Exam 18: International Trade, Comparative Advantage, and Protectionism

Refer to the information provided in Figure 18.4 below to answer the questions that follow. Figure 18.4 -Refer to Figure 18.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. With the tariff domestic consumption is

Refer to the information provided in Table 18.2 below to answer the questions that follow. Table 18.2 -Refer to Table 18.2. ________ has a comparative advantage in motorcycles and ________ has an absolute advantage in motorcycles.

Tariffs, quotas, and exports subsidies all increase domestic production.

In 2014, the United States ran a trade deficit of 3.1 percent of GDP.

Refer to the information provided in Figure 18.2 below to answer the questions that follow. Figure 18.2 -Refer to Figure 18.2. The opportunity cost of a car is ________ truck(s) in the United States and ________ truck(s) in England

The case for free trade is based on the

If Germany has exports of 90 billion euros and imports of 110 billion euros, then it is running a trade deficit.

Goodwill can be a source of comparative advantage.

-Refer to Table 18.4. In Chile, the opportunity cost of 1 case of beer is

Free trade decreases world production and consumption.

The ratio at which a country can exchange domestic products for imported products is called the terms of trade.

Government payments made to domestic firms in order to encourage exports are called

Free trade allows the people of a country to consume outside their production possibility frontier.

For ________, there is a range of exchange rates that can lead automatically to both countries realizing the gains from specialization and comparative advantage.

An argument in favor of free trade is that trade barriers force consumers to pay higher prices for protected products than they would otherwise pay.

Refer to the information provided in Figure 18.1 below to answer the questions that follow. Figure 18.1 -Refer to Figure 18.1. The opportunity cost of producing a bushel of alfalfa in Canada is

For any pair of nations and goods, if each country has an absolute advantage in the production of one product, it is reasonable to expect that specialization and trade will benefit both countries.

According to ________, trade between two countries allows each of the trading countries to allocate its resources most efficiently.

If a country has a trade deficit of $30 billion, which of the following can be true?

________ U.S. president(s) who has/have held office since GATT was signed has argued for free-trade policies, yet each one has used his powers to protect various sectors of the economy.