Question 1

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

Accepted Answer

A)  Since 1950, both exports and imports have steadily increased as a fraction of U.S. gross domestic product. 
B)  Overall, about 20 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the 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 increased as a fraction of U.S. gross domestic product. 
B)  Overall, about 20 percent of U.S. manufacturing jobs depend directly or indirectly on exports. 
C)  The United States is the largest exporter in the world. 
D)  The U.S. economy is highly dependent on international trade for growth in its gross domestic product.

Question 2

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

Accepted Answer

A)  the average cost of production for sugar cane is lower in Brazil than in Cuba. 
B)  the implicit costs of production for sugar cane are lower in Brazil than in Cuba. 
C)  the opportunity cost of production for sugar cane is lower in Brazil than in Cuba. 
D)  the explicit cost of production for sugar cane is lower in Brazil than in Cuba. 
A)  the average cost of production for sugar cane is lower in Brazil than in Cuba. 
B)  the implicit costs of production for sugar cane are lower in Brazil than in Cuba. 
C)  the opportunity cost of production for sugar cane is lower in Brazil than in Cuba. 
D)  the explicit cost of production for sugar cane is lower in Brazil than in Cuba.

Question 3

Which of the following is common to both tariffs and quotas?

Accepted Answer

A)  Tariffs and quotas are both used as a means to increase government revenue. 
B)  Tariffs and quotas both increase economic efficiency. 
C)  Tariffs and quotas are both designed to reduce foreign competition faced by domestic firms. 
D)  Tariffs and quotas are both examples of voluntary export restraints. 
A)  Tariffs and quotas are both used as a means to increase government revenue. 
B)  Tariffs and quotas both increase economic efficiency. 
C)  Tariffs and quotas are both designed to reduce foreign competition faced by domestic firms. 
D)  Tariffs and quotas are both examples of voluntary export restraints.

Question 4

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

Accepted Answer

A)  unless the buyer resides in a different country than the seller resides in. International trade may make the buyer or seller worse off. 
B)  unless one party is richer than the other. 
C)  only if the buyer and seller live in countries with market economies. 
D)  whether the buyer and seller live in the same city or different countries. 
A)  unless the buyer resides in a different country than the seller resides in. International trade may make the buyer or seller worse off. 
B)  unless one party is richer than the other. 
C)  only if the buyer and seller live in countries with market economies. 
D)  whether the buyer and seller live in the same city or different countries.

Question 5

A "Buy American" provision in the 2009 stimulus bill would ________ consumer surplus and ________ producer surplus for industries that produce 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 6

Which of the following is the best example of a quota?

Accepted Answer

A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment 
A)  a subsidy from the U.S. government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers 
B)  a limit on the quantity of residential air conditioners that can be imported from a foreign country 
C)  a $150 fee imposed on all imported residential air conditioners 
D)  a tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment

Question 7

"Buy American" provisions create winners and losers.Winners include ________ and losers include ________.

Accepted Answer

A)  U.S. consumers and taxpayers; foreign firms that rely on U.S. exports 
B)  firms sheltered from foreign competition; U.S. consumers and taxpayers 
C)  U.S. firms that rely on exports to foreign countries; foreign manufacturers 
D)  the U.S. government; firms sheltered from foreign competition 
A)  U.S. consumers and taxpayers; foreign firms that rely on U.S. exports 
B)  firms sheltered from foreign competition; U.S. consumers and taxpayers 
C)  U.S. firms that rely on exports to foreign countries; foreign manufacturers 
D)  the U.S. government; firms sheltered from foreign competition

Question 8

Which of the following statements is false?

Accepted Answer

A)  Japan is less dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of the Netherlands. 
C)  The United States is the leading exporting country, accounting for almost 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops. 
A)  Japan is less dependent on foreign trade than is the United States. 
B)  Imports and exports account for over one-half of the GDP of the Netherlands. 
C)  The United States is the leading exporting country, accounting for almost 10 percent of total world exports. 
D)  Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops.

Question 9

The quota on imported sugar costs U.S.consumers more than $2 billion annually and protects very few jobs.Why does Congress maintain a sugar quota that protects only a few thousand workers while forcing millions of people to pay higher prices for sugar products?

Accepted Answer

A)  Most U.S. citizens do not buy sugar products and want to help workers in the sugar industry. 
B)  Voters fear that if they oppose the sugar lobby, the lobby may oppose issues that they want Congress to support. 
C)  Citizens are not as involved in social and political issues as they used to be. 
D)  The per person cost of the sugar quota is too small for many people to lobby Congress to make their views known. 
A)  Most U.S. citizens do not buy sugar products and want to help workers in the sugar industry. 
B)  Voters fear that if they oppose the sugar lobby, the lobby may oppose issues that they want Congress to support. 
C)  Citizens are not as involved in social and political issues as they used to be. 
D)  The per person cost of the sugar quota is too small for many people to lobby Congress to make their views known.

Question 10

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 11

If Finland has an absolute advantage in the production of two goods compared to Latvia,Finland can still benefit from trade with Latvia.

Accepted Answer

A) True 
 B)False

Question 12

A tax imposed by a government on imports of a good into a country is called a

Accepted Answer

A)  tariff. 
B)  quota. 
C)  value added tax. 
D)  sales tax. 
A)  tariff. 
B)  quota. 
C)  value added tax. 
D)  sales tax.

Question 13

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

Accepted Answer

A)  Honduras also has an absolute advantage in producing bananas relative to Brazil. 
B)  Honduras has a lower opportunity cost of producing bananas relative to Brazil. 
C)  Brazil has an absolute disadvantage in producing bananas relative to Honduras. 
D)  Labor costs are higher for banana producers in Brazil than in Honduras. 
A)  Honduras also has an absolute advantage in producing bananas relative to Brazil. 
B)  Honduras has a lower opportunity cost of producing bananas relative to Brazil. 
C)  Brazil has an absolute disadvantage in producing bananas relative to Honduras. 
D)  Labor costs are higher for banana producers in Brazil than in Honduras.

Question 14

Which of the following is the best example of a tariff?

Accepted Answer

A)  a limit imposed on the number of sports utility vehicles that the United States can import from Japan 
B)  a subsidy granted by the U.S. government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers 
C)  a tax placed on all sports utility vehicles sold in the domestic market 
D)  a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States 
A)  a limit imposed on the number of sports utility vehicles that the United States can import from Japan 
B)  a subsidy granted by the U.S. government to domestic garment manufacturers so they can compete more effectively with foreign garment manufacturers 
C)  a tax placed on all sports utility vehicles sold in the domestic market 
D)  a $5,000 per-car fee imposed on all sports utility vehicles imported into the United States

Question 15

If Norwegian workers are more productive than Albanian workers,then trade between Norway and Albania

Accepted Answer

A)  cannot take place because Norwegian goods and services will be less expensive than Albanian goods and services. 
B)  will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. 
C)  cannot take place until Albanian workers become more productive. 
D)  can take place only if Albania has an absolute advantage in producing a good or service Norwegian buyers want. 
A)  cannot take place because Norwegian goods and services will be less expensive than Albanian goods and services. 
B)  will take place so long as each country has a comparative advantage in a good or service that buyers in the other country want. 
C)  cannot take place until Albanian workers become more productive. 
D)  can take place only if Albania has an absolute advantage in producing a good or service Norwegian buyers want.

Question 16

A tariff

Accepted Answer

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

Question 17

Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________.

Accepted Answer

A)  a comparative advantage; an absolute advantage 
B)  an absolute advantage; an absolute advantage 
C)  a comparative advantage; a comparative advantage 
D)  an absolute advantage; a comparative advantage 
A)  a comparative advantage; an absolute advantage 
B)  an absolute advantage; an absolute advantage 
C)  a comparative advantage; a comparative advantage 
D)  an absolute advantage; a comparative advantage

Question 18

Figure 9-4
  
-Refer to Figure 9-4.Suppose the U.S.government imposes a $0.25 per pound tariff on rice imports.Figure 9-4 shows the demand and supply curves for rice and the impact of this tariff.Use the figure to answer questions a-i.
a.Following the imposition of the tariff,what is the price that domestic consumers must now pay and what is the quantity purchased?
b.Calculate the value of consumer surplus with the tariff in place.
c.What is the quantity supplied by domestic rice growers with the tariff in place?
d.Calculate the value of producer surplus received by U.S.rice growers with the tariff in place.
e.What is the quantity of rice imported with the tariff in place?
f.What is the amount of tariff revenue collected by the government?
g.The tariff has reduced consumer surplus.Calculate the loss in consumer surplus due to the tariff.
h.What portion of the consumer surplus loss is redistributed to domestic producers? To the government?
i.Calculate the deadweight loss due to the tariff.

Accepted Answer

a.Price = $1.00 per pound; Quantity purc

Question 19

Autarky is a situation in which a country

Accepted Answer

A)  only exports products.. 
B)  only imports products. 
C)  does not trade with other countries. 
D)  has no absolute advantage in any production. 
A)  only exports products.. 
B)  only imports products. 
C)  does not trade with other countries. 
D)  has no absolute advantage in any production.

Question 20

What are three primary reasons for the growth of international trade over the past 50 years?

Accepted Answer

The increase in trade is the r

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

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

Which of the following is common to both tariffs and quotas?

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

A "Buy American" provision in the 2009 stimulus bill would consumer surplus and producer surplus for industries that produce protected products in the United States.

Which of the following is the best example of a quota?

"Buy American" provisions create winners and losers.Winners include and losers include .

Which of the following statements is false?

The quota on imported sugar costs U.S.consumers more than $2 billion annually and protects very few jobs.Why does Congress maintain a sugar quota that protects only a few thousand workers while forcing millions of people to pay higher prices for sugar products?

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

If Finland has an absolute advantage in the production of two goods compared to Latvia,Finland can still benefit from trade with Latvia.

A tax imposed by a government on imports of a good into a country is called a

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

Which of the following is the best example of a tariff?

If Norwegian workers are more productive than Albanian workers,then trade between Norway and Albania

A tariff

Countries gain from specializing in producing goods in which they have and trading for goods in which other countries have .

Autarky is a situation in which a country

What are three primary reasons for the growth of international trade over the past 50 years?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

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

Filters

Exam 7: Comparative Advantage and the Gains From International Trade

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

If Brazil has a comparative advantage relative to Cuba in the production of sugar cane,then

Which of the following is common to both tariffs and quotas?

Whenever a buyer and a seller agree to trade,both must believe they will be made better off

A "Buy American" provision in the 2009 stimulus bill would ________ consumer surplus and ________ producer surplus for industries that produce protected products in the United States.

Which of the following is the best example of a quota?

"Buy American" provisions create winners and losers.Winners include ________ and losers include ________.

Which of the following statements is false?

The quota on imported sugar costs U.S.consumers more than $2 billion annually and protects very few jobs.Why does Congress maintain a sugar quota that protects only a few thousand workers while forcing millions of people to pay higher prices for sugar products?

One reason a country does not specialize completely in production is that production of most goods involves increasing opportunity costs.

If Finland has an absolute advantage in the production of two goods compared to Latvia,Finland can still benefit from trade with Latvia.

A tax imposed by a government on imports of a good into a country is called a

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that

Which of the following is the best example of a tariff?

If Norwegian workers are more productive than Albanian workers,then trade between Norway and Albania

A tariff

Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________.

Autarky is a situation in which a country

What are three primary reasons for the growth of international trade over the past 50 years?

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

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

Filters

A "Buy American" provision in the 2009 stimulus bill would consumer surplus and producer surplus for industries that produce protected products in the United States.

"Buy American" provisions create winners and losers.Winners include and losers include .

Countries gain from specializing in producing goods in which they have and trading for goods in which other countries have .