Question 1

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 2

Import quotas on products will reduce the quantity of the imported products and

Accepted Answer

A)  decrease the price to the consumers.
B)  increase the price to the consumers.
C)  will not affect the price to the consumers.
D)  increase the total quantity of the product consumed.

Question 3

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

Accepted Answer

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

Question 4

Assume that by devoting all its resources to the production of X, nation Alpha can produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y. Comparable figures for nation Beta are 60X and 40Y. There is no basis for trade between Alpha and Beta, because Beta has an absolute advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 5

Which is more effective in blocking imports, a tariff or a quota?

Accepted Answer

Import quotas are more effective than ta...

Question 6

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

Accepted Answer

A)  exporting products.
B)  importing products.
C)  import tariffs.
D)  import quotas.

Question 7

Economists who criticize trade adjustment assistance argue that

Accepted Answer

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.

Question 8

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.

Question 9

When an export subsidy on a product is removed, this policy action

Accepted Answer

A)  increases efficiency within the country.
B)  decreases production costs.
C)  benefits domestic exporters.
D)  none of these answers are correct.

Question 10

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Accepted Answer

A)  France has a comparative advantage in the production of chemicals.
B)  Germany has a comparative advantage in the production of chemicals.
C)  France has an absolute advantage in the production of chemicals.
D)  Germany has an absolute advantage in the production of chemicals.

Question 11

Trade adjustment assistance

Accepted Answer

A)  provides financial assistance to all unemployed workers in the United States.
B)  guarantees jobs for all workers displaced by imports or plant relocations abroad.
C)  provides assistance to about 20 percent of unemployed U.S. workers each year.
D)  provides cash assistance for workers displaced by imports or plant relocations abroad.

Question 12

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 exchange ratio for X and Y reflect their domestic opportunity costs.

Question 13

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

Accepted Answer

A)  tractors.
B)  DVD players.
C)  beef.
D)  chemicals.

Question 14

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves for the two countries are shown in the graphs. If Italy and Greece open up trade with each other, which of the following terms of trade is mutually beneficial?

Accepted Answer

A)  1 ton of chemicals = 1 ton of steel
B)  2 tons of chemicals = 1 ton of steel
C)  5 tons of chemicals = 2 tons of steel
D)  9 tons of chemicals = 5 tons of steel

Question 15

Specialization and trade between individuals or between nations leads to

Accepted Answer

A)  greater self-sufficiency.
B)  higher product prices.
C)  higher utilization of resources.
D)  higher total output.

Question 16

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities  Sigma's production possibilities
 What are the limits of the terms of trade between Gamma and Sigma?

Accepted Answer

A)  1 tea = 2 pots to 1 tea = 6 pots
B)  1 tea = 3 pots to 1 tea = 6 pots
C)  1 tea = 2 pots to 1 tea = 3.5 pots
D)  1 tea = 1 pot to 1 tea = 3 pots

Question 17

Dumping of goods abroad

Accepted Answer

A)  constitutes a general case for permanent tariffs.
B)  is simply comparative advantage at work.
C)  may be part of a nation's strategy to rectify its trade deficit.
D)  drives up prices of the dumped goods.

Question 18

Which of the following best describes economists' general assessment of the impacts of offshoring?

Accepted Answer

A)  Offshoring has an overall negative impact on the U.S. economy because of the significant domestic job losses it causes.
B)  Offshoring benefits the U.S. economy by promoting greater specialization and exchange of goods and services based on comparative advantage.
C)  Offshoring provides some cost advantages but generally results in much-lower-quality goods for consumers.
D)  Job losses from offshoring are magnified by job losses in complementary industries.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Other things equal, economists would prefer

Accepted Answer

A)  free trade to tariffs and tariffs to import quotas.
B)  free trade to import quotas and import quotas to tariffs.
C)  import quotas to tariffs and tariffs to voluntary export restrictions.
D)  import quotas to free trade and free trade to tariffs.

Exam 26: International Trade

Trade adjustment assistance

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Dumping of goods abroad

Correct Answer
verified

Which of the following best describes economists' general assessment of the impacts of offshoring?

Correct Answer
verified

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities Sigma's production possibilities What are the limits of the terms of trade between Gamma and Sigma?

Correct Answer
verified

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

Correct Answer
verified

Other things equal, economists would prefer

Correct Answer
verified

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Correct Answer
verified

Specialization and trade between individuals or between nations leads to

Correct Answer
verified

Correct Answer
verified

When an export subsidy on a product is removed, this policy action

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

Which is more effective in blocking imports, a tariff or a quota?

Correct Answer
verified
Import quotas are more effective than ta...
View Answer

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

Correct Answer
verified

Import quotas on products will reduce the quantity of the imported products and

Correct Answer
verified

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

Correct Answer
verified

Economists who criticize trade adjustment assistance argue that

Correct Answer
verified

Exam 26: International Trade

Trade adjustment assistance

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Dumping of goods abroad

Correct AnswerverifiedShow Answer

Which of the following best describes economists' general assessment of the impacts of offshoring?

Correct AnswerverifiedShow Answer

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities Sigma's production possibilities What are the limits of the terms of trade between Gamma and Sigma?

Correct AnswerverifiedShow Answer

Some people accuse an offshoring firm of "exporting jobs". This activity called offshoring is really equivalent to

Correct AnswerverifiedShow Answer

Other things equal, economists would prefer

Correct AnswerverifiedShow Answer

The domestic opportunity cost of producing 100 barrels of chemicals in Germany is one ton of steel. In France, the domestic opportunity cost of producing 100 barrels of chemicals is two tons of steel. In this case,

Correct AnswerverifiedShow Answer

Specialization and trade between individuals or between nations leads to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When an export subsidy on a product is removed, this policy action

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

Which is more effective in blocking imports, a tariff or a quota?

Correct AnswerverifiedImport quotas are more effective than ta...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Import quotas on products will reduce the quantity of the imported products and

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Economists who criticize trade adjustment assistance argue that

Correct AnswerverifiedShow Answer

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Import quotas are more effective than ta...
View Answer

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