Question 1

Which one of the following would best describe a protective tariff?

Accepted Answer

A)  an excise tax that is usually applied to products which are not produced domestically in order to raise revenues for government
B)  an excise tax that is designed to put foreign producers at a competitive disadvantage in selling in domestic markets
C)  a specification of the maximum amount of a product that may be imported in any period of time which is often used to protect domestic producers of a product
D)  such activities as restricting the issuance of licenses for imported products or setting unreasonable standards for quality or safety in order to restrict imports and protect domestic marketsE) C) and D)
F) All of the above

Question 2

When a tariff on a product is removed, it will result in a(n) :

Accepted Answer

A)  decrease in the supply of a product and a higher price.
B)  increase in the supply of the product and a higher price.
C)  increase in the supply of the product and a lower price.
D)  decrease in the supply of the product and a lower price.E) A) and D)
F) None of the above

Question 3

Regional free-trade zones refers to a:

Accepted Answer

A)  group of industries that have common commodity and trade rules.
B)  group of countries which have liberalized the movement of Labour and not capital.
C)  group of countries that impose trade restrictions against each other.
D)  group of countries that seek to reduce tariffs, increase economic interests, and establish trade rules.E) B) and C)
F) None of the above

Question 4

The best example of a land-intensive commodity is:

Accepted Answer

A)  cameras.
B)  radios.
C)  meat.
D)  chemicals.E) B) and C)
F) A) and B)

Question 5

When a tariff or quota on a product is removed, the action:

Accepted Answer

A)  benefits producers in the protected industries.
B)  benefits consumers of the product.
C)  benefits the government.
D)  hurts nations exporting the product.E) A) and B)
F) B) and D)

Question 6

Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

Accepted Answer

A)  domestic supply curves for two countries.
B)  import demand curves for two countries.
C)  domestic demand curves for two countries.
D)  export supply curves for two countries.E) A) and D)
F) C) and D)

Question 7

The cheap foreign labour argument suggests that:

Accepted Answer

A)  trade barriers between rich and poor countries would definitely create a negative impact on the Canadian economy.
B)  free trade between rich and poor countries would definitely create a positive impact on the Canadian economy.
C)  it is not mutually beneficial for rich and poor countries to trade with one another.
D)  it is mutually beneficial for rich and poor countries to trade with one another.E) A) and B)
F) C) and D)

Question 8

The major beneficiaries of a tariff on a product are the:

Accepted Answer

A)  domestic producers of the product.
B)  domestic consumers of the product.
C)  foreign consumers of the product.
D)  foreign producers of the product.E) C) and D)
F) B) and C)

Question 9

Which 1993 economic agreement established a major free-trade zone in the western hemisphere?

Accepted Answer

A)  the formation of the European Union
B)  the North American Free Trade Agreement
C)  the Reciprocal Trade Agreements Act
D)  the Doha Development AgendaE) B) and D)
F) C) and D)

Question 10

If a nation has a comparative advantage in the production of X, this means the nation:

Accepted Answer

A)  cannot benefit by producing and trading this product.
B)  must give up less of other goods than other nations in producing a unit of X.
C)  has a production possibilities curve identical to those of other nations.
D)  is not subject to increasing opportunity costs.E) B) and C)
F) A) and D)

Question 11

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1.  Refer to the above data.With a $1 per unit tariff, prices (revenue per unit)  received by domestic and foreign producers respectively will be:

Accepted Answer

A)  $2 and $1.
B)  $1 and $2.
C)  $2 and $2.
D)  $3 and $2.E) A) and B)
F) B) and C)

Question 12

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1.  Refer to the above data.With a $1 per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

Accepted Answer

A)  1 unit and 15 units.
B)  7 units and 4 units.
C)  11 units and 4 units.
D)  indeterminate.E) B) and C)
F) A) and D)

Question 13

Given the following production possibilities schedules, it can be seen that:

Accepted Answer

A)  France has a comparative advantage in producing wine.
B)  Germany can produce more machines than France.
C)  France has a comparative advantage in producing machines.
D)  Germany can produce more of both goods than France.E) A) and B)
F) B) and C)

Question 14

A licensing requirement, or unreasonable standard pertaining to the product quality and safety for a product that is imported into a country, is an example of:

Accepted Answer

A)  protective tariffs.
B)  nontariff barriers.
C)  voluntary export restrictions.
D)  quotas on imported products.E) None of the above
F) C) and D)

Question 15

Which of the following is an example of a labour-intensive commodity?

Accepted Answer

A)  clothing
B)  beer
C)  Aspirin tablets
D)  gasolineE) A) and B)
F) B) and D)

Question 16

The 1993 General Agreement on Tariffs and Trade (GATT) :

Accepted Answer

A)  established the European Union.
B)  is also known as NAFTA.
C)  established new protections for intellectual property (copyrights, patents, and trademarks) .
D)  eliminated all tariffs and quotas worldwide.E) C) and D)
F) A) and C)

Question 17

The long-run effect of tariffs is:

Accepted Answer

A)  an increase in domestic employment.
B)  an increase in export businesses.
C)  a reallocation of domestic workers from export industries to protected domestic industries.
D)  a reallocation of consumer spending to imported products over domestically-produced products.E) A) and B)
F) C) and D)

Question 18

Differences in production efficiencies among nations in producing a particular good result from:

Accepted Answer

A)  different amounts of skilled labour.
B)  different climatic conditions.
C)  different levels of technological knowledge.
D)  all of the above.E) B) and C)
F) All of the above

Question 19

Assuming labour forces of equal size, the production possibilities curves below suggest that West Mudsville has:

Accepted Answer

A)  lower wages than workers in East Mudsville before trade but equal wages after trade.
B)  absolute advantage over East Mudsville for both baseballs and, baseball hats.
C)  no advantage over East Mudsville.
D)  advantage of East Mudsville for baseballs and not baseball hats.E) C) and D)
F) A) and D)

Question 20

The data in the tables below, show that production in:

Accepted Answer

A)  Germany is subject to increasing domestic opportunity costs and the U.S.to constant domestic opportunity costs.
B)  the U.S.is subject to increasing domestic opportunity costs and Germany to constant domestic opportunity costs.
C)  both Germany and the U.S.are subject to constant domestic opportunity costs.
D)  both Germany and the U.S.are subject to increasing domestic opportunity costs.E) B) and C)
F) A) and D)

Exam 17: Part B: International Trade

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. Refer to the above data.With a $1 per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

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The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. Refer to the above data.With a $1 per unit tariff, prices (revenue per unit) received by domestic and foreign producers respectively will be:

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Assuming labour forces of equal size, the production possibilities curves below suggest that West Mudsville has:

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A licensing requirement, or unreasonable standard pertaining to the product quality and safety for a product that is imported into a country, is an example of:

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Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

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The data in the tables below, show that production in:

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When a tariff on a product is removed, it will result in a(n) :

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Regional free-trade zones refers to a:

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When a tariff or quota on a product is removed, the action:

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The best example of a land-intensive commodity is:

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Which one of the following would best describe a protective tariff?

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The long-run effect of tariffs is:

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Given the following production possibilities schedules, it can be seen that:

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Differences in production efficiencies among nations in producing a particular good result from:

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Which of the following is an example of a labour-intensive commodity?

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The major beneficiaries of a tariff on a product are the:

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If a nation has a comparative advantage in the production of X, this means the nation:

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The 1993 General Agreement on Tariffs and Trade (GATT) :

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Which 1993 economic agreement established a major free-trade zone in the western hemisphere?

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The cheap foreign labour argument suggests that:

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