Question 1

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Accepted Answer

A)  the product with fewer inputs than the other nation.
B)  the product at lower average cost than the other nation.
C)  the product at a lower domestic opportunity cost than the other nation.
D)  more of the product than the other nation.

Question 2

The benefits to trading nations based on comparative advantage accrue from

Accepted Answer

A)  specialization only.
B)  specialization and trading.
C)  trading only.
D)  protection of domestic industries.

Question 3

The primary gain from international trade is

Accepted Answer

A)  increased employment in the domestic export sector.
B)  more goods than would be attainable through domestic production alone.
C)  tariff revenue.
D)  increased employment in the domestic import sector.

Question 4

One main point of Frederic Bastiat's satire is that

Accepted Answer

A)  employment, or jobs, is the single most important measure of the standard of living.
B)  we should not try to produce what we can get from others at a lower cost.
C)  some industries may reasonably require protection in order to grow.
D)  exporting is always a worthwhile activity to be supported and enhanceD.

Question 5

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Accepted Answer

A) True 
 B)False

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

In 2015, U.S.exports of services U.S.imports of services by about .

Accepted Answer

A)  exceeded; $20 B
B)  fell short of; $20 B
C)  exceeded; $220 B
D)  fell short of; $220 B

Question 8

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.

Question 9

Benefits from international trade are based on differences in the following areas, except

Accepted Answer

A)  resource endowments.
B)  technological capabilities.
C)  product quality and other attributes.
D)  income levels.

Question 10

Dumping of goods abroad

Accepted Answer

A)  constitutes a general case for permanent tariffs.
B)  may be part of a firm's price discrimination strategy.
C)  may be part of a nation's strategy to rectify its trade deficit.
D)  drives up prices of the dumped goods.

Question 11

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Accepted Answer

A)  Nation A has the absolute advantage over Nation B in producing cloth.
B)  Nation B has the absolute advantage over Nation A in producing cloth.
C)  Nation A has the comparative advantage over Nation B in producing cloth.
D)  Nation B has the comparative advantage over Nation A in producing cloth.

Question 12

Assume that by devoting all its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are
60X and 40Y.If Alpha had produced 20X and 30Y and Beta had produced 30X and 20Y before specialization and trade, then we can say that the gains from specialization and trade are 10X and 10Y.

Accepted Answer

A) True 
 B)False

Question 13

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.

Question 14

The use of tariffs and quotas for trade protection results in

Accepted Answer

A)  lower prices for domestic consumers.
B)  less revenue for government.
C)  less efficiency in the economy.
D)  less rent-seeking activity.

Question 15

U.S.exports of goods and services (on a national income account basis)  are about

Accepted Answer

A)  20 percent of U.S.GDP.
B)  8 percent of U.S.GDP.
C)  28 percent of U.S.GDP.
D)  13 percent of U.S.GDP.

Question 16

Which is not a commonly heard argument for protectionism?

Accepted Answer

A)  A strong national defense requires that some military products be produced domestically.
B)  Infant industries need short-term protection from foreign competition in order to grow.
C)  Specialization along the lines of comparative advantage can lead to some economic instability in a nation.
D)  When other nations' economies grow, they typically import fewer goods and services.

Question 17

A tariff is a

Accepted Answer

A)  tax.
B)  price ceiling.
C)  quantity limit.
D)  subsidy.

Question 18

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Accepted Answer

A)  textiles
B)  financial services
C)  steel
D)  apparel

Exam 40: International Trade

Which is not a commonly heard argument for protectionism?

Correct Answer
verified

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

Correct Answer
verified

The benefits to trading nations based on comparative advantage accrue from

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

The primary gain from international trade is

Correct Answer
verified

The use of tariffs and quotas for trade protection results in

Correct Answer
verified

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Correct Answer
verified

Correct Answer
verified

U.S.exports of goods and services (on a national income account basis) are about

Correct Answer
verified

Dumping of goods abroad

Correct Answer
verified

One main point of Frederic Bastiat's satire is that

Correct Answer
verified

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Correct Answer
verified

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Correct Answer
verified

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

Correct Answer
verified

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Correct Answer
verified

Benefits from international trade are based on differences in the following areas, except

Correct Answer
verified

In 2015, U.S.exports of services U.S.imports of services by about .

Correct Answer
verified

A tariff is a

Correct Answer
verified

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Correct Answer
verified

Exam 40: International Trade

Which is not a commonly heard argument for protectionism?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The benefits to trading nations based on comparative advantage accrue from

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The primary gain from international trade is

Correct AnswerverifiedShow Answer

The use of tariffs and quotas for trade protection results in

Correct AnswerverifiedShow Answer

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

U.S.exports of goods and services (on a national income account basis) are about

Correct AnswerverifiedShow Answer

Dumping of goods abroad

Correct AnswerverifiedShow Answer

One main point of Frederic Bastiat's satire is that

Correct AnswerverifiedShow Answer

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Correct AnswerverifiedShow Answer

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the U.S.industries below has not seen major shutdowns and layoffs because of free foreign trade?

Correct AnswerverifiedShow Answer

Benefits from international trade are based on differences in the following areas, except

Correct AnswerverifiedShow Answer

In 2015, U.S.exports of services U.S.imports of services by about .

Correct AnswerverifiedShow Answer

A tariff is a

Correct AnswerverifiedShow Answer

Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

Correct AnswerverifiedShow Answer

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