Question 1

A major goal of the World Trade Organization is to

Accepted Answer

A)   increase the protection of producers against foreign trade competition.
B)   encourage bilateral trade agreements between nations.
C)   liberalize international trade among nations.
D)   maximize tariff revenue for governments.E) A) and C)
F) A) and D)

Question 2

An import-licensing requirement or import restrictions pertaining to the product quality and safety are examples of

Accepted Answer

A)   protective tariffs.
B)   nontariff barriers.
C)   voluntary export restrictions.
D)   quotas on imported products.E) B) and D)
F) B) and C)

Question 3

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Accepted Answer

A)   The benefits of such a tariff policy will go to consumers, not workers.
B)   The benefits of such a tariff policy will go to businesses, not workers.
C)   Wage rates in a nation are largely determined by productivity, not trade tariffs.
D)   The economy may become overheated, thus increasing inflation.E) A) and B)
F) B) and D)

Question 4

Answer the question using the accompanying cost ratios for two products, fish (F)  and chicken (C) , in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and that these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C
Which one of the following would not be feasible terms for trade between Singsong and Harmony?

Accepted Answer

A)   1 fish for 2½ chicken
B)   1 fish for 3 chicken
C)   1 chicken for 1/5 of a fish
D)   1 chicken for 1/3 of a fishE) A) and D)
F) All of the above

Question 5

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

Accepted Answer

A)   tractors.
B)   DVD players.
C)   meat.
D)   chemicals.E) A) and B)
F) A) and C)

Question 6

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

Accepted Answer

A)   the increased domestic employment argument
B)   the cheap foreign labor argument
C)   the diversification-for-stability argument
D)   the military self-sufficiency argumentE) None of the above
F) B) and D)

Question 8

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

Accepted Answer

A)   the price of German bicycles to increase in the United States.
B)   employment to decrease in the German bicycle industry.
C)   employment to decrease in the U.S. bicycle industry.
D)   profits to rise in the U.S. bicycle industry.E) B) and C)
F) None of the above

Question 9

The nation that has a comparative advantage in a particular product will be the only world exporter of that product.

Accepted Answer

A) True 
 B)False

Question 10

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

Accepted Answer

A)   no comparative advantage over the other nation.
B)   a comparative advantage in one good and a comparative disadvantage in the other good.
C)   no absolute advantage over the other nation.
D)   an absolute advantage in one good and an absolute disadvantage in the other good.E) C) and D)
F) B) and C)

Question 11

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Accepted Answer

A) True 
 B)False

Question 12

Bastiat's "Petition of the Candlemakers," a classic reading in economics, presents a powerful argument in favor of protectionism.

Accepted Answer

A) True 
 B)False

Question 13

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Accepted Answer

A)   price of wristwatches in the United States would decrease and total quantity consumed (domestic and imported)  would increase.
B)   prices of wristwatches in Switzerland would rise, and that's how Switzerland would be hurt by the quota.
C)   price of wristwatches in the United States would remain the same, but the quantity would fall as imports fell.
D)   total quantity of wristwatches (domestic and imported)  purchased would decline as prices rose.E) C) and D)
F) A) and C)

Question 14

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 free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers would be

Accepted Answer

A)   1 unit and 15 units, respectively.
B)   4 units and 7 units, respectively.
C)   7 units and 0 units, respectively.
D)   4 units and 6 units, respectively. E) A) and D)
F) B) and C)

Question 15

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Accepted Answer

A) True 
 B)False

Question 16

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 C)
F) A) and B)

Question 17

A side benefit of international trade is that it links national interests and increases the opportunity costs of war.

Accepted Answer

A) True 
 B)False

Question 18

In the United States, exports of goods and services accounted for about what percentage of GDP (total output)  in 2014?

Accepted Answer

A)   6 percent
B)   13 percent
C)   24 percent
D)   42 percentE) B) and C)
F) A) and D)

Question 19

If the world price of a product rises relative to the domestic price in a trading nation, then, for that product,

Accepted Answer

A)   exports and imports will increase.
B)   exports and imports will decrease.
C)   exports will increase and imports will decrease.
D)   imports will increase and exports will decrease.E) A) and B)
F) A) and C)

Question 20

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

Accepted Answer

A)   the exchange ratio of X for Y is fixed.
B)   the terms of trade increase in both nations.
C)   there is excess capacity in both economies.
D)   the prices charged for X and Y reflect their domestic opportunity costs.E) None of the above
F) A) and B)

Exam 26: International Trade

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

Correct Answer
verified

Bastiat's "Petition of the Candlemakers," a classic reading in economics, presents a powerful argument in favor of protectionism.

Correct Answer
verified

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

Correct Answer
verified

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

Correct Answer
verified

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Correct Answer
verified

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Correct Answer
verified

Correct Answer
verified

A major goal of the World Trade Organization is to

Correct Answer
verified

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 Answer
verified

The nation that has a comparative advantage in a particular product will be the only world exporter of that product.

Correct Answer
verified

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Correct Answer
verified

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Correct Answer
verified

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

Correct Answer
verified

If the world price of a product rises relative to the domestic price in a trading nation, then, for that product,

Correct Answer
verified

A side benefit of international trade is that it links national interests and increases the opportunity costs of war.

Correct Answer
verified

An import-licensing requirement or import restrictions pertaining to the product quality and safety are examples of

Correct Answer
verified

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Correct Answer
verified

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

Correct Answer
verified

Correct Answer
verified

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

Correct Answer
verified

Exam 26: International Trade

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

Correct AnswerverifiedShow Answer

Bastiat's "Petition of the Candlemakers," a classic reading in economics, presents a powerful argument in favor of protectionism.

Correct AnswerverifiedShow Answer

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect

Correct AnswerverifiedShow Answer

Nation Alpha has a comparative advantage in product X, and nation Beta has a comparative advantage in product Y. Trade in the two products will only benefit the two nations if

Correct AnswerverifiedShow Answer

If the United States government were to impose a quota on wristwatches imported from Switzerland, then the

Correct AnswerverifiedShow Answer

If a nation starts exporting a product to the rest of the world, then the price of that product in the exporting nation will rise.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A major goal of the World Trade Organization is to

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 nation that has a comparative advantage in a particular product will be the only world exporter of that product.

Correct AnswerverifiedShow Answer

A nation's export supply curve is downsloping, and its import demand curve is upsloping.

Correct AnswerverifiedShow Answer

In a two-nation, two-good world, it is possible for one nation to have the comparative advantage in both goods.

Correct AnswerverifiedShow Answer

In the United States, exports of goods and services accounted for about what percentage of GDP (total output) in 2014?

Correct AnswerverifiedShow Answer

If the world price of a product rises relative to the domestic price in a trading nation, then, for that product,

Correct AnswerverifiedShow Answer

A side benefit of international trade is that it links national interests and increases the opportunity costs of war.

Correct AnswerverifiedShow Answer

An import-licensing requirement or import restrictions pertaining to the product quality and safety are examples of

Correct AnswerverifiedShow Answer

Which of the following is a valid counterargument against using tariffs to protect high wages from cheap foreign labor?

Correct AnswerverifiedShow Answer

In a two-nation, two-good world, if both nations have identical production possibilities curves with constant costs, then one nation would have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A natural-resource abundant nation would be expected to export a land-intensive commodity such as

Correct AnswerverifiedShow Answer

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