Deck 19: International Trade

Question 1

If Hong Kong has an open economy,it ____________ with other countries.

A) trades all of its goods
B) does not trade its goods
C) only trades a few of its goods
D) trades both services and goods
E) trades only services but no goods

Answer 1

trades both services and goods

Question 2

Examples
B.Other Advantages of Trade

Question 3

An economy that does not trade with the rest of the world is a(n):

A) open economy.
B) command economy.
C) trade economy.
D) closed economy.
E) one-person economy.

Answer 3

closed economy.

Question 4

Economies of Scale and Competition
C.Trade Agreements and the WTO
III.Trade Barriers
A.Tariffs
B.Quotas
C.Reasons for Trade Barriers

Question 5

Use the following graph to answer the next six questions:

In a trading (open) economy,the quantity supplied of TVs (in thousands) in the domestic market will be:

A) 30.
B) 60.
C) 90.
D) 120.
E) 150.

Answer 5

30.

Question 6

National Security

Question 7

Use the following graph to answer the next six questions:

If this is a trading (open) economy,the price of a car will be:

A) $6,000 per car.
B) $8,000 per car.
C) $10,000 per car.
D) $14,000 per car.
E) $24,000 per car.

Question 8

Infant Industries

Question 9

Total world exports of goods and services are now about ____________ the size of world gross domestic product (GDP).

A) one-tenth
B) one-eighth
C) one-fourth
D) one-third
E) one-half

Question 10

Anti-Dumping

Question 11

Use the following graph to answer the next six questions:

In a trading (open) economy,the price of a TV will be:

A) $75.
B) $125.
C) $175.
D) $225.
E) $275.

Question 12

Special Interests
MULTIPLE-CHOICE QUESTIONS

Question 13

If St.John has a closed economy,it _____________ with other countries.

A) trades all of its goods
B) does not trade goods
C) prevents its citizens from traveling to other countries but trades goods
D) trades both services and goods
E) trades only services but no goods

Question 14

Free trade is _____________,because it _____________ the size of the pie available to the economy.

A) inefficient; decreases
B) inefficient; increases
C) good for developed countries only; unfairly changes
D) efficient; decreases
E) efficient; increases

Question 15

Use the following graph to answer the next six questions:

How many cars (in thousands) will this country import in a trading (open) economy situation?

A) 20
B) 40
C) 60
D) 80
E) 100

Question 16

Use the following graph to answer the next six questions:

If this is a nontrading (closed) economy,the number of TVs exchanged (in thousands) will be:

A) 30.
B) 60.
C) 90.
D) 120.
E) 150.

Question 17

Use the following graph to answer the next six questions:

If this is a trading (open) economy,quantity supplied of cars (in thousands) by the domestic producers will be:

A) 20.
B) 40.
C) 60.
D) 80.
E) 100.

Question 18

Use the following graph to answer the next six questions:

If this is a nontrading (closed) economy,the price of a TV will be:

A) $75.
B) $125.
C) $175.
D) $225.
E) $275.

Question 19

Use the following graph to answer the next six questions:

If this is a trading (open) economy,quantity demanded of cars (in thousands) will be:

A) 20.
B) 40.
C) 60.
D) 80.
E) 100.

Question 20

For country A,an export is a good produced in:

A) country B and purchased by residents of country A.
B) country A and purchased by residents of country A.
C) country A and purchased by residents of country B.
D) country B and purchased by residents of country B.
E) any other country.

Question 21

Use the following graph to answer the next six questions:

What is the price of cars if this is a nontrading (closed) economy?

A) $6,000 per car
B) $8,000 per car
C) $10,000 per car
D) $14,000 per car
E) $24,000 per car

Question 22

Use the following graph to answer the next six questions:

If this is a nontrading (closed) economy,how many cars (in thousands) will be exchanged?

A) 20
B) 40
C) 60
D) 80
E) 100

Question 23

Use the following graph to answer the next six questions:

In a trading (open) economy,how many TVs (in thousands) will this country import?

A) 30
B) 60
C) 90
D) 120
E) 150

Question 24

Use the following graph to answer the next six questions:

In a trading (open) economy,the quantity demanded of TVs (in thousands) in the domestic market will be:

A) 30.
B) 60.
C) 90.
D) 120.
E) 150.

Question 25

An economy that trades with the rest of the world is a(n):

A) open economy.
B) command economy.
C) trade economy.
D) closed economy.
E) autarky.

Question 26

For country A,an import is a good produced in:

A) country B and purchased by residents of country A.
B) country A and purchased by residents of country A.
C) country A and purchased by residents of country B.
D) country B and purchased by residents of country B.
E) the domestic economy.

Question 27

Citizens can consume the largest quantities of goods and services in which of the following situations?

A) autarky
B) closed economy
C) open economy
D) economy with few citizens
E) developed country

Question 28

Trade deficit is:

A) the sum of a nation's total exports and total imports.
B) the difference between a nation's total exports and total imports.
C) when a nation exports more than it imports.
D) when a nation imports more than it exports.
E) when a nation no longer feels it has the need for trade partners.

Question 29

In 2011,60% of goods imported by the United States came from just seven nations.Which of the following nations was one of those seven?

A) Australia
B) United Kingdom
C) Argentina
D) India
E) France

Question 30

Which of the following trade agreements provides for the development of a single market among its members?

A) World Trade Organization
B) Asia Pacific Economic Cooperation
C) North American Free Trade Agreement
D) European Union
E) Central America Free Trade Agreement

Question 31

The ability of one person or nation to produce more of a good while using the same quantity of resources as another is called a(n):

A) market advantage.
B) absolute advantage.
C) specialization advantage.
D) comparative advantage.
E) specific advantage.

Question 32

The ability of one person or nation to produce a good at a lower opportunity cost than another is called a(n):

A) market advantage.
B) absolute advantage.
C) specialization advantage.
D) comparative advantage.
E) specific advantage.

Question 33

The combination of goods and services Mexico's citizens might feasibly consume is called Mexico's:

A) total consumption.
B) total production.
C) consumption possibilities.
D) production possibilities.
E) national output.

Question 34

For nearly four decades,the United States has had a:

A) trade balance.
B) trade surplus.
C) trade deficit.
D) ban on imports.
E) ban on exports.

Question 35

In recent years,the United States has:

A) exported more services abroad than it has imported.
B) imported more services from abroad than it has exported.
C) had a small goods trade surplus with Japan.
D) had a large goods trade surplus with the rest of the world.
E) fallen to third behind Japan and Germany in the list of leading export nations (absolute volume basis).

Question 36

Since 2000,world goods trade has:

A) doubled.
B) tripled.
C) remained the same.
D) decreased by 10%.
E) decreased by 25%.

Question 37

In the past decade,companies like Nike and Under Armour have set up manufacturing centers in Nicaragua in part due to the country's establishment of _____________,allowing these companies to avoid standard corporate tax rates.

A) "trade zones"
B) "international zones"
C) "production zones"
D) "free zones"
E) "tax zones"

Question 38

Trade balance is:

A) the sum of a nation's total exports and total imports.
B) the difference between a nation's total exports and total imports.
C) when a nation exports more than it imports.
D) when a nation imports more than it exports.
E) when a nation no longer feels it has the need for trade partners.

Question 39

In 2011,60% of goods imported by the United States came from just seven nations.Which of the following nations was NOT one of those seven?

A) Australia
B) South Korea
C) Japan
D) Mexico
E) Canada

Question 40

What does NAFTA stand for?

A) National Authorized Free Trade Agreement
B) North American Free Trade Agreement
C) North American Fair Trade Agreement
D) National Assembly for Free Trading Americas
E) National Authorized Free Trade Assembly

Question 41

Which country has the world's biggest economy?

A) Japan
B) Germany
C) United States
D) China
E) India

Question 42

Which of the following trade agreements is a binding agreement to reduce trade barriers between 18 Asian nations?

A) World Trade Organization
B) Asia Pacific Economic Cooperation
C) North American Free Trade Agreement
D) European Union
E) Central America Free Trade Agreement

Question 43

Trade surplus is:

A) the sum of a nation's total exports and total imports.
B) the difference between a nation's total exports and total imports.
C) when a nation exports more than it imports.
D) when a nation imports more than it exports.
E) when a nation no longer feels it has the need for trade partners.

Question 44

Which two countries buy the most U.S.exports?

A) China and Japan
B) China and Mexico
C) Canada and Mexico
D) Canada and Japan
E) Mexico and Japan

Question 45

If a society's consumption possibilities are identical to its production possibilities,that society has a(n):

A) closed economy.
B) open economy.
C) one-person economy.
D) absolute advantage in both goods and services.
E) free trade policy.

Question 46

Which of the following organizations has over 130 member nations and oversees the General Agreement on Trade and Tariffs (GATT)?

A) United Nations (UN)
B) North American Free Trade Agreement (NAFTA)
C) World Trade Organization (WTO)
D) European Union (EU)
E) Asia Pacific Economic Cooperation (APEC)

Question 47

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
A has a comparative advantage over B in producing a good if:

A) A can produce more of the good than B can in a given time period.
B) A has to trade off more than B does to produce the good.
C) A has a lower opportunity cost of producing the good than does B.
D) A has a higher opportunity cost of producing the good than does B.
E) B can produce more of the good than A can in a given time period.

Question 48

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
If both Amy and Jim produce only cheese,how much cheese can they produce per year?

A) 2,500 pounds
B) 5,000 pounds
C) 7,500 pounds
D) 10,000 pounds
E) 12,500 pounds

Question 49

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
Jim's opportunity cost of producing one pound of cheese is ____________ house(s).

A) 1/500
B) 1/250
C) 1/10
D) 250
E) 500

Question 50

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
A rich nation will trade with a poor nation (and vice versa) because the:

A) rich nation has a comparative advantage in all products.
B) poor nation has an absolute advantage in all products.
C) rich nation has an absolute advantage in all products.
D) poor nation has a comparative advantage in a product.
E) poor nation does not have any comparative advantage.

Question 51

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
By the principle of comparative advantage,Amy should specialize in producing:

A) both cheese and houses.
B) cheese.
C) houses.
D) neither cheese nor houses.
E) a little of both goods.

Question 52

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
Florida's nice beaches and subtropical climate give the state ___________ in tourism.

A) a comparative advantage
B) specialization
C) a trade benefit
D) higher income than all other states
E) self-sufficiency

Question 53

Use the following scenario to answer the next four questions:
Esther and Albert produce hamburgers and hot dogs. Esther can produce six hamburgers per hour or four hot dogs per hour. Albert can produce three hamburgers per hour or one hot dog per hour.
Based on the scenario,Albert's opportunity cost of one hamburger is:

A) 1/3 hot dog.
B) 1 hot dog.
C) 6 hot dogs.
D) 4 hot dogs.
E) 8 hot dogs.

Question 54

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
Which country's consumers will benefit from the free trade agreement?

A) neither
B) Canada
C) both
D) Mexico
E) not enough information to determine

Question 55

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
According to the principle of comparative advantage,trade between two countries will benefit:

A) neither country.
B) the country with lower production costs.
C) the country with higher production costs.
D) both countries.
E) all workers.

Question 56

Use the following scenario to answer the next four questions:
Esther and Albert produce hamburgers and hot dogs. Esther can produce six hamburgers per hour or four hot dogs per hour. Albert can produce three hamburgers per hour or one hot dog per hour.
Based on the scenario,Esther's opportunity cost of one hot dog is:

A) 3 hamburgers.
B) 1 1/2 hamburgers.
C) 6 hamburgers.
D) 4 hamburgers.
E) 8 hamburgers.

Question 57

Use the following scenario to answer the next four questions:
Esther and Albert produce hamburgers and hot dogs. Esther can produce six hamburgers per hour or four hot dogs per hour. Albert can produce three hamburgers per hour or one hot dog per hour.
Based on the scenario,Albert's opportunity cost of one hot dog is:

A) 3 hamburgers.
B) 1 1/2 hamburgers.
C) 6 hamburgers.
D) 4 hamburgers.
E) 8 hamburgers.

Question 58

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
In general,a nation can enjoy a higher standard of living by ___________ than by being self-sufficient.

A) increasing its versatility
B) avoiding trade with other nations
C) specializing and trading
D) taxing imported goods
E) producing on the PPF curve

Question 59

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
Amy has a comparative advantage in the production of ___________,and Jim has a comparative advantage in the production of _____________.

A) houses; houses
B) houses; cheese
C) cheese; houses
D) both goods; houses
E) both goods; cheese

Question 60

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
Jim's opportunity cost of producing one house is _____________ pound(s) of cheese.

A) 1/250
B) 1/20
C) 20
D) 250
E) 500

Question 61

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
A society could achieve a higher level of productivity if:

A) each person in the society is a jack-of-all-trades.
B) it takes advantage of each individual's comparative advantage.
C) it does not trade with other nations.
D) it does not tax imported goods.
E) it does not limit exports.

Question 62

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
Amy's opportunity cost of producing one house is ____________ pound(s) of cheese.

A) 1/250
B) 1/20
C) 20
D) 250
E) 500

Question 63

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
Which country benefits from this free trade agreement?

A) Canada
B) Mexico
C) neither of them
D) both of them
E) not enough information to determine

Question 64

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
Amy's opportunity cost of producing one pound of cheese is _____________ house(s).

A) 1/250
B) 1/20
C) 20
D) 250
E) 500

Question 65

Use the following scenario to answer the next four questions:
Esther and Albert produce hamburgers and hot dogs. Esther can produce six hamburgers per hour or four hot dogs per hour. Albert can produce three hamburgers per hour or one hot dog per hour.
Based on the scenario,Esther's opportunity cost of one hamburger is:

A) 2/3 hot dog.
B) 1 hot dog.
C) 6 hot dogs.
D) 4 hot dogs.
E) 8 hot dogs.

Question 66

Use the following scenario to answer the next two questions:
Suppose that Canada, an industrialized nation, and Mexico, a developing nation, both produce clothes and cars. The real wage in Mexico is lower than in Canada. The countries have a free trade agreement. Each nation will find a comparative advantage.
An individual or country that has a comparative advantage in the production of one good:

A) may or may not have an absolute advantage in the good's production.
B) must not have an absolute advantage in the production of the other good.
C) must not have an absolute advantage in the good's production.
D) must have an absolute advantage in the good's production.
E) must not have a specific advantage in the good's production.

Question 67

Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario,which of the following is true?

A) Pete has an absolute advantage in producing cars but not trucks.
B) Pete has an absolute advantage in producing trucks but not cars.
C) Pete has an absolute advantage in producing both goods.
D) Pete has an absolute advantage in producing neither good.
E) Karl has a comparative advantage in producing both goods.

Question 68

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
Based on the scenario,Dirk's opportunity cost of one football is:

A) 3/4 basketball.
B) 1 1/3 basketballs.
C) 3 basketballs.
D) 4 basketballs.
E) 6 basketballs.

Question 69

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
Based on the scenario,Rosa's opportunity cost of one basketball is:

A) 1/3 football.
B) 1 football.
C) 6 footballs.
D) 4 footballs.
E) 8 footballs.

Question 70

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
Based on the scenario,which of the following is true?

A) Dirk has an absolute advantage in producing basketballs but not footballs.
B) Dirk has an absolute advantage in producing footballs but not basketballs.
C) Dirk has an absolute advantage in producing both goods.
D) Dirk has an absolute advantage in producing neither good.
E) Rosa has a comparative advantage in producing both goods.

Question 71

Use the following scenario to answer the next eight questions:
An economy has two workers, Smith and Ricardo. Every day they work, Smith can produce 4 computers or 16 smartphones, and Ricardo can produce 6 computers or 12 smartphones.
If Smith and Ricardo spend one-half of their time producing computers and the other half of their time producing smartphones,what will be the total output per day?

A) 4 computers and 12 smartphones
B) 5 computers and 14 smartphones
C) 6 computers and 16 smartphones
D) 8 computers and 22 smartphones
E) 10 computers and 28 smartphones

Question 72

Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario,Karl's opportunity cost of one car is:

A) 1/4 truck.
B) 1/2 truck.
C) 2 trucks.
D) 4 trucks.
E) 6 trucks.

Question 73

Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario,Karl's opportunity cost of one truck is:

A) 4 cars.
B) 1 1/2 cars.
C) 2 cars.
D) 3 cars.
E) 8 cars.

Question 74

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
Based on the scenario,which of the following is true?

A) Rosa has a comparative advantage in producing basketballs but not footballs.
B) Rosa has a comparative advantage in producing footballs but not basketballs.
C) Rosa has a comparative advantage in producing both goods.
D) Rosa has a comparative advantage in producing neither good.
E) Rosa does not have any absolute advantage.

Question 75

Use the following scenario to answer the next ten questions:
Amy can produce either 5,000 pounds of cheese or 20 houses per year. Jim can produce either 5,000 pounds of cheese or 10 houses per year.
If this economy produces more than 20 houses per year,the opportunity cost of a house will ____________ because _____________.

A) decrease; production will be specialized
B) increase; an input with a higher opportunity cost must be used
C) decrease; inputs will be obtained at lower cost
D) increase; all gains from trade have already been exploited
E) remain the same; Amy and Jim produce in constant ratios regardless of level of output

Question 76

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
Based on the scenario,Dirk's opportunity cost of one basketball is:

A) 1 1/3 footballs.
B) 1 football.
C) 3/4 football.
D) 4 footballs.
E) 3 footballs.

Question 77

Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario,Pete's opportunity cost of one truck is:

A) 3/4 car.
B) 1 1/3 cars.
C) 3 cars.
D) 4 cars.
E) 6 cars.

Question 78

Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario,which of the following is true?

A) Karl has a comparative advantage in producing cars but not trucks.
B) Karl has a comparative advantage in producing trucks but not cars.
C) Karl has a comparative advantage in producing both goods.
D) Karl has a comparative advantage in producing neither good.
E) Karl does not have any absolute advantage.

Question 79

Use the following scenario to answer the next eight questions:
Rosa and Dirk produce basketballs and footballs. Rosa can produce six basketballs per hour or two footballs per hour. Dirk can produce three basketballs per hour or four footballs per hour.
Based on the scenario,which of the following is true?

A) Rosa has an absolute advantage in producing basketballs but not footballs.
B) Rosa has an absolute advantage in producing footballs but not basketballs.
C) Rosa has an absolute advantage in producing both goods.
D) Rosa has an absolute advantage in producing neither good.
E) Rosa does not have any comparative advantage.

Question 80

Use the following scenario to answer the next eight questions:
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
Based on the scenario,which of the following is true?

A) Karl has both an absolute and a comparative advantage in car production.
B) Karl has both an absolute and a comparative advantage in truck production.
C) Karl has neither an absolute nor a comparative advantage in car production.
D) Karl has neither an absolute nor a comparative advantage in truck production.
E) Pete has both an absolute and a comparative advantage in truck production.