Question 1

One way tariffs differ from quotas is that

Accepted Answer

A) tariffs produce revenues for the importing country's government. 
B) quotas produce revenues for the exporting country's government. 
C) tariffs produce no revenues but set limits on the imported items. 
D) tariffs are applied only on raw materials. 
A) tariffs produce revenues for the importing country's government. 
B) quotas produce revenues for the exporting country's government. 
C) tariffs produce no revenues but set limits on the imported items. 
D) tariffs are applied only on raw materials.

Question 2

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 3

The law that created the high level of tariffs in United States in the 1930s is

Accepted Answer

A) the GATT Act. 
B) the World Trade Act. 
C) the Smoot-Hawley Act. 
D) the Tariffs Agreement Act. 
A) the GATT Act. 
B) the World Trade Act. 
C) the Smoot-Hawley Act. 
D) the Tariffs Agreement Act.

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

The ability to produce a good or service at a lower opportunity cost than other producers is

Accepted Answer

A) absolute advantage. 
B) the quota system. 
C) intellectual property. 
D) comparative advantage. 
A) absolute advantage. 
B) the quota system. 
C) intellectual property. 
D) comparative advantage.

Question 6

The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as

Accepted Answer

A) recycling. 
B) a quota. 
C) dumping. 
D) a tariff. 
A) recycling. 
B) a quota. 
C) dumping. 
D) a tariff.

Question 7

All of the following are arguments in favor of restricting trade EXCEPT

Accepted Answer

A) comparative advantage. 
B) protecting domestic jobs. 
C) protecting emerging industries. 
D) dumping. 
A) comparative advantage. 
B) protecting domestic jobs. 
C) protecting emerging industries. 
D) dumping.

Question 8

Voluntary restraint agreements are

Accepted Answer

A) a type of tariff in which the tax is a fixed amount per unit of good imported. 
B) a type of tariff in which the tax is based on the value of the good. 
C) a type of quota that actually benefits the firms facing the restrictions. 
D) a type of quota agreed to "voluntarily" in order to prevent more severe protection of another type. 
A) a type of tariff in which the tax is a fixed amount per unit of good imported. 
B) a type of tariff in which the tax is based on the value of the good. 
C) a type of quota that actually benefits the firms facing the restrictions. 
D) a type of quota agreed to "voluntarily" in order to prevent more severe protection of another type.

Question 9

Suppose a Middle Eastern firm moves its final assembly line to Germany and then ships the final products to other members of the EU trading bloc. This is an example of

Accepted Answer

A) trade diversion. 
B) trade deflection. 
C) trade restriction. 
D) trade detection. 
A) trade diversion. 
B) trade deflection. 
C) trade restriction. 
D) trade detection.

Question 10

The WTO replaced the GATT in

Accepted Answer

A) 1900. 
B) 1945. 
C) 1960. 
D) 1995. 
A) 1900. 
B) 1945. 
C) 1960. 
D) 1995.

Question 11

Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This

Accepted Answer

A) is true and is a justification for tariffs to protect domestic jobs. 
B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy. 
C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries. 
D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages. 
A) is true and is a justification for tariffs to protect domestic jobs. 
B) is true and it is has been found that tariffs in these cases can save thousands of jobs and benefit the economy. 
C) is true but the benefits of free trade are still such that tariffs should not be placed on these industries. 
D) is not true, as evidenced by the fact that the United States carries on a lot of trade with countries that have lower wages.

Question 12

The General Agreement on Tariffs and Trade is an international agreement

Accepted Answer

A) to establish the North American continent as a free trade area. 
B) to encourage peaceful settlements of trade disputes, but has no particular point of view about the desirability of higher or lower tariffs. 
C) to encourage world trade by lowering tariffs and other trade barriers. 
D) to make all tariffs illegal. 
A) to establish the North American continent as a free trade area. 
B) to encourage peaceful settlements of trade disputes, but has no particular point of view about the desirability of higher or lower tariffs. 
C) to encourage world trade by lowering tariffs and other trade barriers. 
D) to make all tariffs illegal.

Question 13

-Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

Accepted Answer

A) U.S. residents would be willing to export cuckoo clocks, but Swiss residents would not gain from exporting movies at this rate of exchange. 
B) Swiss residents would be willing to export movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange. 
C) U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange. 
D) U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange. 
A) U.S. residents would be willing to export cuckoo clocks, but Swiss residents would not gain from exporting movies at this rate of exchange. 
B) Swiss residents would be willing to export movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange. 
C) U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange. 
D) U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange.

Question 14

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

Accepted Answer

A) trade deflection. 
B) trade diversion. 
C) protectionism. 
D) rules of origin. 
A) trade deflection. 
B) trade diversion. 
C) protectionism. 
D) rules of origin.

Question 15

-Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of producing one cuckoo clock in the United States is ________, and the opportunity cost of producing one cuckoo clock in Switzerland is ________.

Accepted Answer

A) 3 movies; 1.33 cuckoo clocks 
B) 0.33 movies; 0.67 cuckoo clocks 
C) 0.67 movie; 1.5 movies 
D) 1.5 movies; 0.67 movie 
A) 3 movies; 1.33 cuckoo clocks 
B) 0.33 movies; 0.67 cuckoo clocks 
C) 0.67 movie; 1.5 movies 
D) 1.5 movies; 0.67 movie

Question 16

Which of the following is the situation in which a nation shifts its international trade from nations outside a regional trade bloc to nations within the bloc?

Accepted Answer

A) trade diversion 
B) trade deflection 
C) trade retention 
D) protectionism 
A) trade diversion 
B) trade deflection 
C) trade retention 
D) protectionism

Question 17

The successor organization to GATT, created in 1995, is the

Accepted Answer

A) WTO. 
B) EU. 
C) NAFTA. 
D) FDIC. 
A) WTO. 
B) EU. 
C) NAFTA. 
D) FDIC.

Question 18

The contention that specific sensitive domestic technologies must not be traded freely is

Accepted Answer

A) a national defense concern. 
B) the infant industry argument. 
C) dumping. 
D) to protect domestic jobs. 
A) a national defense concern. 
B) the infant industry argument. 
C) dumping. 
D) to protect domestic jobs.

Question 19

One reason that U.S. exports of commercial services have increased steadily over the past 25 years is that

Accepted Answer

A) European and Asian nations have shown little interest in developing their own commercial services sectors. 
B) the United States has made significant investments in new information technologies. 
C) the U.S. government owns and operates most of the economy's service sector. 
D) the U.S. economy operates like one big corporation. 
A) European and Asian nations have shown little interest in developing their own commercial services sectors. 
B) the United States has made significant investments in new information technologies. 
C) the U.S. government owns and operates most of the economy's service sector. 
D) the U.S. economy operates like one big corporation.

Question 20

If country X can produce a unit of good 1 at a lower opportunity cost than can country Y, it is correct to state that country X

Accepted Answer

A) has a comparative advantage in producing good 1. 
B) has an absolute advantage in producing good 1. 
C) will import good 1 from country Y. 
D) will not produce good 1. 
A) has a comparative advantage in producing good 1. 
B) has an absolute advantage in producing good 1. 
C) will import good 1 from country Y. 
D) will not produce good 1.

One way tariffs differ from quotas is that

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

The law that created the high level of tariffs in United States in the 1930s 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

The ability to produce a good or service at a lower opportunity cost than other producers is

The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as

All of the following are arguments in favor of restricting trade EXCEPT

Voluntary restraint agreements are

Suppose a Middle Eastern firm moves its final assembly line to Germany and then ships the final products to other members of the EU trading bloc. This is an example of

The WTO replaced the GATT in

Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This

The General Agreement on Tariffs and Trade is an international agreement

-Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

-Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of producing one cuckoo clock in the United States is , and the opportunity cost of producing one cuckoo clock in Switzerland is .

Which of the following is the situation in which a nation shifts its international trade from nations outside a regional trade bloc to nations within the bloc?

The successor organization to GATT, created in 1995, is the

The contention that specific sensitive domestic technologies must not be traded freely is

One reason that U.S. exports of commercial services have increased steadily over the past 25 years is that

If country X can produce a unit of good 1 at a lower opportunity cost than can country Y, it is correct to state that country X

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

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Exchange Rates and the Balance of Payments

Filters

Exam 18: Comparative Advantage and the Open Economy

One way tariffs differ from quotas is that

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

The law that created the high level of tariffs in United States in the 1930s 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

The ability to produce a good or service at a lower opportunity cost than other producers is

The selling of a good or service abroad at a price below what is charged in the home market or below the cost of production is referred to as

All of the following are arguments in favor of restricting trade EXCEPT

Voluntary restraint agreements are

Suppose a Middle Eastern firm moves its final assembly line to Germany and then ships the final products to other members of the EU trading bloc. This is an example of

The WTO replaced the GATT in

Some argue that U.S. workers cannot compete with cheap labor from many developing nations. This

The General Agreement on Tariffs and Trade is an international agreement

-Refer to the above table. Assuming constant opportunity costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

-Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of producing one cuckoo clock in the United States is ________, and the opportunity cost of producing one cuckoo clock in Switzerland is ________.

Which of the following is the situation in which a nation shifts its international trade from nations outside a regional trade bloc to nations within the bloc?

The successor organization to GATT, created in 1995, is the

The contention that specific sensitive domestic technologies must not be traded freely is

One reason that U.S. exports of commercial services have increased steadily over the past 25 years is that

If country X can produce a unit of good 1 at a lower opportunity cost than can country Y, it is correct to state that country X

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

The Macroeconomy: Unemployment, Inflation, and Deflation

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money Banking and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Exchange Rates and the Balance of Payments

Filters

-Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of producing one cuckoo clock in the United States is , and the opportunity cost of producing one cuckoo clock in Switzerland is .