Question 1

In effect, tariffs on imports are

Accepted Answer

A)   special taxes on domestic producers.
B)   subsidies to domestic consumers.
C)   subsidies to foreign producers.
D)   subsidies for domestic producers.E) All of the above
F) C) and D)

Question 2

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) A) and B)
F) None of the above

Question 3

Answer the question on the basis of the accompanying production possibilities tables for two countries, Latalia and Trombonia.   \quad \quad \quad \quad \quad \quad Latalia’s production possibilities 	ext { Latalia&#x27;s production possibilities } Latalia’s production possibilities  
  A  B  C  D  E  Pork (Tons)  43210 Beans (Tons)  05101520\begin{array}{c|c|c|c|c|c} & 	ext { A } & 	ext { B } & 	ext { C } & 	ext { D } & 	ext { E } \\hline 	ext { Pork (Tons)  } & 4 & 3 & 2 & 1 & 0 \\hline 	ext { Beans (Tons)  } & 0 & 5 & 10 & 15 & 20\end{array} Pork (Tons)   Beans (Tons)  ​ A 40​ B 35​ C 210​ D 115​ E 020​​    \quad \quad \quad \quad \quad \quad \quad \quad Trombonia’s production 	ext { Trombonia&#x27;s production } Trombonia’s production  
  \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad possibilities 	ext { possibilities } possibilities  
  A  B  C  D  E  Pork (Tons)  86420 Beans (Tons)  06121824\begin{array}{c|c|c|c|c|c}\hline & 	ext { A } & 	ext { B } & 	ext { C } & 	ext { D } & 	ext { E } \\hline 	ext { Pork (Tons)  } & 8 & 6 & 4 & 2 & 0 \\hline 	ext { Beans (Tons)  } & 0 & 6 & 12 & 18 & 24 \\hline\end{array} Pork (Tons)   Beans (Tons)  ​ A 80​ B 66​ C 412​ D 218​ E 024​​  If these two nations specialize on the basis of comparative advantage,

Accepted Answer

A)   Trombonia will produce beans and Latalia will produce pork.
B)   Trombonia will produce both beans and pork.
C)   Latalia will produce both beans and pork, and Trombonia will produce neither.
D)   Latalia will produce beans, and Trombonia will produce pork. E) B) and C)
F) A) and D)

Question 4

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

Accepted Answer

A) True 
 B)False

Question 5

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities
 ABCDE Tea 1209060300 Pots 0306090120\begin{array}{c|c|c|c|c|c} & \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \\hline 	ext { Tea } & 120 & 90 & 60 & 30 & 0 \\hline 	ext { Pots } & 0 & 30 & 60 & 90 & 120 \\hline\end{array} Tea  Pots ​A1200​B9030​C6060​D3090​E0120​​  Sigma's production possibilities
 ABCDE Tea 403020100 Pots 0306090120\begin{array}{c|c|c|c|c|c} & \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \\hline 	ext { Tea } & 40 & 30 & 20 & 10 & 0 \\hline 	ext { Pots } & 0 & 30 & 60 & 90 & 120 \\hline\end{array} Tea  Pots ​A400​B3030​C2060​D1090​E0120​​  Assume that before specialization and trade, Gamma and Sigma both chose production possibility "C." Now if each specializes according to comparative advantage, the gains from specialization and trade will be

Accepted Answer

A)   40 tons of pots.
B)   20 tons of tea and 20 tons of pots.
C)   20 tons of tea.
D)   40 tons of tea. E) A) and D)
F) B) and C)

Question 6

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

Accepted Answer

A)   the production possibilities curves of any two nations are identical.
B)   a nation's production possibilities and trading possibilities lines coincide.
C)   a nation's trading possibilities line lies to the right of its production possibilities line.
D)   a nation's production possibilities line lies to the right of its trading possibilities line.E) A) and C)
F) A) and D)

Question 7

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) B) and D)

Question 8

Which of the following is not a major achievements of the European Union (EU) ?

Accepted Answer

A)   It abolished tariffs and quotas among its member nations.
B)   It liberalized the movement of capital and labor among its member nations.
C)   It created common policies in agriculture, transportation, and business practices among its members.
D)   It established a common fiscal policy among its member nations.E) C) and D)
F) None of the above

Question 9

If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true about the alleged benefits and adverse effects of trade barriers?

Accepted Answer

A)   The alleged benefits like "saved jobs" are limited to a narrow sector of the economy and clearly seen by the general public, while the adverse effects tend to be obscure and dispersed.
B)   The general public does not have much interest in trade and trade barriers because their effects are very small.
C)   The alleged benefits of trade barriers tend to be spread over the whole economy, while their adverse effects are narrow and concentrated on a small sector.
D)   The U.S. does not really have any significant trade barriers. That's why there is not much debate about them.E) A) and D)
F) A) and B)

Question 11

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.   Ouantity  Ouantity ( Supplied  Demanded  (Domestic)   Price  (Domestic)  12$52104473742111116\begin{array}{|c|c|c|}\hline\text { Ouantity }&&\text { Ouantity }\(\text { Supplied }&&\text { Demanded }\\hline \text { (Domestic)  } & \text { Price } & \text { (Domestic)  } \\hline 12 & \$ 5 & 2 \\hline 10 & 4 & 4 \\hline 7 & 3 & 7 \\hline 4 & 2 & 11 \\hline 1 & 1 & 16 \\hline\end{array} Ouantity ( Supplied  (Domestic)  1210741​ Price $54321​ Ouantity  Demanded  (Domestic)  2471116​​  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 12

Tariffs and import quotas would benefit the following groups, except

Accepted Answer

A)   consumers of the product.
B)   domestic producers of the product.
C)   workers in domestic firms producing the product.
D)   the government of the importing country.E) A) and C)
F) A) and B)

Question 13

In recent years, the United States has

Accepted Answer

A)   exported more services abroad than it has imported.
B)   had a small goods trade surplus with Japan.
C)   had a large goods trade surplus with the rest of the world.
D)   maintained an overall trade surplus (goods and services combined)  with the rest of the world.E) A) and B)
F) A) and C)

Question 14

The term trade deficit refers to a situation where

Accepted Answer

A)   government spending (including transfer payments)  exceeds tax revenues.
B)   a nation's purchases from other nations are less than its sales to other nations.
C)   assets are less than liabilities.
D)   exports are less than imports.E) None of the above
F) A) and C)

Question 15

NAFTA

Accepted Answer

A)   has increased the standard of living in the North African member nations.
B)   benefits workers in the participating nations but hurts consumers by raising prices.
C)   allows completely unrestricted movement of goods, services, and resources between the member nations.
D)   has reduced most trade barriers between Canada, Mexico, and the United States.E) B) and D)
F) C) and D)

Question 16

Which of the following statements is false?

Accepted Answer

A)   In recent years, the United States has had large annual trade deficits in goods and services.
B)   The United States imports some of the same categories of goods as it exports.
C)   China has the largest share of world exports.
D)   As a percentage of GDP, U.S. exports are the highest among the industrially advanced nations.E) A) and C)
F) B) and C)

Question 17

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

Accepted Answer

A)   clothing
B)   wool
C)   sunflower seeds
D)   chemicalsE) B) and D)
F) A) and D)

Question 18

A nation will neither export nor import a specific product when its

Accepted Answer

A)   domestic price equals the world price.
B)   export supply curve lies above its import demand curve.
C)   export supply curve is upsloping.
D)   import demand curve is downsloping.E) A) and D)
F) B) and D)

Question 19

225. In a world with two products, wheat (W)  and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C, and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation

Accepted Answer

A)   Alpha will prevail if world demand for coffee is great relative to its supply.
B)   Alpha will prevail if world demand for wheat is weak relative to its supply.
C)   Beta will prevail if world demand for coffee is great relative to its supply.
D)   Beta will prevail if world demand for wheat is great relative to its supply.E) B) and D)
F) A) and D)

Question 20

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case,

Accepted Answer

A)   Korea has a comparative advantage in the production of wheat.
B)   the United States has a comparative advantage in the production of televisions.
C)   mutual gains from trade can be obtained if the United States imports televisions from Korea and Korea imports wheat from the United States.
D)   mutual gains from trade can be obtained if the United States imports wheat from Korea and Korea imports televisions from the United States.E) None of the above
F) A) and B)

Exam 26: International Trade

NAFTA

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

225. In a world with two products, wheat (W) and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C, and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation

Correct Answer
verified

Which of the following is not a major achievements of the European Union (EU) ?

Correct Answer
verified

In effect, tariffs on imports are

Correct Answer
verified

Which of the following statements is true about the alleged benefits and adverse effects of trade barriers?

Correct Answer
verified

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

Correct Answer
verified

Tariffs and import quotas would benefit the following groups, except

Correct Answer
verified

In recent years, the United States has

Correct Answer
verified

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

Correct Answer
verified

The term trade deficit refers to a situation where

Correct Answer
verified

A nation will neither export nor import a specific product when its

Correct Answer
verified

If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

Correct Answer
verified

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case,

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exam 26: International Trade

NAFTA

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

225. In a world with two products, wheat (W) and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C, and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation

Correct AnswerverifiedShow Answer

Which of the following is not a major achievements of the European Union (EU) ?

Correct AnswerverifiedShow Answer

In effect, tariffs on imports are

Correct AnswerverifiedShow Answer

Which of the following statements is true about the alleged benefits and adverse effects of trade barriers?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Tariffs and import quotas would benefit the following groups, except

Correct AnswerverifiedShow Answer

In recent years, the United States has

Correct AnswerverifiedShow Answer

The equilibrium world price of a product equates the quantities of exports supplied and imports demanded.

Correct AnswerverifiedShow Answer

The term trade deficit refers to a situation where

Correct AnswerverifiedShow Answer

A nation will neither export nor import a specific product when its

Correct AnswerverifiedShow Answer

If a nation's labor can produce more of a good compared to labor in another nation, then we say that the first nation has a comparative advantage in producing that good.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

Correct AnswerverifiedShow Answer

The domestic opportunity cost of producing a television in the United States is 20 bushels of wheat. In Korea, the domestic opportunity cost of producing a television is 10 bushels of wheat. In this case,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified