Question 1

International trade does all the following except

Accepted Answer

A) allow a country to specialize in producing certain goods and services 
B) reduce world output 
C) allow a country to move to a higher consumption possibilities frontier 
D) allow a country's consumption possibilities frontier to lie outside its production possibilities frontier 
E) increase world output 
A) allow a country to specialize in producing certain goods and services 
B) reduce world output 
C) allow a country to move to a higher consumption possibilities frontier 
D) allow a country's consumption possibilities frontier to lie outside its production possibilities frontier 
E) increase world output B

Question 2

Exhibit 18-1
  
-In Exhibit 18-1, the opportunity cost of 1 t-shirt in Costa Rica is

Accepted Answer

A) 0 
B) 1/40 ton of rice 
C) 3/4 ton of rice 
D) 1 ton of rice 
E) 2 tons of rice 
A) 0 
B) 1/40 ton of rice 
C) 3/4 ton of rice 
D) 1 ton of rice 
E) 2 tons of rice B

Question 3

Which of the following is not true regarding the argument for protection as a way of maintaining jobs and wage levels?

Accepted Answer

A) Wages may be only a small fraction of total production costs. 
B) High wages do not necessarily imply high labor costs when productivity is taken into account. 
C) U.S. workers are among the most productive in the world partly because they are well educated and trained compared to other countries. 
D) U.S. workers are highly productive partly because they are provided with abundant supplies of machines and physical capital. 
E) It is not possible that the U.S. wages, even when supported by high U.S. output per worker, can render U.S. products competitive with low-wage countries. 
A) Wages may be only a small fraction of total production costs. 
B) High wages do not necessarily imply high labor costs when productivity is taken into account. 
C) U.S. workers are among the most productive in the world partly because they are well educated and trained compared to other countries. 
D) U.S. workers are highly productive partly because they are provided with abundant supplies of machines and physical capital. 
E) It is not possible that the U.S. wages, even when supported by high U.S. output per worker, can render U.S. products competitive with low-wage countries. E

Question 4

International trade equalizes the opportunity cost of producing any good around the world.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 18-5  
-In Exhibit 18-5, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, which area represents the amount of tariff revenue the United States government collects?

Accepted Answer

A) a 
B) b 
C) c 
D) f 
E) e 
A) a 
B) b 
C) c 
D) f 
E) e

Question 6

Exhibit 18-4  
-In Exhibit 18-4, with a tariff of $0.50 per unit and a world price of $1.00,

Accepted Answer

A) 25 units will be exported 
B) 25 units will be imported 
C) 50 units will be exported 
D) 50 units will be imported 
E) 10 units will be exported 
A) 25 units will be exported 
B) 25 units will be imported 
C) 50 units will be exported 
D) 50 units will be imported 
E) 10 units will be exported

Question 7

Revenue from a(n) __________ goes to the U.S. government while revenue from a(n) __________ goes to whomever secures the right to sell foreign goods in the U.S. market.

Accepted Answer

A) export subsidy, quota 
B) tariff, quota 
C) domestic content requirement, low-interest loan 
D) tariff, export subsidy 
E) quota, tariff 
A) export subsidy, quota 
B) tariff, quota 
C) domestic content requirement, low-interest loan 
D) tariff, export subsidy 
E) quota, tariff

Question 8

Which of the following is not a type of trade restriction?

Accepted Answer

A) low-interest loans to foreign buyers 
B) export subsidies for domestic firms 
C) domestic content requirements 
D) restrictive health and safety standards 
E) economies of scale 
A) low-interest loans to foreign buyers 
B) export subsidies for domestic firms 
C) domestic content requirements 
D) restrictive health and safety standards 
E) economies of scale

Question 9

Which of the following is true concerning the impact of tariffs and quotas?

Accepted Answer

A) Tariffs raise the price of a good but quotas do not. 
B) Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus. 
C) Both tariffs and quotas increase the quantity demanded. 
D) The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product. 
E) The potential welfare loss is greater with tariffs than quotas. 
A) Tariffs raise the price of a good but quotas do not. 
B) Tariffs reduce consumer and producer surplus whereas quotas reduce domestic consumer surplus and increase domestic producer surplus. 
C) Both tariffs and quotas increase the quantity demanded. 
D) The revenue resulting from a tariff goes to the government whereas the revenue resulting from a quota goes to whoever is awarded the right to sell the product. 
E) The potential welfare loss is greater with tariffs than quotas.

Question 10

A nation's consumption possibilities frontier is

Accepted Answer

A) always the same as its production possibilities frontier 
B) never the same as its production possibilities frontier 
C) the same as its production possibilities frontier only if there is advantageous trade 
D) the same as its production possibilities frontier only if there is no international trade 
E) usually lower than its production possibilities frontier 
A) always the same as its production possibilities frontier 
B) never the same as its production possibilities frontier 
C) the same as its production possibilities frontier only if there is advantageous trade 
D) the same as its production possibilities frontier only if there is no international trade 
E) usually lower than its production possibilities frontier

Question 11

It is possible for one country to have a comparative advantage in the production of all products.

Accepted Answer

A) True 
 B)False

Question 12

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true concerning comparative advantage between the two countries?

Accepted Answer

A) Denmark has the comparative advantage in watches and cheese. 
B) Germany has the comparative advantage in watches and cheese. 
C) Germany has the comparative advantage in watches. 
D) Denmark has the comparative advantage in watches. 
E) Denmark has the comparative advantage in cheese. 
A) Denmark has the comparative advantage in watches and cheese. 
B) Germany has the comparative advantage in watches and cheese. 
C) Germany has the comparative advantage in watches. 
D) Denmark has the comparative advantage in watches. 
E) Denmark has the comparative advantage in cheese.

Question 13

Which of the following is not a criticism of the national defense argument for trade restrictions?

Accepted Answer

A) National defense only makes sense in the absence of international trade. 
B) Stockpiling basic military hardware could eliminate the need to protect the domestic industry. 
C) Nearly all industries can make some claim to strategic importance, so such trade restrictions can get out of hand. 
D) National defense considerations can outweigh concerns about efficiency. 
E) Government subsidies to domestic producers may be more efficient than trade restrictions. 
A) National defense only makes sense in the absence of international trade. 
B) Stockpiling basic military hardware could eliminate the need to protect the domestic industry. 
C) Nearly all industries can make some claim to strategic importance, so such trade restrictions can get out of hand. 
D) National defense considerations can outweigh concerns about efficiency. 
E) Government subsidies to domestic producers may be more efficient than trade restrictions.

Question 14

For which of the following nations does international trade account for the largest percentage of GDP?

Accepted Answer

A) Japan 
B) The Netherlands 
C) Germany 
D) Great Britain 
E) the United States 
A) Japan 
B) The Netherlands 
C) Germany 
D) Great Britain 
E) the United States

Question 15

Exhibit 18-4  
-If the country illustrated in Exhibit 18-4 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

Question 16

Absolute advantage

Accepted Answer

A) is the same as comparative advantage 
B) implies autarky 
C) means that countries of the same size have the same opportunity cost of producing both goods 
D) means that a country can produce more of two goods than another country can 
E) means that a country can produce less of two goods than another country can 
A) is the same as comparative advantage 
B) implies autarky 
C) means that countries of the same size have the same opportunity cost of producing both goods 
D) means that a country can produce more of two goods than another country can 
E) means that a country can produce less of two goods than another country can

Question 17

The difference between a specific tariff and an ad valorem tariff is that a specific tariff

Accepted Answer

A) is a set amount of money per unit of a product, while an ad valorem tariff is a set percentage of product price 
B) is a set percentage of product price, while an ad valorem tariff is a set amount of money per unit of a product 
C) names a particular good to which the tariff applies, while an ad valorem tariff applies to large classes of products 
D) applies only to imports, while an ad valorem tariff applies only to exports 
E) sets a strict quota limit on the amount one individual can purchase, while an ad valorem tariff sets no such limit 
A) is a set amount of money per unit of a product, while an ad valorem tariff is a set percentage of product price 
B) is a set percentage of product price, while an ad valorem tariff is a set amount of money per unit of a product 
C) names a particular good to which the tariff applies, while an ad valorem tariff applies to large classes of products 
D) applies only to imports, while an ad valorem tariff applies only to exports 
E) sets a strict quota limit on the amount one individual can purchase, while an ad valorem tariff sets no such limit

Question 18

Mutually beneficial trade will occur between two countries for all of the following reasons except one. Which is the exception?

Accepted Answer

A) The opportunity costs of producing two goods differs between the two trading partners. 
B) One country is more productive than the other. 
C) One country is more efficient than the other. 
D) One country has an absolute advantage over the other. 
E) Each country has a comparative advantage in producing some good. 
A) The opportunity costs of producing two goods differs between the two trading partners. 
B) One country is more productive than the other. 
C) One country is more efficient than the other. 
D) One country has an absolute advantage over the other. 
E) Each country has a comparative advantage in producing some good.

Question 19

Which of the following is not a basis for trade between two nations?

Accepted Answer

A) different skill levels of the labor forces 
B) one nation's absolute advantage 
C) a difference in tastes between countries 
D) economies of scale 
E) different capital stocks 
A) different skill levels of the labor forces 
B) one nation's absolute advantage 
C) a difference in tastes between countries 
D) economies of scale 
E) different capital stocks

Question 20

Exhibit 18-1
  
-In Exhibit 18-1, trade between the United States and Costa Rica will benefit Costa Rica but not the United States.

Accepted Answer

A) True 
 B)False

Exam 18: International Trade

International trade does all the following except

Exhibit 18-1 -In Exhibit 18-1, the opportunity cost of 1 t-shirt in Costa Rica is

Which of the following is not true regarding the argument for protection as a way of maintaining jobs and wage levels?

International trade equalizes the opportunity cost of producing any good around the world.

Exhibit 18-5 -In Exhibit 18-5, if the world price of a baseball is $3 and a tariff of $1 per baseball is imposed in the United States, which area represents the amount of tariff revenue the United States government collects?

Exhibit 18-4 -In Exhibit 18-4, with a tariff of $0.50 per unit and a world price of $1.00,

Revenue from a(n) __________ goes to the U.S. government while revenue from a(n) __________ goes to whomever secures the right to sell foreign goods in the U.S. market.

Which of the following is not a type of trade restriction?

Which of the following is true concerning the impact of tariffs and quotas?

A nation's consumption possibilities frontier is

It is possible for one country to have a comparative advantage in the production of all products.

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true concerning comparative advantage between the two countries?

Which of the following is not a criticism of the national defense argument for trade restrictions?

For which of the following nations does international trade account for the largest percentage of GDP?

Exhibit 18-4 -If the country illustrated in Exhibit 18-4 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

Absolute advantage

The difference between a specific tariff and an ad valorem tariff is that a specific tariff

Mutually beneficial trade will occur between two countries for all of the following reasons except one. Which is the exception?

Which of the following is not a basis for trade between two nations?

Exhibit 18-1 -In Exhibit 18-1, trade between the United States and Costa Rica will benefit Costa Rica but not the United States.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Introduction to Macroeconomics

Tracking the Us Economy

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

The Algebra of Income and Expenditure

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

The Algebra of Demand-Side Equilibrium

International Finance

Economic Development

National Income Accounts

Understanding Graphs

Variable Net Exports

Variable Net Exports Revisited

Filters

Revenue from a(n) goes to the U.S. government while revenue from a(n) goes to whomever secures the right to sell foreign goods in the U.S. market.