Question 1

A voluntary import expansion involves a

Accepted Answer

A) country agreeing to import more from another country. 
B) country agreeing to reduce its trade barriers. 
C) country agreeing to an import quota. 
D) firm agreeing to expand output. 
A) country agreeing to import more from another country. 
B) country agreeing to reduce its trade barriers. 
C) country agreeing to an import quota. 
D) firm agreeing to expand output.

Question 2

A tariff is

Accepted Answer

A) a subsidy on domestically produced goods. 
B) the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. 
C) a tax on imported goods. 
D) a government imposed restriction on the quantity of a specific good that can be imported into the country and sold. 
A) a subsidy on domestically produced goods. 
B) the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. 
C) a tax on imported goods. 
D) a government imposed restriction on the quantity of a specific good that can be imported into the country and sold.

Question 3

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.

Question 4

The argument that trade in high-tech equipment can facilitate the implementation of advanced military technology in countries that may become strategic opponents later on is the

Accepted Answer

A) national security argument. 
B) infant industry argument. 
C) protecting domestic jobs argument. 
D) environmental and safety argument. 
A) national security argument. 
B) infant industry argument. 
C) protecting domestic jobs argument. 
D) environmental and safety argument.

Question 5

Dumping is

Accepted Answer

A) international price discrimination. 
B) international monopolistic pricing. 
C) collusive behavior among producers in different countries. 
D) selling goods produced with government approval. 
A) international price discrimination. 
B) international monopolistic pricing. 
C) collusive behavior among producers in different countries. 
D) selling goods produced with government approval.

Question 6

Trade restrictions tend to make domestic products

Accepted Answer

A) cheaper because they do not have to compete with foreign goods. 
B) cheaper because they do have to compete with foreign goods. 
C) more expensive because they have to compete with foreign goods. 
D) more expensive because they do not have to compete with foreign goods. 
A) cheaper because they do not have to compete with foreign goods. 
B) cheaper because they do have to compete with foreign goods. 
C) more expensive because they have to compete with foreign goods. 
D) more expensive because they do not have to compete with foreign goods.

Question 7

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 8

Suppose a new EU member begins substituting its imports from non-EU members to other EU members.This is an example of

Accepted Answer

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

Question 9

A VRA is an example of

Accepted Answer

A) a "voluntary" quota. 
B) a tariff. 
C) an illegal foreign good. 
D) an illegal foreign tariff. 
A) a "voluntary" quota. 
B) a tariff. 
C) an illegal foreign good. 
D) an illegal foreign tariff.

Question 10

Absolute advantage is

Accepted Answer

A) the ability to produce more output from given inputs than another producer can. 
B) the ability to produce a good at a lower opportunity cost than other producers. 
C) is always a relative concept. 
D) the ability to produce all goods at lower costs than anyone else can. 
A) the ability to produce more output from given inputs than another producer can. 
B) the ability to produce a good at a lower opportunity cost than other producers. 
C) is always a relative concept. 
D) the ability to produce all goods at lower costs than anyone else can.

Question 11

The highest tariff rates of the twentieth century in the United States arose as a result of which law?

Accepted Answer

A) the Robinson-Patman Act 
B) the Tariff of Abominations Act 
C) the Wheeler-Lea Act 
D) the Smoot-Hawley Act 
A) the Robinson-Patman Act 
B) the Tariff of Abominations Act 
C) the Wheeler-Lea Act 
D) the Smoot-Hawley Act

Question 12

When U.S.residents buy products that were made in Japan,then ultimately the Japanese want

Accepted Answer

A) yen. 
B) dollars. 
C) Japanese goods. 
D) goods,including U.S.-made goods. 
A) yen. 
B) dollars. 
C) Japanese goods. 
D) goods,including U.S.-made goods.

Question 13

"Everybody has a comparative advantage in something." Do you agree or disagree? Why?

Accepted Answer

Agree.Since comparative advantage is bas

Question 14

Because of NAFTA,the U.S.shifts some of its imports from Europe to Mexico (a member of NAFTA).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

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.Assuming constant opportunity costs,

Accepted Answer

A) Country X has a comparative advantage in the production of both goods. 
B) Country Y has a comparative advantage in the production of both goods. 
C) Country X has a comparative advantage in the production of Product A while Country Y has a comparative advantage in the production of Product B. 
D) Country Y has a comparative advantage in the production of Product A while Country X has a comparative advantage in the production of Product B. 
A) Country X has a comparative advantage in the production of both goods. 
B) Country Y has a comparative advantage in the production of both goods. 
C) Country X has a comparative advantage in the production of Product A while Country Y has a comparative advantage in the production of Product B. 
D) Country Y has a comparative advantage in the production of Product A while Country X has a comparative advantage in the production of Product B.

Question 16

A legal restriction on the amount of a good that can be imported into a country is known as a

Accepted Answer

A) voluntary restraint agreement. 
B) tariff. 
C) quota. 
D) Domestic Protection Restraint (DPR). 
A) voluntary restraint agreement. 
B) tariff. 
C) quota. 
D) Domestic Protection Restraint (DPR).

Question 17

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 18

Given two economic systems,A and B,if economy A has a comparative advantage in the production of widgets,then

Accepted Answer

A) the inputs necessary to produce widgets in economy A cost less than in economy B. 
B) economy A must give up less of all other goods to produce widgets than economy B. 
C) economy A is less efficient in the production of some goods than economy B. 
D) economy A would not benefit from the specialization of production. 
A) the inputs necessary to produce widgets in economy A cost less than in economy B. 
B) economy A must give up less of all other goods to produce widgets than economy B. 
C) economy A is less efficient in the production of some goods than economy B. 
D) economy A would not benefit from the specialization of production.

Question 19

The Number of Worker Days to Produce One
Cuckoo Clock or Movie Using All Available Resources 
$$\begin{array}{l}
\begin{array} { l c c } 
&u.s&switzerland\
\text { Product } & \text { (Worker-Days) } & \text { (Worker-Days) } \
\hline \text { Cuckoo Clocks } & 8 & 6 \
\text { Movies } & 12 & 4
\end{array}
\end{array}$$
-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 20

According to international trade theory,

Accepted Answer

A) trade is based on absolute advantage. 
B) comparative advantage is based on absolute advantage. 
C) every country has a comparative advantage in something. 
D) less developed countries cannot trade successfully with developed countries. 
A) trade is based on absolute advantage. 
B) comparative advantage is based on absolute advantage. 
C) every country has a comparative advantage in something. 
D) less developed countries cannot trade successfully with developed countries.

A voluntary import expansion involves a

A tariff is

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 argument that trade in high-tech equipment can facilitate the implementation of advanced military technology in countries that may become strategic opponents later on is the

Dumping is

Trade restrictions tend to make domestic products

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

Suppose a new EU member begins substituting its imports from non-EU members to other EU members.This is an example of

A VRA is an example of

Absolute advantage is

The highest tariff rates of the twentieth century in the United States arose as a result of which law?

When U.S.residents buy products that were made in Japan,then ultimately the Japanese want

"Everybody has a comparative advantage in something." Do you agree or disagree? Why?

Because of NAFTA,the U.S.shifts some of its imports from Europe to Mexico (a member of NAFTA).This is an example of

Maximum Feasible Hourly Production Rates of Either Product A or Product B Using All Available Resources Product Country X Country Y A 4 8 B 4 4 -Refer to the above table.Assuming constant opportunity costs,

A legal restriction on the amount of a good that can be imported into a country is known as a

Voluntary restraint agreements are

Given two economic systems,A and B,if economy A has a comparative advantage in the production of widgets,then

According to international trade theory,

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

A voluntary import expansion involves a

A tariff is

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 argument that trade in high-tech equipment can facilitate the implementation of advanced military technology in countries that may become strategic opponents later on is the

Dumping is

Trade restrictions tend to make domestic products

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

Suppose a new EU member begins substituting its imports from non-EU members to other EU members.This is an example of

A VRA is an example of

Absolute advantage is

The highest tariff rates of the twentieth century in the United States arose as a result of which law?

When U.S.residents buy products that were made in Japan,then ultimately the Japanese want

"Everybody has a comparative advantage in something." Do you agree or disagree? Why?

Because of NAFTA,the U.S.shifts some of its imports from Europe to Mexico (a member of NAFTA).This is an example of

Maximum Feasible Hourly Production Rates of Either Product A or Product B Using All Available Resources Product Country X Country Y A 4 8 B 4 4 -Refer to the above table.Assuming constant opportunity costs,

A legal restriction on the amount of a good that can be imported into a country is known as a

Voluntary restraint agreements are

Given two economic systems,A and B,if economy A has a comparative advantage in the production of widgets,then

According to international trade theory,

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