Question 1

Which of the following statements is false?

Accepted Answer

A)   Not all individuals in both countries are made better off as a result of international trade.
B)   Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall.
C)   Although some individuals may not be made better off as a result of international trade, both countries may be made better off overall.
D)   Each country as a whole is made better off as a result of international trade, but individuals within each country may be made worse off.E) B) and C)
F) B) and D)

Question 2

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.All of the following are reasons for this except

Accepted Answer

A)   not all goods and services are traded internationally.
B)   some countries have more resources than other countries.
C)   tastes for many traded goods are different in many countries because of globalization.
D)   production of most goods involves increasing opportunity costs.E) C) and D)
F) B) and D)

Question 3

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?

Accepted Answer

A)   a requirement that the employees of domestic firms that engage in foreign trade pay income taxes
B)   a requirement that imports meet health and safety requirements
C)   restrictions on imports for national security reasons
D)   a requirement that the U.S. government buy military uniforms only from U.S. manufacturersE) None of the above
F) C) and D)

Question 4

Free trade refers to trade between countries

Accepted Answer

A)   that is without shipping costs.
B)   that is licensed by both governments.
C)   that is without restrictions.
D)   of products which are free to low-income consumers.E) C) and D)
F) A) and C)

Question 5

A voluntary export restraint is an agreement negotiated by two countries that places ________ that can be imported by one country from another country.

Accepted Answer

A)   a tax on goods
B)   a minimum quantity of a good
C)   quality standards on goods
D)   a numerical limit on the quantity of a goodE) C) and D)
F) A) and B)

Question 6

For the U.S.steel industry,a "Buy American" provision in the 2009 stimulus bill would create gains for all of the following except

Accepted Answer

A)   U.S. steel companies.
B)   U.S. steel workers.
C)   foreign steel companies still able to sell in the United States.
D)   U.S. taxpayers.E) All of the above
F) B) and C) D

Question 7

Economists believe the most persuasive argument for protectionism is to

Accepted Answer

A)   save jobs.
B)   protect high wages.
C)   protect national security.
D)   protect infant industries.E) B) and C)
F) A) and B)

Question 8

The terms of trade refers to

Accepted Answer

A)   the rules and regulations that countries must adhere to when trading.
B)   the ratio at which a country can trade its exports for imports from other countries.
C)   the role of the government in overseeing international trade.
D)   a legal document that specifies the trade quantities agreed to by two countries.E) A) and B)
F) None of the above

Question 9

In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.

Accepted Answer

A)   higher; higher
B)   higher; lower
C)   lower; higher
D)   lower; lowerE) A) and B)
F) None of the above

Question 10

Which of the following is an example of a trade restriction?

Accepted Answer

A)   Japan places a tax on all Korean automobiles.
B)   Domestic wine is more expensive than wine imported from Chile.
C)   The United States, Canada, and Mexico sign the NAFTA agreement.
D)   Consumers prefer German beer to domestic beer.E) A) and D)
F) All of the above

Question 11

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Accepted Answer

A)   marginal
B)   explicit
C)   opportunity
D)   implicitE) None of the above
F) All of the above C

Question 12

The first discussion of comparative advantage appears in a book written by

Accepted Answer

A)   Adam Smith.
B)   Paul Samuelson.
C)   David Portugal.
D)   David Ricardo.E) C) and D)
F) None of the above

Question 13

Which of the following statements is false?

Accepted Answer

A)   Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs.
B)   Each year the United States exports about 50 percent of its wheat crop and 20 percent of its corn crop.
C)   Most of the leading exporting countries are large, high-income countries.
D)   Not all sectors of the U.S. economy are affected equally by international trade.E) A) and C)
F) All of the above

Question 14

The United States has developed a comparative advantage in digital computers,airliners and many prescription drugs.The source of its comparative advantage in these products is

Accepted Answer

A)   a favorable climate.
B)   technology.
C)   abundant supplies of natural resources.
D)   a strong central government.E) A) and C)
F) C) and D)

Question 15

All of the following are sources of comparative advantage except

Accepted Answer

A)   climate and natural resources.
B)   relative abundance of labor and capital.
C)   a strong foreign currency exchange rate.
D)   technology.E) B) and D)
F) C) and D)

Question 16

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would be imported?

Accepted Answer

A)   16 million
B)   28 million
C)   30 million
D)   40 millionE) B) and C)
F) A) and D)

Question 17

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Accepted Answer

A)   both a U.S. and an French import.
B)   a U.S. import and an French export.
C)   a U.S. export and an French import.
D)   neither an export nor an import for either country.E) C) and D)
F) All of the above

Question 18

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Accepted Answer

A) True 
 B)False

Question 19

Figure 9-3
  
Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota.
-Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Accepted Answer

A)   Domestic consumption equals 28 million pounds of which 18 million pounds are imports.
B)   Domestic consumption equals 40 million pounds of which 22 million pounds are imports.
C)   Domestic consumption equals 34 million pounds of which 16 million pounds are imports.
D)   Domestic consumption equals 34 million pounds of which 18 million pounds are imports.E) All of the above
F) B) and C)

Question 20

________ is the ability to produce more of a good or service than competitors when using the same amount of resources.

Accepted Answer

A)   Absolute advantage
B)   Comparative advantage
C)   Trade superiority
D)   Trade autarkyE) A) and B)
F) A) and C) A

Exam 7: Comparative Advantage and the Gains From International Trade

Which of the following statements is false?

Correct AnswerverifiedShow Answer

In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.All of the following are reasons for this except

Correct AnswerverifiedShow Answer

Governments sometimes erect barriers to trade other than tariffs and quotas.Which of the following is not an example of this type of trade barrier?

Correct AnswerverifiedShow Answer

Free trade refers to trade between countries

Correct AnswerverifiedShow Answer

A voluntary export restraint is an agreement negotiated by two countries that places ________ that can be imported by one country from another country.

Correct AnswerverifiedShow Answer

For the U.S.steel industry,a "Buy American" provision in the 2009 stimulus bill would create gains for all of the following except

Correct AnswerverifiedD

Economists believe the most persuasive argument for protectionism is to

Correct AnswerverifiedShow Answer

The terms of trade refers to

Correct AnswerverifiedShow Answer

In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.

Correct AnswerverifiedShow Answer

Which of the following is an example of a trade restriction?

Correct AnswerverifiedShow Answer

If the ________ cost of production for two goods is different between two countries then mutually beneficial trade is possible.

Correct AnswerverifiedC

The first discussion of comparative advantage appears in a book written by

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

The United States has developed a comparative advantage in digital computers,airliners and many prescription drugs.The source of its comparative advantage in these products is

Correct AnswerverifiedShow Answer

All of the following are sources of comparative advantage except

Correct AnswerverifiedShow Answer

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.If there was no quota,how many pounds of peanuts would be imported?

Correct AnswerverifiedShow Answer

When Sophie,a French citizen,purchases a Dell computer in Paris that was produced in Texas,the purchase is

Correct AnswerverifiedShow Answer

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Correct AnswerverifiedShow Answer

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. -Refer to Figure 9-3.With a quota in place,what is the quantity consumed in the domestic market and what portion of this is supplied by imports?

Correct AnswerverifiedShow Answer

________ is the ability to produce more of a good or service than competitors when using the same amount of resources.

Correct AnswerverifiedA

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D

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In the United States during the Great Depression,tariffs were than they were following World War II,and than they are today.

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C

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A