Question 1

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60 Y.Comparable figures for nation Beta are 60 X
and 40 Y.Beta would prefer terms of trade at, or close to, 1X = 1½Y.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following products is a leading import of the United States?

Accepted Answer

A)  grains
B)  aircraft
C)  automobiles
D)  generating equipmentE) None of the above
F) C) and D)

Question 3

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

Accepted Answer

A)  the increased domestic employment argument
B)  the cheap foreign labor argument
C)  the diversification-for-stability argument
D)  the infant industry argumentE) A) and B)
F) All of the above

Question 4

In terms of absolute dollar volume, the top 3 leaders in world exports are

Accepted Answer

A)  Japan, China, and the European Union.
B)  the United States, England, and Canada.
C)  Germany, England, and the United States.
D)  China, the United States, and Germany.E) C) and D)
F) A) and D)

Question 5

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Accepted Answer

A)  higher combined output.
B)  higher consumption and standard of living.
C)  rising total employment.
D)  consuming combinations of products that are outside their PPCs.E) B) and D)
F) A) and D)

Question 6

(Last Word)  Frederic Bastiat's "Petition of the Candlemakers" most directly refutes which of the following arguments for protectionism?

Accepted Answer

A)  increased domestic employment argument
B)  infant industry argument
C)  cheap foreign labor argument
D)  diversification-for-stability argumentE) All of the above
F) C) and D)

Question 7

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.Topic: The Economic Basis for Trade

Accepted Answer

A) True 
 B)False

Question 8

An excise tax that is applied to an imported product that is not at all produced domestically is called a(n)

Accepted Answer

A)  protective tariff.
B)  revenue tariff.
C)  import quota.
D)  nontariff barrier.E) B) and C)
F) A) and C)

Question 9

Which of the following best describes economists' general assessment of the impacts of offshoring?

Accepted Answer

A)  Offshoring has an overall negative impact on the U.S.economy because of the significant domestic job losses it causes.
B)  Offshoring benefits the U.S.economy by promoting greater specialization and exchange of goods and services based on comparative advantage.
C)  Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers.
D)  Job losses from offshoring are magnified by job losses in complementary industries.E) A) and D)
F) B) and C)

Question 10

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Accepted Answer

A)  a decrease in consumer prices
B)  a decrease in the tariff rates of foreign nations
C)  an increase in the number of jobs
D)  an increase in the possibility of retaliatory tariffsE) A) and D)
F) B) and D)

Question 11

The principal concept behind comparative advantage is that a nation should

Accepted Answer

A)  maximize its volume of trade with other nations.
B)  use tariffs and quotas to protect the production of vital products for the nation.
C)  concentrate production on those products for which it has the lowest domestic opportunity cost.
D)  strive to be self-sufficient in the production of essential goods and services.E) A) and D)
F) B) and D)

Question 12

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  different endowments of fertile soil.
B)  different amounts of skilled labor.
C)  different levels of technological knowledge.
D)  all of these.E) All of the above
F) A) and C)

Question 14

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Accepted Answer

A)  specialization in production
B)  nationalization of industries
C)  regulation of production and trade
D)  spreading out of resources in more industriesE) B) and C)
F) All of the above

Question 15

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel.In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel.In this case,

Accepted Answer

A)  France has a comparative advantage in the production of chemicals.
B)  Germany has a comparative advantage in the production of chemicals.
C)  France has an absolute advantage in the production of chemicals.
D)  Germany has an absolute advantage in the production of chemicals.E) B) and C)
F) None of the above

Question 16

Barriers to free trade impair efficiency in the international allocation of resources.

Accepted Answer

A) True 
 B)False

Question 17

(Last Word)  Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Accepted Answer

A)  fire.
B)  the sun.
C)  other European countries.
D)  invention of the electric light.E) None of the above
F) All of the above

Question 18

Countries engaged in international trade specialize in production based on

Accepted Answer

A)  relative levels of GDP.
B)  comparative advantage.
C)  relative exchange rates.
D)  relative inflation rates.E) A) and D)
F) B) and C)

Question 19

Critics of the World Trade Organization (WTO)  say that liberalized world trade does all of the following except

Accepted Answer

A)  produce environmental degradation.
B)  allow producers to circumvent labor protections such as workplace safety, child labor restrictions, and collective bargaining rights.
C)  help developing nations escape from poverty.
D)  promote the interests of multinational corporations.E) B) and C)
F) B) and D)

Question 20

NAFTA is a trade agreement that covers trade between the United States and the European Union.

Accepted Answer

A) True 
 B)False

Exam 40: International Trade

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Correct AnswerverifiedShow Answer

An excise tax that is applied to an imported product that is not at all produced domestically is called a(n)

Correct AnswerverifiedShow Answer

Countries engaged in international trade specialize in production based on

Correct AnswerverifiedShow Answer

Offshoring benefits some firms by reducing their producing costs and maintaining their global competitiveness.

Correct AnswerverifiedShow Answer

The principal concept behind comparative advantage is that a nation should

Correct AnswerverifiedShow Answer

Critics of the World Trade Organization (WTO) say that liberalized world trade does all of the following except

Correct AnswerverifiedShow Answer

Which of the following best describes economists' general assessment of the impacts of offshoring?

Correct AnswerverifiedShow Answer

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary?

Correct AnswerverifiedShow Answer

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel.In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel.In this case,

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

Correct AnswerverifiedShow Answer

In terms of absolute dollar volume, the top 3 leaders in world exports are

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Which of the following products is a leading import of the United States?

Correct AnswerverifiedShow Answer

Specialization and trade based on comparative advantage allow nations to attain the following results, except

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NAFTA is a trade agreement that covers trade between the United States and the European Union.

Correct AnswerverifiedShow Answer

Barriers to free trade impair efficiency in the international allocation of resources.

Correct AnswerverifiedShow Answer

What other economic process needs to accompany international trade, for nations to benefit from such trade?

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Which of the following is a likely result of imposing tariffs to increase domestic employment?

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(Last Word) Frederic Bastiat's "Petition of the Candlemakers" most directly refutes which of the following arguments for protectionism?

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The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.Topic: The Economic Basis for Trade

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Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60 Y.Comparable figures for nation Beta are 60 X and 40 Y.Beta would prefer terms of trade at, or close to, 1X = 1½Y.

Correct AnswerverifiedShow Answer

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