Question 1

From an economic perspective, studies of the costs of trade barriers show that they

Accepted Answer

A)   are outweighed by the reduction in foreign competition provided by the barriers.
B)   are much less than benefits for domestic producers and workers.
C)   are about equal to the benefits from trade barriers.
D)   far exceed their benefits for society.

Question 2

If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation.   \quad \quad \quad \quad \quad \quad \quad Output (Units)  	ext { Output (Units)  } Output (Units)   
  Nations  Aluminum  Oil  Quirk 2040 Tunk 3090\begin{array}{c|c|c|}\hline 	ext { Nations } & 	ext { Aluminum } & 	ext { Oil } \\hline 	ext { Quirk } & 20 & 40 \\hline 	ext { Tunk } & 30 & 90\\hline \end{array} Nations  Quirk  Tunk ​ Aluminum 2030​ Oil 4090​​  Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations?

Accepted Answer

A)   0.5 unit of oil for 1 unit of aluminum
B)   0.5 unit of oil for 2 units of aluminum
C)   1 unit of oil for 0.4 unit of aluminum
D)   1 unit of oil for 4 units of aluminum

Question 3

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 4

An excise tax on imported items is known as a(n)

Accepted Answer

A)   quota.
B)   tariff.
C)   export restriction.
D)   price ceiling.

Question 5

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Accepted Answer

A) True 
 B)False

Question 6

NAFTA established a free-trade area and eliminated trade barriers between

Accepted Answer

A)   the U.S. and Canada only.
B)   the U.S., Mexico, and China.
C)   the U.S., Mexico, and Canada.
D)   the U.S., China, and Canada.

Question 7

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

Accepted Answer

A)   International Monetary Fund (IMF) .
B)   World Trade Organization (WTO) .
C)   Common Market Organization (CMO) .
D)   International Trade Commission (IT
C)  .

Question 8

The following are commonly used arguments for protection against imports, except

Accepted Answer

A)   self-sufficiency and diversification-for-stability.
B)   protection against dumping.
C)   infant industry protection.
D)   price- and profit-maintenance.

Question 9

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)

Accepted Answer

A)   protective tariff.
B)   export subsidy.
C)   import quota.
D)   voluntary export restriction.

Question 10

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 11

In the theory of comparative advantage, a good should be produced in that nation where

Accepted Answer

A)   the production possibilities line lies further to the right than the trading possibilities line.
B)   its cost is least in terms of alternative goods that might otherwise be produced.
C)   its absolute cost in terms of real resources used is least.
D)   its absolute money cost of production is least.

Question 12

In the real world, specialization is rarely complete because

Accepted Answer

A)   nations normally experience increasing opportunity costs in producing more of the product in which they are specializing.
B)   production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin.
C)   one nation's imports are necessarily another nation's exports.
D)   international law prohibits monopolies.

Question 13

Which country has the largest share of total world exports?

Accepted Answer

A)   Japan
B)   Germany
C)   United States
D)   China

Question 14

The tables give production possibilities data for two countries, Alpha and Beta, which have populations of equal size.   \quad \quad \quad \quad \quad \quad \quad Alpha’s production possibilities 	ext { Alpha&#x27;s production possibilities } Alpha’s production possibilities  
  A  B  C  D  E  Fish (Tons)  806040200 Chips (Tons)  05101520\begin{array}{|c|c|c|c|c|c|}\hline & 	ext { A } & 	ext { B } & 	ext { C } & 	ext { D } & 	ext { E } \\hline 	ext { Fish (Tons)  } & 80 & 60 & 40 & 20 & 0 \\hline 	ext { Chips (Tons)  } & 0 & 5 & 10 & 15 & 20 \\hline\end{array} Fish (Tons)   Chips (Tons)  ​ A 800​ B 605​ C 4010​ D 2015​ E 020​​    \quad \quad \quad \quad \quad \quad \quad Beta’s production possibilities 	ext { Beta&#x27;s production possibilities } Beta’s production possibilities  
 ABCDE Fish (Tons)  240180120600 Chips (Tons)  010203040\begin{array}{|c|c|c|c|c|c|} \hline& \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \\hline 	ext { Fish (Tons)  } & 240 & 180 & 120 & 60 & 0 \\hline 	ext { Chips (Tons)  } & 0 & 10 & 20 & 30 & 40\\hline\end{array} Fish (Tons)   Chips (Tons)  ​A2400​B18010​C12020​D6030​E040​​  The given data show that

Accepted Answer

A)   Beta has a comparative advantage in producing chips.
B)   Alpha has a comparative advantage in catching fish.
C)   Alpha is subject to constant costs and Beta is subject to increasing costs.
D)   Beta is more efficient than Alpha both in catching fish and in producing chips.

Question 15

Common arguments often raised to present the case for protectionism include the following, except

Accepted Answer

A)   protecting infant industries until they mature.
B)   protection against foreign suppliers' dumping.
C)   raising domestic employment in specific industries.
D)   reducing the price of the product to consumers.

Question 16

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

Accepted Answer

A)   Taiwan in both goods
B)   Taiwan in clocks and Germany in mugs
C)   Germany in clocks and Taiwan in mugs
D)   Germany in both goods

Question 17

A tariff can best be described as

Accepted Answer

A)   an excise tax on an imported good.
B)   a government payment to domestic producers to enable them to sell competitively in world markets.
C)   an excise tax on an exported good.
D)   a law that sets a limit on the amount of a good that can be imported.

Question 18

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

Accepted Answer

A) True 
 B)False

Question 19

The "eurozone"

Accepted Answer

A)   is another name for the European Union.
B)   refers to the common currency used by all European Union members.
C)   is a geographic region in Europe with no national sovereignty, where free trade between European nations is allowed to occur.
D)   is the subset of the EU that uses a common currency.

Question 20

Among the principal exports of the United States are agricultural products.

Accepted Answer

A) True 
 B)False

Exam 26: International Trade

NAFTA established a free-trade area and eliminated trade barriers between

Correct Answer
verified

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

Correct Answer
verified

Correct Answer
verified

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)

Correct Answer
verified

The following are commonly used arguments for protection against imports, except

Correct Answer
verified

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Correct Answer
verified

From an economic perspective, studies of the costs of trade barriers show that they

Correct Answer
verified

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

Correct Answer
verified

Correct Answer
verified

An excise tax on imported items is known as a(n)

Correct Answer
verified

Among the principal exports of the United States are agricultural products.

Correct Answer
verified

Which country has the largest share of total world exports?

Correct Answer
verified

In the theory of comparative advantage, a good should be produced in that nation where

Correct Answer
verified

A tariff can best be described as

Correct Answer
verified

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

Correct Answer
verified

The "eurozone"

Correct Answer
verified

Which is not a commonly heard argument for protectionism?

Correct Answer
verified

The use of tariffs and quotas for trade protection results in

Correct Answer
verified

Common arguments often raised to present the case for protectionism include the following, except

Correct Answer
verified

In the real world, specialization is rarely complete because

Correct Answer
verified

Exam 26: International Trade

NAFTA established a free-trade area and eliminated trade barriers between

Correct AnswerverifiedShow Answer

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)

Correct AnswerverifiedShow Answer

The following are commonly used arguments for protection against imports, except

Correct AnswerverifiedShow Answer

With constant costs in production, specialization tends to proceed to complete specialization, but with increasing costs, specialization will not be complete.

Correct AnswerverifiedShow Answer

From an economic perspective, studies of the costs of trade barriers show that they

Correct AnswerverifiedShow Answer

A voluntary export restraint (VER) is similar to an import quota, except that the former benefits the foreign producers while the latter benefits the domestic producers.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An excise tax on imported items is known as a(n)

Correct AnswerverifiedShow Answer

Among the principal exports of the United States are agricultural products.

Correct AnswerverifiedShow Answer

Which country has the largest share of total world exports?

Correct AnswerverifiedShow Answer

In the theory of comparative advantage, a good should be produced in that nation where

Correct AnswerverifiedShow Answer

A tariff can best be described as

Correct AnswerverifiedShow Answer

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the comparative advantage in each good?

Correct AnswerverifiedShow Answer

The "eurozone"

Correct AnswerverifiedShow Answer

Which is not a commonly heard argument for protectionism?

Correct AnswerverifiedShow Answer

The use of tariffs and quotas for trade protection results in

Correct AnswerverifiedShow Answer

Common arguments often raised to present the case for protectionism include the following, except

Correct AnswerverifiedShow Answer

In the real world, specialization is rarely complete because

Correct AnswerverifiedShow Answer

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