Question 1

In 2014, the United States was the largest exporter in the world.

Accepted Answer

A) True 
 B)False

Question 2

Which country is the United States' largest trading partner in terms of volume of trade?

Accepted Answer

A)  Mexico
B)  Japan
C)  China
D)  CanadaE) B) and C)
F) A) and D)

Question 3

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.Therefore, Alpha should specialize in Y and Beta in X.

Accepted Answer

A) True 
 B)False

Question 4

The World Trade Organization

Accepted Answer

A)  is also known as the International Monetary Fund (IMF) .
B)  is also known as NAFTA.
C)  was established to resolve disputes arising under world trade rules.
D)  enhances world trade by providing interest rate subsidies to foreign borrowers who buy exports on credit.E) None of the above
F) B) and C)

Question 5

The number of countries belonging to the World Trade Organization (WTO) , as of 2015, is about

Accepted Answer

A)  161.
B)  125.
C)  80.
D)  202.E) None of the above
F) A) and C)

Question 6

The World Trade Organization was established as a successor to

Accepted Answer

A)  GATT.
B)  NAFTA.
C)  the EU.
D)  the Doha Development Agenda.E) B) and C)
F) C) and D)

Question 7

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year.This is an example of a(n)

Accepted Answer

A)  protective tariff.
B)  revenue tariff.
C)  voluntary export restriction.
D)  import quota.E) A) and D)
F) None of the above

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.E) B) and D)
F) None of the above

Question 9

Export supply curves are ; import demand curves are .

Accepted Answer

A)  horizontal; vertical
B)  vertical; horizontal
C)  downsloping; upsloping
D)  upsloping; downslopingE) A) and B)
F) A) and C)

Question 10

In a two-nation, two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Accepted Answer

A) True 
 B)False

Question 11

If two nations specialize in their respective comparative advantage and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

Accepted Answer

A) True 
 B)False

Question 12

If two nations have straight-line production possibilities curves,

Accepted Answer

A)  then their trading possibilities curves must lie inside the production possibilities curves.
B)  there will be no basis for mutually advantageous trade.
C)  there will be a basis for mutually advantageous trade whether the slopes are equal or not.
D)  there will be a basis for mutually advantageous trade provided the slopes differ.E) A) and C)
F) A) and D)

Question 13

Whenever a foreign producer is selling a product like steel at a lower price than domestic producers, then dumping is being practiced and must be corrected.Topic: The Case for Protection: A Critical Review

Accepted Answer

A) True 
 B)False

Question 14

A major goal of the World Trade Organization is to

Accepted Answer

A)  increase the protection of producers against foreign trade competition.
B)  encourage bilateral trade agreements between nations.
C)  liberalize international trade among nations.
D)  maximize tariff revenue for governments.E) A) and C)
F) All of the above

Question 15

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Accepted Answer

A)  increase domestic employment
B)  protection against dumping
C)  strategic trade policy
D)  cheap foreign laborE) A) and D)
F) B) and C)

Question 16

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

Accepted Answer

A)  the production possibilities curves of any two nations are identical.
B)  a nation's production possibilities and trading possibilities lines coincide.
C)  a nation's trading possibilities line lies to the right of its production possibilities line.
D)  a nation's production possibilities line lies to the right of its trading possibilities line.E) None of the above
F) B) and D)

Question 17

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat.The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat.Which of the following is true?

Accepted Answer

A)  Country Y should specialize in the growing of soybeans according to the principle of comparative advantage.
B)  Country X is the least-cost producer of wheat.
C)  The domestic opportunity cost of wheat production is lower in country Y.
D)  The high-cost producer of soybeans is country X.E) A) and B)
F) B) and D)

Question 18

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.E) C) and D)
F) None of the above

Question 19

Studies show that

Accepted Answer

A)  it is impossible to estimate the benefits of trade barriers.
B)  costs and benefits of trade barriers are about equal.
C)  benefits of trade barriers exceed their costs in developing nations.
D)  costs of trade barriers exceed their benefits, creating an efficiency loss for society.E) A) and B)
F) A) and D)

Question 20

The so-called eurozone 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 bases.E) A) and C)
F) C) and D)

Exam 40: International Trade

If two nations specialize in their respective comparative advantage and then trade with each other, both nations can consume output-combinations that are beyond their production possibilities curves.

Correct AnswerverifiedShow Answer

The production possibilities for country X are either 6,000 bushels of soybeans or 10,000 bushels of wheat.The production possibilities for country Y are either 2,000 bushels of soybeans or 4,000 bushels of wheat.Which of the following is true?

Correct AnswerverifiedShow Answer

Export supply curves are ; import demand curves are .

Correct AnswerverifiedShow Answer

Suppose the United States sets a limit on the number of tons of sugar that can be imported each year.This is an example of a(n)

Correct AnswerverifiedShow Answer

"The nation needs to prevent foreign nations from selling their excess goods in our nation at a price below cost so we can save American firms." This quotation would be most closely associated with which protectionist argument?

Correct AnswerverifiedShow Answer

In a two-nation, two-good world, if one nation is more efficient in producing both goods than the other nation, then the more-efficient nation cannot gain from trading with the other nation.

Correct AnswerverifiedShow Answer

In 2014, the United States was the largest exporter in the world.

Correct AnswerverifiedShow Answer

The World Trade Organization

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 number of countries belonging to the World Trade Organization (WTO) , as of 2015, is about

Correct AnswerverifiedShow Answer

The World Trade Organization was established as a successor to

Correct AnswerverifiedShow Answer

Which country is the United States' largest trading partner in terms of volume of trade?

Correct AnswerverifiedShow Answer

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that

Correct AnswerverifiedShow Answer

A major goal of the World Trade Organization is to

Correct AnswerverifiedShow Answer

The so-called eurozone refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If two nations have straight-line production possibilities curves,

Correct AnswerverifiedShow Answer

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.Therefore, Alpha should specialize in Y and Beta in X.

Correct AnswerverifiedShow Answer

Whenever a foreign producer is selling a product like steel at a lower price than domestic producers, then dumping is being practiced and must be corrected.Topic: The Case for Protection: A Critical Review

Correct AnswerverifiedShow Answer

Studies show that

Correct AnswerverifiedShow Answer

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