Question 1

A protective tariff will:

Accepted Answer

A) increase the sales revenues of foreign producers 
B) increase the sales revenues of domestic producers 
C) result in a transfer of income from government to domestic consumers 
D) result in a transfer of income from government to domestic producers 
E) result in a transfer of income from government to foreign producers 
A) increase the sales revenues of foreign producers 
B) increase the sales revenues of domestic producers 
C) result in a transfer of income from government to domestic consumers 
D) result in a transfer of income from government to domestic producers 
E) result in a transfer of income from government to foreign producers

Question 2

If a nation has a comparative advantage in the production of product X,this means that the nation:

Accepted Answer

A) cannot benefit by producing and trading this product 
B) must give up less of other products than other nations in producing a unit of X 
C) has production choices identical to those of other nations 
D) is not able to produce this product efficiently 
E) should import this product 
A) cannot benefit by producing and trading this product 
B) must give up less of other products than other nations in producing a unit of X 
C) has production choices identical to those of other nations 
D) is not able to produce this product efficiently 
E) should import this product

Question 3

The following are domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.

$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { supplied } \
\text { (domestic) }
\end{array} & \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { demanded } \
\text { (domestic) }
\end{array} \
\hline 12 & \$ 5 & 2 \
\hline 10 & 4 & 4 \
\hline 7 & 3 & 7 \
\hline 4 & 2 & 11 \
\hline 1 & 1 & 16 \
\hline
\end{array}$
-If the economy is opened to free trade and the world price of $1 prevailed,the price and total quantity sold of this product (both domestically produced and imported)would be:

Accepted Answer

A) $1 and 1 unit 
B) $4 and 10 units 
C) $3 and 7 units 
D) $2 and 11 units 
E) $1 and 16 units 
A) $1 and 1 unit 
B) $4 and 10 units 
C) $3 and 7 units 
D) $2 and 11 units 
E) $1 and 16 units

Question 4

-When compared with the case of free trade,the imposition of a tariff of PcPt will:

Accepted Answer

A) lower domestic price and increase domestic consumption 
B) increase the revenues of domestic producers by areas E + F + K 
C) increase the revenues of domestic producers by areas G + H 
D) increase the revenues of domestic producers by areas E + F + G + H + J 
E) increase the revenues of foreign producers by G + H 
A) lower domestic price and increase domestic consumption 
B) increase the revenues of domestic producers by areas E + F + K 
C) increase the revenues of domestic producers by areas G + H 
D) increase the revenues of domestic producers by areas E + F + G + H + J 
E) increase the revenues of foreign producers by G + H

Question 5

As a percentage of the country's GDP,exports in Canada are:

Accepted Answer

A) relatively low when compared with major economies such as China and the United States 
B) relatively high when compared with small economies such as Belgium 
C) roughly the same as for countries such as the United States and the United Kingdom 
D) higher than for the US and Japan but lower than for Belgium 
E) roughly the same as for small economies such as Belgium 
A) relatively low when compared with major economies such as China and the United States 
B) relatively high when compared with small economies such as Belgium 
C) roughly the same as for countries such as the United States and the United Kingdom 
D) higher than for the US and Japan but lower than for Belgium 
E) roughly the same as for small economies such as Belgium

Question 6

Given two nations and two products,when each nation has an absolute advantage in making one product:

Accepted Answer

A) the nations should specialize and trade 
B) the nations should not trade 
C) the nations should not specialize 
D) both nations have a comparative advantage 
E) the other country also has an absolute advantage in making that same product 
A) the nations should specialize and trade 
B) the nations should not trade 
C) the nations should not specialize 
D) both nations have a comparative advantage 
E) the other country also has an absolute advantage in making that same product

Question 7

Which combination of policies would provide the greatest stimulus to domestic employment and output in the short run?

Accepted Answer

A) raising trade barriers on imports and subsidizing exports 
B) raising trade barriers on imports and imposing special taxes on exports 
C) lowering trade barriers on imports and imposing special taxes on exports 
D) lowering trade barriers on imports and subsidizing exports 
E) subsidizing imports and imposing special taxes on exports 
A) raising trade barriers on imports and subsidizing exports 
B) raising trade barriers on imports and imposing special taxes on exports 
C) lowering trade barriers on imports and imposing special taxes on exports 
D) lowering trade barriers on imports and subsidizing exports 
E) subsidizing imports and imposing special taxes on exports

Question 8

-Assuming there is no tariff,the imposition of the import quota:

Accepted Answer

A) will increase the revenue of the Canadian government by areas G + H 
B) will increase the revenue of the Canadian government by areas E + F + G + H + J 
C) leads to an extra revenue to foreign producers equal to areas G + H, which partly counteracts the loss they bear because of lower quantities supplied 
D) will increase the revenues of foreign producers by area E 
E) will increase the revenues of foreign producers by area F + J 
A) will increase the revenue of the Canadian government by areas G + H 
B) will increase the revenue of the Canadian government by areas E + F + G + H + J 
C) leads to an extra revenue to foreign producers equal to areas G + H, which partly counteracts the loss they bear because of lower quantities supplied 
D) will increase the revenues of foreign producers by area E 
E) will increase the revenues of foreign producers by area F + J

Question 9

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } 
\hline  { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \
\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \
\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \
\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \
\hline
\end{array}$$

-Which of the following would be feasible terms of trade between Landia and Scandia?

Accepted Answer

A) 1 fish for 4 chips 
B) 1 fish for 6 chips 
C) 1 fish for 7 chips 
D) 2 fish for 4 chips 
E) 8 chips for 1 fish 
A) 1 fish for 4 chips 
B) 1 fish for 6 chips 
C) 1 fish for 7 chips 
D) 2 fish for 4 chips 
E) 8 chips for 1 fish

Question 10

Canada's merchandise exports to the US make up what approximate percentage of overall Canadian merchandise exports?

Accepted Answer

A) 95 percent 
B) 85 percent 
C) 75 percent 
D) 65 percent 
E) 55 percent 
A) 95 percent 
B) 85 percent 
C) 75 percent 
D) 65 percent 
E) 55 percent

Question 11

If Paul can mow a lawn in 1 hours and weed a vegetable garden in 3 hours and Mary can mow a lawn in 2 hours and weed a vegetable garden in 1 hour,then:

Accepted Answer

A) on the basis of absolute advantage Mary should mow the lawn and Paul should weed the vegetable garden 
B) on the basis of absolute advantage Paul should mow the lawn and Mary should weed the vegetable garden 
C) on the basis of comparative advantage Mary should mow the lawn and Paul should weed the vegetable garden 
D) on the basis of comparative advantage Paul should mow the lawn and Mary should weed the garden 
E) Paul and Mary do not have an absolute or comparative advantage in either activity 
A) on the basis of absolute advantage Mary should mow the lawn and Paul should weed the vegetable garden 
B) on the basis of absolute advantage Paul should mow the lawn and Mary should weed the vegetable garden 
C) on the basis of comparative advantage Mary should mow the lawn and Paul should weed the vegetable garden 
D) on the basis of comparative advantage Paul should mow the lawn and Mary should weed the garden 
E) Paul and Mary do not have an absolute or comparative advantage in either activity

Question 12

Canada's merchandise imports from the US make up what approximate proportion of overall Canadian merchandise imports?

Accepted Answer

A) almost one third 
B) just over two fifths two fifths 
C) about one half 
D) just under two thirds 
E) over four fifths 
A) almost one third 
B) just over two fifths two fifths 
C) about one half 
D) just under two thirds 
E) over four fifths

Question 13

The following data outline production choices (A or B) in two nations, Latalia and Trombonia. Latalia has a workforce of 14 and Trombonia has a workforce of 10.

$\begin{array} { | l | c | c | l | c | c | c | } 
\hline { \text { Output per worker in Latalia } } & &&& { \text { Output per worker in Trombonia } } \
\hline & \text { A } & \text { B } & & & \text { A } & \text { B } \
\hline \text { Pork (tons) } & 4 & 0 & & \text { Pork (tons) } & 8 & 0 \
\hline \text { Beans (tons) } & 0 & 20 & & \text { Beans (tons) } & 0 & 24 \
\hline
\end{array}$
-Which of the following would be feasible terms for trade between Latalia and Trombonia?

Accepted Answer

A) 1 ton of beans = 1 ton of pork 
B) 8 tons of beans = 1 ton of pork 
C) 6 tons of beans = 1 ton of pork 
D) 1 ton of beans = 4 tons of pork 
E) 4 tons of beans = 1 ton of pork 
A) 1 ton of beans = 1 ton of pork 
B) 8 tons of beans = 1 ton of pork 
C) 6 tons of beans = 1 ton of pork 
D) 1 ton of beans = 4 tons of pork 
E) 4 tons of beans = 1 ton of pork

Question 14

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

$\begin{array}{|l|c|c|l|l|c|c|}
\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \
\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \
\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \
\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \
\hline
\end{array}$
-On the basis of this information,we can say that:

Accepted Answer

A) Gamma should export both tea and pots to Sigma 
B) Sigma should export tea to Gamma and Gamma should export pots to Sigma 
C) Gamma should export tea to Sigma and Sigma should export pots to Gamma 
D) Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots 
E) Sigma should export both tea and pots to Gamma 
A) Gamma should export both tea and pots to Sigma 
B) Sigma should export tea to Gamma and Gamma should export pots to Sigma 
C) Gamma should export tea to Sigma and Sigma should export pots to Gamma 
D) Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots 
E) Sigma should export both tea and pots to Gamma

Question 15

-Given the tariff,prices received by domestic and foreign producers,respectively,would be:

Accepted Answer

A) 0Pc and 0Pa 
B) 0Pa and 0Pc 
C) 0Pa and 0Pt 
D) 0Pt and 0Pc 
E) 0Pc and 0Pt 
A) 0Pc and 0Pa 
B) 0Pa and 0Pc 
C) 0Pa and 0Pt 
D) 0Pt and 0Pc 
E) 0Pc and 0Pt

Question 16

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10.

$\begin{array}{|l|c|c|l|l|c|c|}
\hline{\text { Output per worker in Gamma }} & &&&{\text { Output per worker in Sigma }} \
\hline & \mathrm{A} & \mathrm{B} & & & \mathrm{A} & \mathrm{B} \
\hline \text { Tea } & 120 & 0 & & \text { Tea } & 40 & 0 \
\hline \text { Pots } & 0 & 120 & & \text { Pots } & 0 & 120 \
\hline
\end{array}$
-What are the limits of the terms of trade between Gamma and Sigma?

Accepted Answer

A) 1 unit of tea = 1 pot to 3 units of tea = 1 pot 
B) 1 unit of tea = 3 pots to 1 unit of tea = 6 pots 
C) 1 unit of tea = 1 pot to 1 unit of tea = 3 pots 
D) 6 units of tea = 1 pot to 1 unit of tea = 1 pot 
E) 6 units of tea = 1 pot to 6 pots = 1 unit of tea 
A) 1 unit of tea = 1 pot to 3 units of tea = 1 pot 
B) 1 unit of tea = 3 pots to 1 unit of tea = 6 pots 
C) 1 unit of tea = 1 pot to 1 unit of tea = 3 pots 
D) 6 units of tea = 1 pot to 1 unit of tea = 1 pot 
E) 6 units of tea = 1 pot to 6 pots = 1 unit of tea

Question 17

Assume that by devoting all of its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all of its resources to the production of Y,Alpha can produce 60 units of Y.Comparable figures for nation Beta are 60 units of X and 40 units of Y.On the basis of this information,we can conclude that:

Accepted Answer

A) the terms of trade will be 3 units of X equals 1 unit of Y 
B) Alpha should specialize in Y and Beta in X 
C) Alpha should specialize in X and Beta in Y 
D) there is no basis for mutually beneficial specialization and trade 
E) the terms of trade will be 3 units of Y equals 1 unit of X 
A) the terms of trade will be 3 units of X equals 1 unit of Y 
B) Alpha should specialize in Y and Beta in X 
C) Alpha should specialize in X and Beta in Y 
D) there is no basis for mutually beneficial specialization and trade 
E) the terms of trade will be 3 units of Y equals 1 unit of X

Question 18

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

Accepted Answer

A) labour costs and product prices are not related 
B) there is no discernible relationship between wage rates and labour productivity 
C) wage rates and labour productivity are directly related 
D) wage rates and labour productivity are inversely related 
E) wages are now higher in many low-income countries than they are in high-income countries 
A) labour costs and product prices are not related 
B) there is no discernible relationship between wage rates and labour productivity 
C) wage rates and labour productivity are directly related 
D) wage rates and labour productivity are inversely related 
E) wages are now higher in many low-income countries than they are in high-income countries

Question 19

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10.

$$\begin{array} { | l | c | c | c | c | c | c | } 
\hline  { \text { Output per worker in Landia } } & & && { \text { Output per worker in Scandia } } \
\hline & \mathrm { A } & \mathrm { B } & & & \mathrm { A } & \mathrm { B } \
\hline \text { Fish } & 8 & 0 & & \text { Fish } & 16 & 0 \
\hline \text { Chips } & 0 & 40 & & \text { Chips } & 0 & 48 \
\hline
\end{array}$$

-On the basis of these data,we can say that:

Accepted Answer

A) Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish 
B) Landia has a comparative advantage in fish while Scandia has a comparative advantage in chips 
C) both Landia and Scandia have a comparative advantage in fish 
D) both Landia and Scandia have a comparative advantage in chips 
E) neither Landia nor Scandia has a comparative advantage in chips 
A) Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish 
B) Landia has a comparative advantage in fish while Scandia has a comparative advantage in chips 
C) both Landia and Scandia have a comparative advantage in fish 
D) both Landia and Scandia have a comparative advantage in chips 
E) neither Landia nor Scandia has a comparative advantage in chips

Question 20

A tariff can best be described as a(n):

Accepted Answer

A) excise tax on an imported good 
B) government payment to domestic producers to enable them to sell competitively in world markets 
C) excise tax on an exported good 
D) law that sets a limit upon the amount of a good that can be imported 
E) law that sets a limit on the amount of a good that can be exported 
A) excise tax on an imported good 
B) government payment to domestic producers to enable them to sell competitively in world markets 
C) excise tax on an exported good 
D) law that sets a limit upon the amount of a good that can be imported 
E) law that sets a limit on the amount of a good that can be exported

A protective tariff will:

If a nation has a comparative advantage in the production of product X,this means that the nation:

-When compared with the case of free trade,the imposition of a tariff of P_cP_t will:

As a percentage of the country's GDP,exports in Canada are:

Given two nations and two products,when each nation has an absolute advantage in making one product:

Which combination of policies would provide the greatest stimulus to domestic employment and output in the short run?

-Assuming there is no tariff,the imposition of the import quota:

Canada's merchandise exports to the US make up what approximate percentage of overall Canadian merchandise exports?

If Paul can mow a lawn in 1 hours and weed a vegetable garden in 3 hours and Mary can mow a lawn in 2 hours and weed a vegetable garden in 1 hour,then:

Canada's merchandise imports from the US make up what approximate proportion of overall Canadian merchandise imports?

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10. Output per worker in Gamma Output per worker in Sigma Tea 120 0 Tea 40 0 Pots 0 120 Pots 0 120 -On the basis of this information,we can say that:

-Given the tariff,prices received by domestic and foreign producers,respectively,would be:

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10. Output per worker in Gamma Output per worker in Sigma Tea 120 0 Tea 40 0 Pots 0 120 Pots 0 120 -What are the limits of the terms of trade between Gamma and Sigma?

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10. Output per worker in Landia Output per worker in Scandia Fish 8 0 Fish 16 0 Chips 0 40 Chips 0 48 -On the basis of these data,we can say that:

A tariff can best be described as a(n):

The Economic Problem

Demand and Supply

Elasticity

Costs of Production

Perfect Competition

Monopoly and Imperfect Competition

Economic Welfare and Income Distribution

Measures of Economic Activity

Inflation and Unemployment

Economic Fluctuations

Fiscal Policy

Money

Monetary Policy

The Foreign Sector

Filters

Exam 15: Foreign Trade

A protective tariff will:

If a nation has a comparative advantage in the production of product X,this means that the nation:

-When compared with the case of free trade,the imposition of a tariff of PcPt will:

As a percentage of the country's GDP,exports in Canada are:

Given two nations and two products,when each nation has an absolute advantage in making one product:

Which combination of policies would provide the greatest stimulus to domestic employment and output in the short run?

-Assuming there is no tariff,the imposition of the import quota:

Canada's merchandise exports to the US make up what approximate percentage of overall Canadian merchandise exports?

If Paul can mow a lawn in 1 hours and weed a vegetable garden in 3 hours and Mary can mow a lawn in 2 hours and weed a vegetable garden in 1 hour,then:

Canada's merchandise imports from the US make up what approximate proportion of overall Canadian merchandise imports?

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10. Output per worker in Gamma Output per worker in Sigma Tea 120 0 Tea 40 0 Pots 0 120 Pots 0 120 -On the basis of this information,we can say that:

-Given the tariff,prices received by domestic and foreign producers,respectively,would be:

The following data outline production choices (A or B) in two nations, Gamma and Sigma. Each nation has a workforce of 10. Output per worker in Gamma Output per worker in Sigma Tea 120 0 Tea 40 0 Pots 0 120 Pots 0 120 -What are the limits of the terms of trade between Gamma and Sigma?

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that:

The following data outline production choices (A or B) in two nations, Landia and Scandia. Landia has a workforce of 12 and Scandia has a workforce of 10. Output per worker in Landia Output per worker in Scandia Fish 8 0 Fish 16 0 Chips 0 40 Chips 0 48 -On the basis of these data,we can say that:

A tariff can best be described as a(n):

The Economic Problem

Demand and Supply

Elasticity

Costs of Production

Perfect Competition

Monopoly and Imperfect Competition

Economic Welfare and Income Distribution

Measures of Economic Activity

Inflation and Unemployment

Economic Fluctuations

Fiscal Policy

Money

Monetary Policy

The Foreign Sector

Filters

-When compared with the case of free trade,the imposition of a tariff of P_cP_t will: