Question 1

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 2

Which of the following would increase the total amount of trade in the world?

Accepted Answer

A) trade diversion 
B) trade deflection 
C) trade retention 
D) rules of origin 
A) trade diversion 
B) trade deflection 
C) trade retention 
D) rules of origin

Question 3

If the residents of a country specialize in a good in which they have a comparative advantage and trade with residents in another nation,the residents in the first country

Accepted Answer

A) can consume more than they could without trade. 
B) can produce more than they could without trade. 
C) will have a lower standard of living. 
D) will be exploited by the second nation. 
A) can consume more than they could without trade. 
B) can produce more than they could without trade. 
C) will have a lower standard of living. 
D) will be exploited by the second nation.

Question 4

Goods that are produced in other countries and then sold domestically are called

Accepted Answer

A) exports. 
B) imports. 
C) tariffs. 
D) quotas. 
A) exports. 
B) imports. 
C) tariffs. 
D) quotas.

Question 5

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 6

Selling a good abroad below the price charged in the home market is

Accepted Answer

A) a basic argument for free trade. 
B) the infant industry argument. 
C) dumping. 
D) a voluntary restraint agreement. 
A) a basic argument for free trade. 
B) the infant industry argument. 
C) dumping. 
D) a voluntary restraint agreement.

Question 7

Maximum Feasible Hourly Production Rates for either
 Computers or Bicycles Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll} 
\hline Product & United States & Mexico \
\hline Computers & 8 & 2 \
Bicydes & 6 & 4 \
\hline
\end{array}
\end{array}$$
-Assuming that opportunity costs are constant,which of the following is a correct statement? (See the above table.

Accepted Answer

A) The United States has a comparative advantage in bicycle production. 
B) The United States has a comparative advantage in producing both goods. 
C) Mexico has a comparative advantage in producing bicycles. 
D) Mexico has a comparative advantage in producing both goods. 
A) The United States has a comparative advantage in bicycle production. 
B) The United States has a comparative advantage in producing both goods. 
C) Mexico has a comparative advantage in producing bicycles. 
D) Mexico has a comparative advantage in producing both goods.

Question 8

A quota is

Accepted Answer

A) a government-imposed restriction on the quantity of a specific good that can be imported into a country. 
B) a tariff imposed on goods that are dumped into the home country. 
C) a tariff imposed on goods that are subsidized by their domestic governments and exported to other countries. 
D) a tariff based on the value of the imported good. 
A) a government-imposed restriction on the quantity of a specific good that can be imported into a country. 
B) a tariff imposed on goods that are dumped into the home country. 
C) a tariff imposed on goods that are subsidized by their domestic governments and exported to other countries. 
D) a tariff based on the value of the imported good.

Question 9

Maximum Feasible Hourly Production Rates of Either 
Product A or Product B Using All Available Resources
$\begin{array}{l}

\begin{array}{lll}
\text { Product }&\text {Country } X& \text { Country } Y\
\text { A } & 4 & 8 \
\text { B } & 4 & 4
\end{array}
\end{array}$
-Refer to the above table.If opportunity costs are constant,each nation produces only the one good for which it has a comparative advantage,and trade can occur between the two countries,

Accepted Answer

A) country X will produce product A and country Y will produce product B. 
B) country X will produce product B and country Y will produce product A. 
C) country X will refuse to trade with country Y since country X has a comparative advantage in both products. 
D) country Y will refuse to trade with country X since country Y has a comparative advantage in both products. 
A) country X will produce product A and country Y will produce product B. 
B) country X will produce product B and country Y will produce product A. 
C) country X will refuse to trade with country Y since country X has a comparative advantage in both products. 
D) country Y will refuse to trade with country X since country Y has a comparative advantage in both products.

Question 10

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

Accepted Answer

A) large investments in scientific research. 
B) economic restructuring. 
C) widespread entrepreneurship. 
D) reducing the federal deficit. 
A) large investments in scientific research. 
B) economic restructuring. 
C) widespread entrepreneurship. 
D) reducing the federal deficit.

Question 11

Why do free trade proponents applaud successful trade deflection?

Accepted Answer

A) It circumvents trade restrictions within regional trade blocs. 
B) It increases trade restrictions within regional trade blocs. 
C) It promotes more rules of origin laws. 
D) It decreases incentives for trade diversion. 
A) It circumvents trade restrictions within regional trade blocs. 
B) It increases trade restrictions within regional trade blocs. 
C) It promotes more rules of origin laws. 
D) It decreases incentives for trade diversion.

Question 12

Maximum Feasible Hourly Production Rates (in Tons) of Either
 Wine or Beef Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll } 
Product &Argentina & France \
\hline Wine (gallons)& 30 & 60 \
Beef (pounds) &10 & 30
\end{array}
\end{array}$$
-Use the above table.Assuming constant opportunity costs,if Argentina and France specialize based on comparative advantage,then they will trade if the rate of exchange

Accepted Answer

A) is 2.5 gallons of wine for 1 pound of beef,and Argentina imports beef. 
B) 4 gallons of wine for 1 pound of beef,and France imports beef. 
C) 0.2 pound of beef for 1 gallon of wine,and Argentina imports wine. 
D) 8 pounds of beef for 1 gallon of wine,and France imports wine. 
A) is 2.5 gallons of wine for 1 pound of beef,and Argentina imports beef. 
B) 4 gallons of wine for 1 pound of beef,and France imports beef. 
C) 0.2 pound of beef for 1 gallon of wine,and Argentina imports wine. 
D) 8 pounds of beef for 1 gallon of wine,and France imports wine.

Question 13

When one country "dumps" some of its products in another country,it

Accepted Answer

A) increases the aggregate level of employment in the importing country,thereby depressing that nation's market wages. 
B) also exports new technology to the importing nation and thereby indirectly boosts the importing nation's real GDP. 
C) sells its products abroad at a price lower than the price in the home market or lower than the cost of production. 
D) also exports pollution-causing technologies and thereby creates environmental hazards in the receiving country. 
A) increases the aggregate level of employment in the importing country,thereby depressing that nation's market wages. 
B) also exports new technology to the importing nation and thereby indirectly boosts the importing nation's real GDP. 
C) sells its products abroad at a price lower than the price in the home market or lower than the cost of production. 
D) also exports pollution-causing technologies and thereby creates environmental hazards in the receiving country.

Question 14

If Bob can produce completed mathematics homework assignments at a lower opportunity cost than Jane can accomplish,then Bob has ________ in completing mathematics homework assignments.

Accepted Answer

A) a relative advantage 
B) an absolute advantage 
C) a complete advantage 
D) a comparative disadvantage 
A) a relative advantage 
B) an absolute advantage 
C) a complete advantage 
D) a comparative disadvantage

Question 15

To avoid trade restrictions,a U.S.firm moves its final production process to Ireland and then ships the final products to Germany.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 16

Since 1950,the volume of world trade and the volume of world real GDP

Accepted Answer

A) have both increased at roughly the same rate. 
B) have both decreased at roughly the same rate. 
C) have both increased,but the volume of world trade has increased more slowly than the volume of world real GDP. 
D) have both increased,but the volume of world trade has increased faster than the volume of world real GDP. 
A) have both increased at roughly the same rate. 
B) have both decreased at roughly the same rate. 
C) have both increased,but the volume of world trade has increased more slowly than the volume of world real GDP. 
D) have both increased,but the volume of world trade has increased faster than the volume of world real GDP.

Question 17

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 18

Which of the following is NOT an argument against free trade?

Accepted Answer

A) infant-industry argument 
B) protecting domestic job argument 
C) countering foreign subsidies argument 
D) comparative advantage argument 
A) infant-industry argument 
B) protecting domestic job argument 
C) countering foreign subsidies argument 
D) comparative advantage argument

Question 19

Maximum Feasible Hourly Production Rates (in Tons) of Either
 Cookies or Coffee Using All Available Resources
$$\begin{array}{l}
\begin{array} {lll } 
Product & Country Alpha & Country Beta \
\hline Cookies & 3 & 8 \
Coffee & 9 & 4
\end{array}
\end{array}$$
-Use the above table.If these two countries,Alpha and Beta,specialize based on comparative advantage

Accepted Answer

A) Alpha will specialize in cookies,and Beta will specialize in coffee production. 
B) Alpha will specialize in producing both items. 
C) Beta will specialize in producing both items. 
D) Alpha will specialize in coffee,and Beta will specialize in cookies. 
A) Alpha will specialize in cookies,and Beta will specialize in coffee production. 
B) Alpha will specialize in producing both items. 
C) Beta will specialize in producing both items. 
D) Alpha will specialize in coffee,and Beta will specialize in cookies.

Question 20

Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size.In one hour,Ethan can pick 8 pounds of apples or 1 pound of oranges.Ava can pick 6 pounds of apples or 1 pound of oranges.It can be concluded that

Accepted Answer

A) Ava has a comparative advantage in picking apples. 
B) Ava has an absolute advantage in picking apples. 
C) Ethan has a comparative advantage in picking apples. 
D) Ethan has an absolute advantage in picking oranges. 
A) Ava has a comparative advantage in picking apples. 
B) Ava has an absolute advantage in picking apples. 
C) Ethan has a comparative advantage in picking apples. 
D) Ethan has an absolute advantage in picking oranges.

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

Which of the following would increase the total amount of trade in the world?

If the residents of a country specialize in a good in which they have a comparative advantage and trade with residents in another nation,the residents in the first country

Goods that are produced in other countries and then sold domestically are called

The General Agreement on Tariffs and Trade is an international agreement

Selling a good abroad below the price charged in the home market is

Maximum Feasible Hourly Production Rates for either Computers or Bicycles Using All Available Resources Product UnitedStates Mexico Computers 8 2 Bicydes 6 4 -Assuming that opportunity costs are constant,which of the following is a correct statement? (See the above table.

A quota is

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

Why do free trade proponents applaud successful trade deflection?

When one country "dumps" some of its products in another country,it

If Bob can produce completed mathematics homework assignments at a lower opportunity cost than Jane can accomplish,then Bob has ________ in completing mathematics homework assignments.

To avoid trade restrictions,a U.S.firm moves its final production process to Ireland and then ships the final products to Germany.This is an example of

Since 1950,the volume of world trade and the volume of world real GDP

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

Which of the following is NOT an argument against free trade?

Maximum Feasible Hourly Production Rates (in Tons) of Either Cookies or Coffee Using All Available Resources Product CountryAlpha CountryBeta Cookies 3 8 Coffee 9 4 -Use the above table.If these two countries,Alpha and Beta,specialize based on comparative advantage

Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size.In one hour,Ethan can pick 8 pounds of apples or 1 pound of oranges.Ava can pick 6 pounds of apples or 1 pound of oranges.It can be concluded that

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

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

Filters

Exam 19: Comparative Advantage and the Open Economy

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

Which of the following would increase the total amount of trade in the world?

If the residents of a country specialize in a good in which they have a comparative advantage and trade with residents in another nation,the residents in the first country

Goods that are produced in other countries and then sold domestically are called

The General Agreement on Tariffs and Trade is an international agreement

Selling a good abroad below the price charged in the home market is

Maximum Feasible Hourly Production Rates for either Computers or Bicycles Using All Available Resources Product UnitedStates Mexico Computers 8 2 Bicydes 6 4 -Assuming that opportunity costs are constant,which of the following is a correct statement? (See the above table.

A quota is

All of the following are cited as factors in explaining U.S.competitiveness EXCEPT

Why do free trade proponents applaud successful trade deflection?

When one country "dumps" some of its products in another country,it

If Bob can produce completed mathematics homework assignments at a lower opportunity cost than Jane can accomplish,then Bob has ________ in completing mathematics homework assignments.

To avoid trade restrictions,a U.S.firm moves its final production process to Ireland and then ships the final products to Germany.This is an example of

Since 1950,the volume of world trade and the volume of world real GDP

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

Which of the following is NOT an argument against free trade?

Maximum Feasible Hourly Production Rates (in Tons) of Either Cookies or Coffee Using All Available Resources Product CountryAlpha CountryBeta Cookies 3 8 Coffee 9 4 -Use the above table.If these two countries,Alpha and Beta,specialize based on comparative advantage

Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size.In one hour,Ethan can pick 8 pounds of apples or 1 pound of oranges.Ava can pick 6 pounds of apples or 1 pound of oranges.It can be concluded that

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

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Exchange Rates and the Balance of Payments

Filters