Question 1

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

Question 2

Which of the following describes the national security argument for protectionism?

Accepted Answer

A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand. 
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism. 
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. 
D) Private companies (for example,Coca-Cola)should not be forced to reveal their trade secrets to foreign companies. 
A) Nearly all industries can make some claim to strategic importance so such trade restrictions can get out of hand. 
B) Increases in economic surplus outweigh the decreases in consumer surplus that result from protectionism. 
C) Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. 
D) Private companies (for example,Coca-Cola)should not be forced to reveal their trade secrets to foreign companies.

Question 3

When the U.S.government places a tariff on a product,such as the tariff on tires imported from China,the quantity of the product imported will generally ________ and the price paid by consumers for the product will generally ________.

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 4

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded,how many swords will Estonia gain compared to the "without trade" numbers?

Accepted Answer

A) 5 
B) 45 
C) 100 
D) 105 
A) 5 
B) 45 
C) 100 
D) 105

Question 5

Trade that is within a country or between countries is based on the principle of

Accepted Answer

A) absolute advantage. 
B) scarcity. 
C) competition. 
D) comparative advantage. 
A) absolute advantage. 
B) scarcity. 
C) competition. 
D) comparative advantage.

Question 6

Table 7-1
   Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and make their own food.Rob and Bill spent one day each fishing and picking berries.The table lists the pounds of output Rob and Bill produced.
-Refer to Table 7-1.Use the table above to select the statement that accurately interprets the data in the table.

Accepted Answer

A) Bill has a comparative advantage in catching fish. 
B) Rob has a comparative advantage in picking berries. 
C) Rob has a comparative advantage in catching fish and picking berries. 
D) Bill has a comparative advantage in picking berries. 
A) Bill has a comparative advantage in catching fish. 
B) Rob has a comparative advantage in picking berries. 
C) Rob has a comparative advantage in catching fish and picking berries. 
D) Bill has a comparative advantage in picking berries.

Question 7

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded,how many swords will Morocco gain compared to the "without trade" numbers?

Accepted Answer

A) 5 
B) 45 
C) 105 
D) 150 
A) 5 
B) 45 
C) 105 
D) 150

Question 8

Figure 7-1   Figure 7-1 shows the U.S.demand and supply for leather footwear.
-Refer to Figure 7-1.Under autarky,the producer surplus is area

Accepted Answer

A) S + V. 
B) T + W+ X. 
C) V. 
D) S + T + V + W + X. 
A) S + V. 
B) T + W+ X. 
C) V. 
D) S + T + V + W + X.

Question 9

The ratio at which a country can trade its exports for imports from other countries is called comparative advantage.

Accepted Answer

A) True 
 B)False

Question 10

The General Agreement on Tariffs and Trade (GATT)was formed to replace the World Trade Organization (WTO)because the WTO was empowered only to reduce barriers to trade in goods.The GATT is an agreement to reduce barriers to trade in goods,services and intellectual property.

Accepted Answer

A) True 
 B)False

Question 11

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 12

Automobiles and many other products are differentiated.As a result

Accepted Answer

A) different countries may each have a comparative advantage in producing different types of automobiles. 
B) consumers of automobiles have difficulty deciding what type of imported automobile to buy. 
C) the quality of imported automobiles is less than it could be. 
D) we see countries specializing completely in the production of automobiles. 
A) different countries may each have a comparative advantage in producing different types of automobiles. 
B) consumers of automobiles have difficulty deciding what type of imported automobile to buy. 
C) the quality of imported automobiles is less than it could be. 
D) we see countries specializing completely in the production of automobiles.

Question 13

An economic principle that explains why people pursue different occupations is

Accepted Answer

A) absolute advantage. 
B) international trade. 
C) comparative advantage. 
D) NAFTA. 
A) absolute advantage. 
B) international trade. 
C) comparative advantage. 
D) NAFTA.

Question 14

In the past two decades the United States lost its comparative advantage in automobiles to Japan.What factor was most responsible for the development of Japan's comparative advantage in automobiles?

Accepted Answer

A) Japanese firms excelled in process technology. 
B) Japan has abundant supplies of labor. 
C) Japanese firms benefited from external economies. 
D) Japan has abundant supplies of natural resources needed to produce automobiles. 
A) Japanese firms excelled in process technology. 
B) Japan has abundant supplies of labor. 
C) Japanese firms benefited from external economies. 
D) Japan has abundant supplies of natural resources needed to produce automobiles.

Question 15

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.Which country has a comparative advantage in producing belts?

Accepted Answer

A) Estonia 
B) Morocco 
C) both countries 
D) neither country 
A) Estonia 
B) Morocco 
C) both countries 
D) neither country

Question 16

Table 7-6
Production and
Consumption Production
Without Trade With Trade
   Estonia and Morocco can produce both swords and belts.Table 7-6 shows the production and consumption quantities without trade,and the production numbers with trade.
-Refer to Table 7-6.All of the following are terms of trade that could possibly benefit both countries except

Accepted Answer

A) 1 belt : 1.33 swords 
B) 1 belt : 1.5 swords 
C) 1 belt : 1.75 swords 
D) 1 belt : 2.25 swords 
A) 1 belt : 1.33 swords 
B) 1 belt : 1.5 swords 
C) 1 belt : 1.75 swords 
D) 1 belt : 2.25 swords

Question 17

Dumping refers to

Accepted Answer

A) selling inferior products to unsuspecting consumers. 
B) selling a product for a price below its cost of production. 
C) exporting products that do not meet domestic safety standards. 
D) illegally avoiding tariffs by selling products on the black market. 
A) selling inferior products to unsuspecting consumers. 
B) selling a product for a price below its cost of production. 
C) exporting products that do not meet domestic safety standards. 
D) illegally avoiding tariffs by selling products on the black market.

Question 18

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff.In response to this tariff,other countries ________ and international trade ________.

Accepted Answer

A) lowered their tariffs; thrived 
B) raised their tariffs; collapsed 
C) eliminated tariffs; began to grow outside of the United States 
D) doubled their tariffs; became unrestricted 
A) lowered their tariffs; thrived 
B) raised their tariffs; collapsed 
C) eliminated tariffs; began to grow outside of the United States 
D) doubled their tariffs; became unrestricted

Question 19

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Accepted Answer

A) both a U.S.and an French import. 
B) a U.S.import and an French export. 
C) a U.S.export and an French import. 
D) neither an export nor an import for either country. 
A) both a U.S.and an French import. 
B) a U.S.import and an French export. 
C) a U.S.export and an French import. 
D) neither an export nor an import for either country.

Question 20

Table 7-3
   Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month.
-Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

Accepted Answer

A) Mateo has an absolute advantage in making saddles and spurs. 
B) Celeste has an absolute advantage in making saddles and spurs. 
C) Neither Mateo nor Celeste has an absolute advantage in making saddles. 
D) Neither Mateo nor Celeste has an absolute advantage in making spurs. 
A) Mateo has an absolute advantage in making saddles and spurs. 
B) Celeste has an absolute advantage in making saddles and spurs. 
C) Neither Mateo nor Celeste has an absolute advantage in making saddles. 
D) Neither Mateo nor Celeste has an absolute advantage in making spurs.

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

Which of the following describes the national security argument for protectionism?

When the U.S.government places a tariff on a product,such as the tariff on tires imported from China,the quantity of the product imported will generally and the price paid by consumers for the product will generally .

Trade that is within a country or between countries is based on the principle of

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Under autarky,the producer surplus is area

The ratio at which a country can trade its exports for imports from other countries is called comparative advantage.

The General Agreement on Tariffs and Trade (GATT)was formed to replace the World Trade Organization (WTO)because the WTO was empowered only to reduce barriers to trade in goods.The GATT is an agreement to reduce barriers to trade in goods,services and intellectual property.

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Automobiles and many other products are differentiated.As a result

An economic principle that explains why people pursue different occupations is

In the past two decades the United States lost its comparative advantage in automobiles to Japan.What factor was most responsible for the development of Japan's comparative advantage in automobiles?

Dumping refers to

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff.In response to this tariff,other countries and international trade .

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Table 7-3 Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

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

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

Which of the following describes the national security argument for protectionism?

When the U.S.government places a tariff on a product,such as the tariff on tires imported from China,the quantity of the product imported will generally ________ and the price paid by consumers for the product will generally ________.

Trade that is within a country or between countries is based on the principle of

Figure 7-1 Figure 7-1 shows the U.S.demand and supply for leather footwear. -Refer to Figure 7-1.Under autarky,the producer surplus is area

The ratio at which a country can trade its exports for imports from other countries is called comparative advantage.

The General Agreement on Tariffs and Trade (GATT)was formed to replace the World Trade Organization (WTO)because the WTO was empowered only to reduce barriers to trade in goods.The GATT is an agreement to reduce barriers to trade in goods,services and intellectual property.

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Automobiles and many other products are differentiated.As a result

An economic principle that explains why people pursue different occupations is

In the past two decades the United States lost its comparative advantage in automobiles to Japan.What factor was most responsible for the development of Japan's comparative advantage in automobiles?

Dumping refers to

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff.In response to this tariff,other countries ________ and international trade ________.

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Table 7-3 Mateo and Celeste produce custom saddles and spurs.Table 7-3 lists the number of saddles and pairs of spurs Mateo and Celeste can each produce in one month. -Refer to Table 7-3.Select the statement that accurately interprets the data in the table.

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

When the U.S.government places a tariff on a product,such as the tariff on tires imported from China,the quantity of the product imported will generally and the price paid by consumers for the product will generally .

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff.In response to this tariff,other countries and international trade .