that of Pastaland.The graph indicates Pestoland has an absolute

Trade adjustment assistance in the United States began in 1962.The program

When other nations Orient "dump" products on the U.S.market,they

Voluntary exchange is based on the principle that all parties must gain from trade.

A program of protection that results in preserving jobs in certain industries

A tariff affects imports

If a nation imposes a tariff on imports,the portion of the tax paid by citizens depends upon

Wages in most other countries have increased as a percentage of U.S.wages in the past 33 years.

A country has an absolute advantage over another in the production of widgets if it can produce

The main reason why one nation trades with another is to

Figure 18-2 -In Figure 18-2,

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Many fear that cheap foreign labor will destroy American jobs; in reality,wages in

An import quota on a product normally does all of the following except

In William Safire's 1983 essay,"Smoot-Hawley Lives," he argues that the United States should

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

Exam 18: International Trade and Comparative Advantage

American producers often complain about dumping.What is dumping,and should it be prohibited?

Tariffs are more desirable than quotas if a government wants to increase revenues and reduce benefits to inefficient exporters.

"Dumping" means destroying goods to prevent driving down the price.

Any restriction of international trade that is accomplished by a quota can also be accomplished by a tariff.

Figure 18-7 -In Figure 18-7,AB represents the production possibilities of Pestoland and CD that of Pastaland.The graph indicates Pestoland has an absolute

Trade adjustment assistance in the United States began in 1962.The program

When other nations Orient "dump" products on the U.S.market,they

Voluntary exchange is based on the principle that all parties must gain from trade.

A program of protection that results in preserving jobs in certain industries

A tariff affects imports

If a nation imposes a tariff on imports,the portion of the tax paid by citizens depends upon

Wages in most other countries have increased as a percentage of U.S.wages in the past 33 years.

A country has an absolute advantage over another in the production of widgets if it can produce

The main reason why one nation trades with another is to

Figure 18-2 -In Figure 18-2,

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Many fear that cheap foreign labor will destroy American jobs; in reality,wages in

An import quota on a product normally does all of the following except

In William Safire's 1983 essay,"Smoot-Hawley Lives," he argues that the United States should

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters