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Which organization meets regularly to establish rules and settle disputes related to international trade?


A) the United Nations Commission on Trade Law
B) the United Nations Conference on Trade and Development
C) the World Trade Organization
D) the World Economic Forum

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

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The United States' most important trading partner quantitatively is


A) China.
B) Canada.
C) Mexico.
D) Japan.

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

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Economists who criticize trade adjustment assistance argue that


A) it only benefits a small fraction of all unemployed workers.
B) money spent on the program overstimulates aggregate demand and threatens to cause inflation.
C) benefits are too low to provide unemployed workers with a livable wage.
D) it distorts patterns of foreign trade, reducing the gains from trade.

E) None of the above
F) B) and D)

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Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will A) export all of the product. B) import all of the product. C) import some of the product and produce some of the product domestically. D) neither export nor import the product. Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will


A) export all of the product.
B) import all of the product.
C) import some of the product and produce some of the product domestically.
D) neither export nor import the product.

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

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                   Germany Production Possibilities                            (Production Alternatives)   Product ABCDEF Autos 048121620 Chemicals 4032241680                        U.S. Production Possibilities                            (Production Alternatives)   Product ABCDEF Autos 03691215 Chemicals 60483624120\begin{array}{l}{ ~~~~~~~~~~~~~~~~~~\text { Germany Production Possibilities } } \\{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \\\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Product } & A & B & C & D & E & F \\\hline \text { Autos } & 0 & 4 & 8 & 12 & 16 & 20 \\\hline \text { Chemicals } & 40 & 32 & 24 & 16 & 8 & 0 \\\hline\end{array}\\\\{ ~~~~~~~~~~~~~~~~~~~~~~~\text { U.S. Production Possibilities } } \\{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \\\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Product } & A & B & C & D & E & F \\\hline \text { Autos } & 0 & 3 & 6 & 9 & 12 & 15 \\\hline \text { Chemicals } & 60 & 48 & 36 & 24 & 12 & 0 \\\hline\end{array}\end{array} Refer to the accompanying production possibilities tables. Data are in millions of units. If Germany and the United States engage in trade, the mutually bene?cial terms of trade will be between


A) 3 and 4 units of autos for 1 unit of chemicals.
B) 2 and 4 units of autos for 1 unit of chemicals.
C) 2 and 4 units of chemicals for 1 unit of autos.
D) 0.33 and 0.5 units of autos for 1 unit of chemicals.

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

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A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that


A) labor costs and product prices are not related.
B) there is no discernible relationship between wage rates and labor productivity.
C) wage rates and labor productivity are directly related.
D) wage rates and labor productivity are inversely related.

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

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Excise taxes on imported goods that help shield domestic producers of the good are called


A) protective tariffs.
B) import quotas.
C) revenue tariffs.
D) voluntary export restrictions.

E) B) and D)
F) C) and D)

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International trade based on the principle of comparative advantage creates a more efficient allocation of world economic resources.

A) True
B) False

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Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of Trade) A) is the absolute value of the slope of line AB. B) is the absolute value of the slope of line AC. C) could lie anywhere between the absolute value of the slopes of lines AB and AC. D) cannot be determined on the basis of this information. Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of Trade)


A) is the absolute value of the slope of line AB.
B) is the absolute value of the slope of line AC.
C) could lie anywhere between the absolute value of the slopes of lines AB and AC.
D) cannot be determined on the basis of this information.

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

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Economists generally view offshoring as detrimental to the U.S. economy.

A) True
B) False

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The World Trade Organization (WTO) is an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

A) True
B) False

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In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2018?


A) 6 percent
B) 12 percent
C) 24 percent
D) 42 percent

E) None of the above
F) B) and D)

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One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

A) True
B) False

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In comparing a tariff and an import quota, we find that


A) the tariff and quota both generate the same amount of revenue for the U.S. Treasury.
B) the tariff generates revenue for the U.S. Treasury, but the quota does not.
C) the quota generates revenue for the U.S. Treasury, but the tariff does not.
D) neither the tariff nor the quota generates revenue for the U.S. Treasury.

E) B) and D)
F) C) and D)

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The so-called eurozone refers to


A) all members of the European Union.
B) the EU nations that have adopted a common currency.
C) the combined Eastern and Western Europe.
D) nations in Europe where the U.S. has military bases.

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

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The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now


A) lower in price because import competition has risen.
B) higher in price because import competition has risen.
C) higher in price because import competition has declined.
D) lower in price because import competition has declined.

E) B) and D)
F) B) and C)

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                   Germany Production Possibilities                            (Production Alternatives)   Product ABCDEF Autos 048121620 Chemicals 4032241680                        U.S. Production Possibilities                            (Production Alternatives)   Product ABCDEF Autos 03691215 Chemicals 60483624120\begin{array}{l}{ ~~~~~~~~~~~~~~~~~~\text { Germany Production Possibilities } } \\{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \\\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Product } & A & B & C & D & E & F \\\hline \text { Autos } & 0 & 4 & 8 & 12 & 16 & 20 \\\hline \text { Chemicals } & 40 & 32 & 24 & 16 & 8 & 0 \\\hline\end{array}\\\\{ ~~~~~~~~~~~~~~~~~~~~~~~\text { U.S. Production Possibilities } } \\{ ~~~~~~~~~~~~~~~~~~~~~~~~~~\text { (Production Alternatives) } } \\\begin{array} { | l | c | c | c | c | c | c | } \hline \text { Product } & A & B & C & D & E & F \\\hline \text { Autos } & 0 & 3 & 6 & 9 & 12 & 15 \\\hline \text { Chemicals } & 60 & 48 & 36 & 24 & 12 & 0 \\\hline\end{array}\end{array} The data in the accompanying production possibilities tables (in millions of units) suggest that production in


A) Germany is subject to increasing opportunity costs and in the United States to constant opportunity costs.
B) the United States is subject to increasing opportunity costs and in Germany to constant opportunity costs.
C) both Germany and the United States is subject to constant opportunity costs.
D) both Germany and the United States is subject to increasing opportunity costs.

E) C) and D)
F) None of the above

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Employing all its available resources, Nation Alpha can produce either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of Clothing.


A) Nation Alpha has a comparative advantage in producing clothing.
B) Nation Beta has a comparative advantage in producing chemicals.
C) Nation Alpha has a comparative advantage in producing chemicals.
D) Nation Beta is the high-cost producer of clothing.

E) B) and C)
F) B) and D)

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The production possibilities curves suggest that rev: 09_17_2020_QC_CS-228777 A) West Mudville should specialize in, and export, baseball bats. B) West Mudville should specialize in, and export, both baseballs and baseball bats. C) East Mudville should specialize in, and export, baseball bats. D) workers will try to immigrate from West Mudville to East Mudville. The production possibilities curves suggest that rev: 09_17_2020_QC_CS-228777


A) West Mudville should specialize in, and export, baseball bats.
B) West Mudville should specialize in, and export, both baseballs and baseball bats.
C) East Mudville should specialize in, and export, baseball bats.
D) workers will try to immigrate from West Mudville to East Mudville.

E) None of the above
F) All of the above

Correct Answer

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