Question 1

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 outputE) A) and B)
F) B) and C)

Question 2

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 societyE) None of the above
F) B) and C)

Question 3

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Accepted Answer

A)   Specialization in production
B)   Nationalization of industries
C)   Regulation of production and trade
D)   Spreading out of resources in more industriesE) A) and B)
F) A) and C)

Question 4

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 importing some units of the product? A)  Any price below $5.00 B)  Any price above $5.00 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 importing some units of the product?

Accepted Answer

A)   Any price below $5.00
B)   Any price above $5.00
C)   Any price below $3.00
D)   Any price above $3.00E) A) and C)
F) All of the above

Question 5

The so-called Euro Zone refers to:

Accepted Answer

A)   All members of the European Union
B)   The EU nations that have adopted a common currency
C)   The combined Eastern and Western Europe
D)   Nations in Europe where the U.S. has military basesE) C) and D)
F) A) and B)

Question 6

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 7

When a tariff or quota on a product is removed, this policy action:

Accepted Answer

A)   Benefits domestic producers of the product
B)   Benefits consumers of the product
C)   Benefits the government
D)   Hurts nations exporting the productE) C) and D)
F) B) and D)

Question 8

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 costsE) A) and B)
F) A) and C)

Question 9

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade:

Accepted Answer

A)   India should export rice to Canada and import Canadian wheat
B)   India should export wheat to Canada and import Canadian rice
C)   Canada should produce both wheat and rice and not trade with India
D)   India cannot offer any benefits to Canada from trading with herE) None of the above
F) B) and C)

Question 10

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Accepted Answer

A)   Trade barriers protect the development of new technology, but the new technology eliminates jobs
B)   Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment
C)   The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment
D)   Major American firms have produced many products in other countries, and would not hire more domestic labor when trade barriers are imposedE) B) and C)
F) A) and D)

Question 11

An excise tax that is applied to an imported product which is not at all produced domestically is called a(n) :

Accepted Answer

A)   Protective tariff
B)   Revenue tariff
C)   Import quota
D)   Nontariff barrierE) A) and B)
F) A) and C)

Question 12

A key difference between import quotas and voluntary export restraints (VERs)  is that the:

Accepted Answer

A)   Domestic government administers the former, whereas the foreign government administers the latter
B)   Foreign government administers the former, whereas the domestic government administers the latter
C)   One is a tax, whereas the other is a quantity limit
D)   One raises the price of the imported product involved, whereas the other one does notE) C) and D)
F) A) and D)

Question 13

d and Dd are the domestic supply and demand for a product. The world price of the product is $6. What would be the difference in the total revenue received by foreign producers after a quota of 20 units is imposed compared with the total revenue received by foreign producers when a $4 per unit tariff is imposed? A)  $0 revenue difference B)  $80 more revenue with a quota than with a tariff C)  $200 more revenue with a quota than with a tariff D)  $120 more revenue with a tariff than with a quota" class="answers-bank-image d-inline" rel="preload" > Refer to the graph above, where Sd and Dd are the domestic supply and demand for a product. The world price of the product is $6. What would be the difference in the total revenue received by foreign producers after a quota of 20 units is imposed compared with the total revenue received by foreign producers when a $4 per unit tariff is imposed?

Accepted Answer

A)   $0 revenue difference
B)   $80 more revenue with a quota than with a tariff
C)   $200 more revenue with a quota than with a tariff
D)   $120 more revenue with a tariff than with a quotaE) A) and D)
F) A) and C)

Question 14

Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?

Accepted Answer

A)   Canada
B)   France
C)   United Kingdom
D)   United StatesE) A) and D)
F) None of the above

Question 15

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Accepted Answer

A)   It spawned a global trade war
B)   It triggered the Great Depression
C)   It favored imports over domestic producers
D)   It is a classic example of the dumping argumentE) A) and B)
F) A) and C)

Question 16

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50% of its GDP.

Accepted Answer

A) True 
 B)False

Question 17

Dumping is the sale of a product in a foreign market:

Accepted Answer

A)   At a price below its domestic price or cost of production
B)   That does not meet the quality standards in the domestic market
C)   And is the principal means used to enforce nontariff barriers
D)   And is encouraged by voluntary export restraintsE) A) and C)
F) A) and B)

Question 18

An export subsidy for a product will benefit:

Accepted Answer

A)   Domestic consumers of the product
B)   Foreign producers of the product
C)   Foreign consumers of the product
D)   The domestic taxpayersE) C) and D)
F) B) and C)

Question 19

In a world with two products, wheat (W)  and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation:

Accepted Answer

A)   Alpha will prevail if world demand for coffee is great relative to its supply
B)   Alpha will prevail if world demand for wheat is weak relative to its supply
C)   Beta will prevail if world demand for coffee is great relative to its supply
D)   Beta will prevail if world demand for wheat is great relative to its supplyE) A) and B)
F) B) and C)

Question 20

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of:

Accepted Answer

A)   An import quota
B)   A revenue tariff
C)   A protective tariff
D)   A voluntary export restrictionE) A) and D)
F) C) and D)

Exam 20: International Trade

Correct Answer
verified

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Correct Answer
verified

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50% of its GDP.

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

In a world with two products, wheat (W) and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation:

Correct Answer
verified

Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?

Correct Answer
verified

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Correct Answer
verified

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade:

Correct Answer
verified

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of:

Correct Answer
verified

A key difference between import quotas and voluntary export restraints (VERs) is that the:

Correct Answer
verified

Dumping is the sale of a product in a foreign market:

Correct Answer
verified

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Correct Answer
verified

Specialization and trade between individuals or between nations leads to:

Correct Answer
verified

When a tariff or quota on a product is removed, this policy action:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

An export subsidy for a product will benefit:

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

The so-called Euro Zone refers to:

Correct Answer
verified

An excise tax that is applied to an imported product which is not at all produced domestically is called a(n) :

Correct Answer
verified

Exam 20: International Trade

Correct AnswerverifiedShow Answer

What other economic process needs to accompany international trade, for nations to benefit from such trade?

Correct AnswerverifiedShow Answer

The United States can be classified as an "open" economy in that foreign trade accounts for more than 50% of its GDP.

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

In a world with two products, wheat (W) and coffee (C) , nation Alpha produces wheat and nation Beta produces coffee. Nation Alpha prefers an exchange rate of 1W = 2C and nation Beta prefers an exchange rate of 1W = 1C. The exchange rate preferred by nation:

Correct AnswerverifiedShow Answer

Which of the following countries had the smallest share of exports as a percentage of GDP in 2011?

Correct AnswerverifiedShow Answer

The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following reasons?

Correct AnswerverifiedShow Answer

The productivity table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization and trade:

Correct AnswerverifiedShow Answer

If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of:

Correct AnswerverifiedShow Answer

A key difference between import quotas and voluntary export restraints (VERs) is that the:

Correct AnswerverifiedShow Answer

Dumping is the sale of a product in a foreign market:

Correct AnswerverifiedShow Answer

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

Correct AnswerverifiedShow Answer

Specialization and trade between individuals or between nations leads to:

Correct AnswerverifiedShow Answer

When a tariff or quota on a product is removed, this policy action:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An export subsidy for a product will benefit:

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

The so-called Euro Zone refers to:

Correct AnswerverifiedShow Answer

An excise tax that is applied to an imported product which is not at all produced domestically is called a(n) :

Correct AnswerverifiedShow Answer

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