Question 1

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. Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Accepted Answer

A) True 
 B)False

Question 2

The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.   Ouantity  Ouantity ( Supplied  Demanded  (Domestic)   Price  (Domestic)  12$52104473742111116\begin{array}{|c|c|c|}\hline\text { Ouantity }&&\text { Ouantity }\(\text { Supplied }&&\text { Demanded }\\hline \text { (Domestic)  } & \text { Price } & \text { (Domestic)  } \\hline 12 & \$ 5 & 2 \\hline 10 & 4 & 4 \\hline 7 & 3 & 7 \\hline 4 & 2 & 11 \\hline 1 & 1 & 16 \\hline\end{array} Ouantity ( Supplied  (Domestic)  1210741​ Price $54321​ Ouantity  Demanded  (Domestic)  2471116​​  The total amount of revenue collected from a $1-per-unit tariff on this product will be

Accepted Answer

A)   $22.
B)   $8.
C)   $7.
D)   $14. E) A) and D)
F) All of the above

Question 3

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 4

Tariffs

Accepted Answer

A)   may be imposed either to raise revenue (revenue tariffs)  or to shield domestic producers from foreign competition (protective tariffs) .
B)   are also called import quotas.
C)   are excise taxes on goods exported abroad.
D)   are per-unit subsidies designed to promote exports.E) A) and B)
F) B) and C)

Question 5

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Accepted Answer

A)   a sharp decline in petroleum exports from the U.S.
B)   a significant increase in petroleum imports into the U.S.
C)   a significant decline in the petroleum imports into the U.S.
D)   a huge increase in petroleum exports from the U.S.E) A) and B)
F) A) and C)

Question 6

"Offshoring" refers to

Accepted Answer

A)   importing goods, services, and resources.
B)   stashing money in offshore accounts for the purpose of avoiding taxes.
C)   shifting work overseas that was previously done domestically.
D)   exporting key resources.E) A) and B)
F) A) and C)

Question 7

(Last Word)  Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Accepted Answer

A)   fire.
B)   the sun.
C)   other European countries.
D)   invention of the electric light.E) None of the above
F) C) and D)

Question 8

Export supply curves are ; import demand curves are .

Accepted Answer

A)   horizontal; vertical
B)   vertical; horizontal
C)   downsloping; upsloping
D)   upsloping; downslopingE) None of the above
F) All of the above

Question 9

Barriers to free trade impair efficiency in the international allocation of resources.

Accepted Answer

A) True 
 B)False

Question 10

The accompanying tables give production possibilities data for Gamma and Sigma. All data are in tons. Gamma's production possibilities
 ABCDE Tea 1209060300 Pots 0306090120\begin{array}{c|c|c|c|c|c} & \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \\hline 	ext { Tea } & 120 & 90 & 60 & 30 & 0 \\hline 	ext { Pots } & 0 & 30 & 60 & 90 & 120 \\hline\end{array} Tea  Pots ​A1200​B9030​C6060​D3090​E0120​​  Sigma's production possibilities
 ABCDE Tea 403020100 Pots 0306090120\begin{array}{c|c|c|c|c|c} & \mathrm{A} & \mathrm{B} & \mathrm{C} & \mathrm{D} & \mathrm{E} \\hline 	ext { Tea } & 40 & 30 & 20 & 10 & 0 \\hline 	ext { Pots } & 0 & 30 & 60 & 90 & 120 \\hline\end{array} Tea  Pots ​A400​B3030​C2060​D1090​E0120​​  On the basis of this information,

Accepted Answer

A)   Gamma should export both tea and pots to Sigma.
B)   Sigma should export tea to Gamma, and Gamma should export pots to Sigma.
C)   Gamma should export tea to Sigma, and Sigma should export pots to Gamma.
D)   Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots. E) A) and C)
F) None of the above

Question 11

"Offshoring" of certain production activities refers to

Accepted Answer

A)   businesses shifting production activities from being done domestically to foreign locations.
B)   businesses acquiring other businesses abroad.
C)   investors putting their funds into foreign assets instead of investing them in local businesses.
D)   firms opening new markets offshore and expanding their targeted export areas.E) All of the above
F) B) and C)

Question 12

"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 B)
F) All of the above

Question 13

The World Trade Organization comprises 28 European nations and is dedicated to abolishing trade barriers and integrating their economies.

Accepted Answer

A) True 
 B)False

Question 14

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)   apparelE) A) and B)
F) A) and C)

Question 15

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that

Accepted Answer

A)   the terms of trade will be 3X equals 1Y.
B)   Alpha should specialize in Y and Beta in X.
C)   Alpha should specialize in X and Beta in Y.
D)   there is no basis for mutually beneficial specialization and trade.E) A) and D)
F) C) and D)

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

If a nation exports a product, then the price of that product in the nation

Accepted Answer

A)   will rise above the domestic (no-trade)  equilibrium price.
B)   will fall below the domestic (no-trade)  equilibrium price.
C)   will remain the same as the domestic (no-trade)  equilibrium price.
D)   may either rise or fall, depending on the product.E) A) and D)
F) A) and C)

Question 18

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 argument.E) B) and C)
F) A) and D)

Question 19

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.E) All of the above
F) B) and C)

Question 20

Adam Smith recognized the benefits from trade based on , and David Ricardo recognized the benefits from trade based on .

Accepted Answer

A)   comparative advantage; resource endowments
B)   absolute advantage; comparative advantage
C)   absolute advantage; resource endowments
D)   comparative advantage; absolute advantageE) B) and D)
F) C) and D)

Exam 26: International Trade

The World Trade Organization comprises 28 European nations and is dedicated to abolishing trade barriers and integrating their economies.

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

"Offshoring" of certain production activities refers to

Correct Answer
verified

Export supply curves are ; import demand curves are .

Correct Answer
verified

"Offshoring" refers to

Correct Answer
verified

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

Correct Answer
verified

If a nation exports a product, then the price of that product in the nation

Correct Answer
verified

Tariffs

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that

Correct Answer
verified

Adam Smith recognized the benefits from trade based on , and David Ricardo recognized the benefits from trade based on .

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

"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 Answer
verified

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Correct Answer
verified

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. Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Correct Answer
verified

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Correct Answer
verified

Barriers to free trade impair efficiency in the international allocation of resources.

Correct Answer
verified

Exam 26: International Trade

The World Trade Organization comprises 28 European nations and is dedicated to abolishing trade barriers and integrating their economies.

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

"Offshoring" of certain production activities refers to

Correct AnswerverifiedShow Answer

Export supply curves are ; import demand curves are .

Correct AnswerverifiedShow Answer

"Offshoring" refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a nation exports a product, then the price of that product in the nation

Correct AnswerverifiedShow Answer

Tariffs

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X. By devoting all of its resources to Y, Alpha can produce 60Y. Comparable figures for nation Beta are 60X and 40Y. We can conclude that

Correct AnswerverifiedShow Answer

Adam Smith recognized the benefits from trade based on , and David Ricardo recognized the benefits from trade based on .

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

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. Alpha would prefer terms of trade at, or close to, 1X = 1½Y.

Correct AnswerverifiedShow Answer

Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was

Correct AnswerverifiedShow Answer

Barriers to free trade impair efficiency in the international allocation of resources.

Correct AnswerverifiedShow Answer

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