Question 1

In a two-nation, two-good world, which of the following statements is true?

Accepted Answer

A)   One nation cannot possibly have an absolute advantage over the other nation in both products
B)   If one nation as the comparative advantage in one product, then the other nation would have the comparative advantage in the other product
C)   One nation will always have the comparative advantage over the other nation in one of the products
D)   If one nation has the absolute advantage in one product, then the other nation would have the absolute advantage in the other productE) A) and B)
F) B) and C)

Question 2

The World Trade Organization is the successor to the:

Accepted Answer

A)   General Agreement on Tariffs and Trade (GATT) 
B)   United Nations Commission on Trade Law (UNCTL) 
C)   World Customs Organization
D)   United Nations Conference on Trade and Development (UNCTA
D)  E) A) and B)
F) B) and C)

Question 3

d and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be: A)  $600, but only $240 if the domestic market were open to international trade B)  $600, but only $120 if the domestic market were open to international trade C)  $500, but only $240 if the domestic market were open to international trade D)  $240, but only $120 if the domestic market were open to international trade" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

Accepted Answer

A)   $600, but only $240 if the domestic market were open to international trade
B)   $600, but only $120 if the domestic market were open to international trade
C)   $500, but only $240 if the domestic market were open to international trade
D)   $240, but only $120 if the domestic market were open to international tradeE) C) and D)
F) B) and C)

Question 4

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

Question 5

In terms of trade volume, China is the largest trading partner of the United States.

Accepted Answer

A) True 
 B)False

Question 6

Use the following table for Country X to answer the question below. Column 1 of the table is the price of a product. Column 2 is the quantity demanded domestically (Qdd)  and Column 3 is the quantity supplied domestically (Qsd) . dd)  and Column 3 is the quantity supplied domestically (Qsd) .   Refer to the table above. If Country X opens itself up to international trade, at what world price will it begin exporting some units of the product? A)  Any price below $1.00 B)  Any price above $1.00 C)  Any price below $3.00 D)  Any price above $3.00" class="answers-bank-image d-inline" rel="preload" > Refer to the table above. If Country X opens itself up to international trade, at what world price will it begin exporting some units of the product?

Accepted Answer

A)   Any price below $1.00
B)   Any price above $1.00
C)   Any price below $3.00
D)   Any price above $3.00E) A) and B)
F) A) and C)

Question 7

Use the following table to answer the question below for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Qdd)  and Column 3 is the quantity supplied domestically (Qsd) . dd)  and Column 3 is the quantity supplied domestically (Qsd) .   Refer to the table above. If the world price of the product is $6, then Country Y will: A)  Export 100 units of the product B)  Import 100 units of the product C)  Exports of 300 units of the product D)  Imports of 400 units of the product" class="answers-bank-image d-inline" rel="preload" > Refer to the table above. If the world price of the product is $6, then Country Y will:

Accepted Answer

A)   Export 100 units of the product
B)   Import 100 units of the product
C)   Exports of 300 units of the product
D)   Imports of 400 units of the productE) A) and D)
F) None of the above

Question 8

The ratio at which nations will exchange one product for another is known as the:

Accepted Answer

A)   Exchange rate
B)   Discount rate
C)   Terms of trade
D)   Balance of tradeE) A) and B)
F) A) and C)

Question 9

The "Buy American" policy is equivalent to a(n) :

Accepted Answer

A)   Tariff
B)   Quota
C)   Export subsidy
D)   Voluntary export restrictionE) A) and C)
F) A) and D)

Question 10

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

Accepted Answer

A)   It results in too many benefits for domestic firms that export goods and services
B)   It is difficult to determine which infant industries will become mature industries with a comparative advantage
C)   The objective would be better achieved through strategic trade policy
D)   The objective would be better achieved by import quotas and nontariff barriersE) B) and C)
F) A) and D)

Question 11

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Accepted Answer

A) True 
 B)False

Question 12

Trade protection in most instances transfers wealth from consumers to domestic producers.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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 ForumE) B) and D)
F) B) and C)

Question 14

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 tariff policy will go to consumers, not workers
B)   The benefits of such 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 inflationE) A) and C)
F) A) and D)

Question 15

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

Question 16

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 goodE) B) and C)
F) A) and D)

Question 17

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)  will 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 will fall as imports fall
D)   Total quantity of wristwatches (domestic and imported)  purchased would decline as prices riseE) A) and B)
F) B) and C)

Question 18

d and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be: A)  $6 and the quantity consumed 80 units B)  $8 and the quantity consumed 70 units C)  $10 and the quantity consumed 60 units D)  $12 and the quantity consumed 50 units" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

Accepted Answer

A)   $6 and the quantity consumed 80 units
B)   $8 and the quantity consumed 70 units
C)   $10 and the quantity consumed 60 units
D)   $12 and the quantity consumed 50 unitsE) B) and C)
F) A) and C)

Question 19

The U.S. has a sizable trade surplus in services.

Accepted Answer

A) True 
 B)False

Question 20

Autos and chemicals are in million of units in the following production possibilities tables:  Refer to the tables above. Suppose that each nation specialized in producing the product for which it has a comparative advantage, and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and:

Accepted Answer

A)   12 million units of chemicals
B)   24 million units of chemicals
C)   36 million units of chemicals
D)   48 million units of chemicalsE) B) and D)
F) C) and D)

Exam 20: International Trade

The ratio at which nations will exchange one product for another is known as the:

Correct Answer
verified

In terms of trade volume, China is the largest trading partner of the United States.

Correct Answer
verified

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

Correct Answer
verified

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

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

The principal concept behind comparative advantage is that a nation should:

Correct Answer
verified

The "Buy American" policy is equivalent to a(n) :

Correct Answer
verified

The U.S. has a sizable trade surplus in services.

Correct Answer
verified

The World Trade Organization is the successor to the:

Correct Answer
verified

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

Correct Answer
verified

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

In a two-nation, two-good world, which of the following statements is true?

Correct Answer
verified

Correct Answer
verified

Trade protection in most instances transfers wealth from consumers to domestic producers.

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

Tariffs and import quotas would benefit the following groups, except:

Correct Answer
verified

Exam 20: International Trade

The ratio at which nations will exchange one product for another is known as the:

Correct AnswerverifiedShow Answer

In terms of trade volume, China is the largest trading partner of the United States.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

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

The principal concept behind comparative advantage is that a nation should:

Correct AnswerverifiedShow Answer

The "Buy American" policy is equivalent to a(n) :

Correct AnswerverifiedShow Answer

The U.S. has a sizable trade surplus in services.

Correct AnswerverifiedShow Answer

The World Trade Organization is the successor to the:

Correct AnswerverifiedShow Answer

Refer to the graph above, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

Correct AnswerverifiedShow Answer

If demand for a product is increasing, an import tariff is less restrictive than an import quota.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a two-nation, two-good world, which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Trade protection in most instances transfers wealth from consumers to domestic producers.

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

Tariffs and import quotas would benefit the following groups, except:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the graph above, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If an import quota of 40 units were imposed on the product, then the equilibrium price would be:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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