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Exam 20: International Trade

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Question 121

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Other things equal, a tariff is

A) superior to an import quota for Americans because a tariff increases the profits of foreign producers.
B) inferior to an import quota for Americans because a tariff increases the profits of domestic producers.
C) superior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury.
D) inferior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury.

E) All of the above
F) A) and B)

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Question 122

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What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

A) Trade barriers protect the development of new technology, but the new technology eliminates jobs.
B) Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment.
C) The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment.
D) Major American firms have produced many products in other countries and would not hire more domestic labor when trade barriers are imposed.

E) A) and C)
F) A) and B)

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Question 123

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If two nations specialize according to their respective comparative advantage, and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

How can supply and demand analysis be used to explain the equilibrium price and quantity of exports and imports for aluminum when there is trade between two nations (e.g., the United States and Canada)?

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves For the two countries are shown in the graphs. The assumption made about the domestic production Opportunity costs in both countries is that they are

In 2018, the United States became a net exporter of oil.

In a two-nation, two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Which is a valid counterargument to the infant industry argument for protective tariffs?

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

Which of the following is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Which of the following was not one of the principles on which the General Agreement on Tariffs and Trade (GATT) was established?

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity Demanded } \\\text { Domestically }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity Supplied } \\\text { Domestically }\end{array} \\\hline 1,400 & \$ 10 & 2,200 \\\hline 1,600 & 9 & 2,000 \\\hline 1,800 & 8 & 1,800 \\\hline 2,000 & 7 & 1,600 \\\hline 2,200 & 6 & 1,400 \\\hline 2,400 & 5 & 1,200 \\\hline\end{array}$ Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and an import quota of 400 units were imposed on the product, then the Equilibrium price in Econland would be

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

What is the principle of comparative advantage?

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50 percent of its GDP.

The World Trade Organization was established by the United States to force other nations to open their markets to U.S. goods.

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

$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity Demanded } \\\text { Domestically }\end{array} & \text { Price } & \begin{array} { c } \text { Quantity Supplied } \\\text { Domestically }\end{array} \\\hline 1,400 & \$ 10 & 2,200 \\\hline 1,600 & 9 & 2,000 \\\hline 1,800 & 8 & 1,800 \\\hline 2,000 & 7 & 1,600 \\\hline 2,200 & 6 & 1,400 \\\hline 2,400 & 5 & 1,200 \\\hline\end{array}$ Refer to the accompanying table for a certain product's market in Econland. If the world price of the product were $6 and a tariff of $1 per unit were applied to imports of the product, then the tariff Would generate government revenues of

Countries engaged in international trade specialize in production based on

${ \text { Alpha's production possibilities } }$ $\begin{array}{l}\begin{array} { | l | c | c | c | c | c | } \hline & A & B & C & D & E \\\hline \text { Fish (Tons) } & 80 & 60 & 40 & 20 & 0 \\\hline \text { Chips (Tons) } & 0 & 5 & 10 & 15 & 20 \\\hline\end{array}\\\\\\{ \text { Beta's production possibilities } } \\\begin{array} { | l | c | c | c | c | c | } \hline & A & B & C & D & E \\\hline \text { Fish (Tons) } & 240 & 180 & 120 & 60 & 0 \\\hline \text { Chips (Tons) } & 0 & 10 & 20 & 30 & 40 \\\hline\end{array}\end{array}$ The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size. Beta