Question 1

Tariffs and quotas are the only two devices used to restrict foreign trade.

Accepted Answer

A) True 
 B)False

Question 2

The world price of a good refers to the quantity of one good exchanged for a unit of another good.

Accepted Answer

A) True 
 B)False

Question 3

Quotas are favoured over free international trade by:

Accepted Answer

A)   consumers in the importing country and consumers in the exporting country.
B)   domestic producers in the importing country and foreign producers with quota rights.
C)   domestic producers and domestic consumers in the exporting country.
D)   foreign producers without quota rights and consumers in the importing country.
E)   foreign consumers and domestic producers in the exporting country.F) B) and C)
G) C) and E)

Question 4

In the United States, dumping:

Accepted Answer

A)   is encouraged because it lowers prices for consumers.
B)   is prohibited by the Trade Agreements Act of 1979.
C)   is encouraged by domestic consumers who benefit from lower prices.
D)   is encouraged by the government because it encourages competition.
E)   was prohibited in 1947 by the provisions of General Agreement on Tariffs and Trade (GATT) .F) B) and C)
G) A) and C)

Question 5

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 T-shirt in Cambria is _____.

Accepted Answer

A)   4 tons of rice
B)   0.5 ton of rice
C)   0.75 ton of rice
D)   0.025 ton of rice
E)   2 tons of riceF) None of the above
G) A) and B)

Question 6

The establishment of GATT resulted in:

Accepted Answer

A)   lower tariff rates.
B)   an increase in the net welfare loss of economies.
C)   a decrease in the total world trade.
D)   increased protectionism.
E)   a rise in the price of imports.F) B) and C)
G) D) and E)

Question 7

Which of the following was a motive of the United States to negotiate a free trade agreement with Mexico?

Accepted Answer

A)   To help foster the study of the Spanish language as a means to trade with all Spanish-speaking countries
B)   To increase immigration into the United States
C)   To gain increased access to Mexican consumers
D)   To attract more Mexican investment
E)   To achieve political union with MexicoF) B) and D)
G) A) and E)

Question 8

Which of the following statements is true of free trade zones?

Accepted Answer

A)   Central American countries and the Dominican Republic (CAFTA-DR)  is a free trade agreement between the U.S. and Europe that has resulted in greater exports of U.S. beef to Europe.
B)   North American Free Trade Agreement (NAFT
A)   is a free trade agreement between the U.S., Canada, and Mexico that has reduced illegal migration of Mexicans to the U.S.
C)   Association of Southeast Asian nations (ASEAN)  is a free trade agreement between the U.S. and a group of South Asian countries that has led to an increase in U.S. outsourcing to countries like India.
D)   Mercosur is a free trade association of Latin American countries that aims to increase export subsidies and domestic content requirements in each member country.
E)   The Trans-Pacific Partnership is a free trade association of South Africa and its four neighbouring countries.F) None of the above
G) C) and E)

Question 9

The following graph shows the supply of and demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is shown by the area _____.

Accepted Answer

A)   a
B)   b
C)   c
D)   f
E)   eF) A) and E)
G) A) and B)

Question 10

In the case of declining industries, wage subsidies or special tax breaks that decline over time:

Accepted Answer

A)   can be more efficient than tariffs.
B)   are permanent import restrictions.
C)   can result in increasing shocks in the economy.
D)   equal or exceed the direct welfare loss from tariffs.
E)   result from diseconomies of scale.F) D) and E)
G) A) and C)

Question 11

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that trade between Bodoni and Cambria will benefit Cambria but not Bodoni.

Accepted Answer

A) True 
 B)False

Question 12

The following graph shows the supply of and demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is _____.

Accepted Answer

A)   $4,000
B)   $16,000
C)   $20,000
D)   $24,000
E)   $48,000F) C) and E)
G) A) and C)

Question 13

The following graph shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by the area _____.

Accepted Answer

A)   f
B)   i
C)   h
D)   f, g, and h
E)   a, b, c, d, and eF) A) and D)
G) B) and C)

Question 14

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Which of the following is true in such a case?

Accepted Answer

A)   Bodoni has an absolute advantage in the production of both rice and T-shirts.
B)   Bodoni has an absolute advantage in the production of only rice.
C)   Bodoni has an absolute advantage in the production of T-shirts only.
D)   Cambria has an absolute advantage in the production of both rice and T-shirts.
E)   Cambria has an absolute advantage in the production of only T-shirts.F) B) and D)
G) None of the above

Question 15

International trade increases the variety of goods and services available in a country.

Accepted Answer

A) True 
 B)False

Question 16

International trade is most likely to occur whenever:

Accepted Answer

A)   nations have an absolute advantage in the production of goods.
B)   all of the trading nations are self-sufficient.
C)   world production equals world consumption.
D)   each of the trading nations gains from trade.
E)   labor is cheaper abroad.F) C) and D)
G) A) and C)

Question 17

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni has a comparative advantage in the production of rice.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a type of trade restriction?

Accepted Answer

A)   Low-interest loans to foreign buyers
B)   Export subsidies to domestic producers
C)   Restrictive health and safety standards
D)   Domestic content requirements
E)   Economies of scaleF) B) and E)
G) B) and D)

Question 19

Tariffs and quotas:

Accepted Answer

A)   reduce consumer surplus and increase producer surplus in the importing country.
B)   increase consumer surplus and reduce producer surplus in the importing country.
C)   reduce both consumer surplus and producer surplus in the exporting country.
D)   are imposed when there are differences in the opportunity cost of production across countries.
E)   are imposed when production is subject to economies of scale.F) A) and C)
G) A) and B)

Question 20

The largest regional trading bloc is the _____.

Accepted Answer

A)   North American Free Trade Agreement
B)   European Community
C)   Latin American Free Trade Agreement
D)   Asian Free Trade Agreement
E)   East Asian Cooperation CouncilF) A) and E)
G) C) and D)

Exam 17: International Trade

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that Bodoni has a comparative advantage in the production of rice.

Correct AnswerverifiedShow Answer

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Which of the following is true in such a case?

Correct AnswerverifiedShow Answer

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that the opportunity cost of 1 T-shirt in Cambria is _____.

Correct AnswerverifiedShow Answer

Which of the following is not a type of trade restriction?

Correct AnswerverifiedShow Answer

International trade increases the variety of goods and services available in a country.

Correct AnswerverifiedShow Answer

The following graph shows the supply of and demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is shown by the area _____.

Correct AnswerverifiedShow Answer

In the case of declining industries, wage subsidies or special tax breaks that decline over time:

Correct AnswerverifiedShow Answer

International trade is most likely to occur whenever:

Correct AnswerverifiedShow Answer

The world price of a good refers to the quantity of one good exchanged for a unit of another good.

Correct AnswerverifiedShow Answer

Which of the following statements is true of free trade zones?

Correct AnswerverifiedShow Answer

Quotas are favoured over free international trade by:

Correct AnswerverifiedShow Answer

Tariffs and quotas:

Correct AnswerverifiedShow Answer

The largest regional trading bloc is the _____.

Correct AnswerverifiedShow Answer

Which of the following was a motive of the United States to negotiate a free trade agreement with Mexico?

Correct AnswerverifiedShow Answer

The following graph shows the demand for and the supply of a good in a country. If the world price of the good is $2.00 per unit and an import quota of 50 units per month is imposed, then the decrease in consumer surplus can be represented by the area _____.

Correct AnswerverifiedShow Answer

Tariffs and quotas are the only two devices used to restrict foreign trade.

Correct AnswerverifiedShow Answer

In the United States, dumping:

Correct AnswerverifiedShow Answer

The establishment of GATT resulted in:

Correct AnswerverifiedShow Answer

The following graph shows the supply of and demand for baseballs in the United States. If the world price is $3 per baseball and a tariff of $1 per baseball is imposed, then the tariff revenue collected by the United States government is _____.

Correct AnswerverifiedShow Answer

The following table shows per-day production data of rice and T-shirts for two countries, Cambria and Bodoni. Based on the table, it can be said that trade between Bodoni and Cambria will benefit Cambria but not Bodoni.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified