Question 1

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 supply.E) None of the above
F) A) and B)

Question 2

If a nation has a comparative advantage in the production of X, this means the nation

Accepted Answer

A)  cannot benefit by producing and trading this product.
B)  must give up less of other goods than other nations in producing a unit of X.
C)  has a production possibilities curve identical to those of other nations.
D)  is not subject to increasing opportunity costs.E) A) and C)
F) B) and C)

Question 3

The ratio at which nations will exchange one product for another is known as the

Accepted Answer

A)  exchange rate.
B)  discount rate.
C)  terms of trade.
D)  balance of trade.E) B) and C)
F) A) and B)

Question 4

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 product.E) A) and C)
F) A) and B)

Question 5

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 restraints.E) C) and D)
F) B) and C)

Question 6

Answer the question using the accompanying cost ratios for two products, fish (F)  and chicken (C) , in countries Singsong and Harmony.Assume that production occurs under conditions of constant costs and that these are the only two nations in the world.Singsong: 1F = 2C Harmony: 1F = 4C
Which one of the following would not be feasible terms for trade between Singsong and Harmony?

Accepted Answer

A)  1 fish for 2½ chicken
B)  1 fish for 3 chicken
C)  1 chicken for 1/5 of a fish
D)  1 chicken for 1/3 of a fishE) All of the above
F) None of the above

Question 7

In effect, tariffs on imports are

Accepted Answer

A)  special taxes on domestic producers.
B)  subsidies to domestic consumers.
C)  subsidies to foreign producers.
D)  subsidies for domestic producers.E) A) and B)
F) All of the above

Question 8

In terms of trade volume in the past many years, China has been the largest trading partner of the United States.

Accepted Answer

A) True 
 B)False

Question 9

Other things equal, a tariff is

Accepted Answer

A)  superior to an import quota for Americans because a tariff increases the profits of foreign producers.
B)  inferior to an import quota for Americans because a tariff increases the profits of domestic producers.
C)  superior to an import quota for Americans because a tariff generates revenue for the U.S.Treasury.
D)  inferior to an import quota for Americans because a tariff generates revenue for the U.S.Treasury.E) A) and B)
F) B) and C)

Question 10

The World Trade Organization was established by the United States to force other nations to open their markets to U.S.goods.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

Which of the following is a valid counterargument to the call for higher tariffs to save U.S.jobs?

Accepted Answer

A)  U.S.firms and workers must be protected from the cheaper labor in nations where wages are low.
B)  All nations cannot simultaneously succeed in restricting imports while maintaining exports.
C)  Reducing tariffs will benefit all consumers and domestic producers.
D)  The need to protect U.S.workers from unemployment is not a concern in international economics.E) B) and D)
F) B) and C)

Question 13

In which of the following countries did exports account for the biggest percentage of GDP in 2014?

Accepted Answer

A)  Japan
B)  United States
C)  Netherlands
D)  GermanyE) A) and D)
F) A) and C)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

NAFTA

Accepted Answer

A)  has increased the standard of living in the North African member nations.
B)  benefits workers in the participating nations but hurts consumers by raising prices.
C)  allows completely unrestricted movement of goods, services, and resources between the member nations.
D)  has reduced most trade barriers between Canada, Mexico, and the United States.E) B) and D)
F) A) and B)

Question 16

Trade adjustment assistance provides subsidies to companies that have lost business to foreign firms.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true?

Accepted Answer

A)  Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost of producing it.
B)  Comparative advantage means that a nation can gain from trade only if it has a lower labor productivity than its trading partner.
C)  Specialization will be complete among nations when opportunity costs increase as the nations produce more of a particular product.
D)  Specialization will be less than complete among nations when opportunity costs increase as the nations produce more of a particular product.E) A) and C)
F) A) and D)

Question 18

Trade adjustment assistance

Accepted Answer

A)  provides financial assistance to all unemployed workers in the United States.
B)  guarantees jobs for all workers displaced by imports or plant relocations abroad.
C)  provides assistance to about 20 percent of unemployed U.S.workers each year.
D)  provides cash assistance for workers displaced by imports or plant relocations abroad.E) A) and C)
F) None of the above

Question 19

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.The terms of trade will be at or within the 1X = 1½Y to 1X = ⅔Y range.

Accepted Answer

A) True 
 B)False

Question 20

Economists who criticize trade adjustment assistance argue that

Accepted Answer

A)  it only benefits a small fraction of all unemployed workers.
B)  money spent on the program overstimulates aggregate demand and threatens to cause inflation.
C)  benefits are too low to provide unemployed workers with a livable wage.
D)  it distorts patterns of foreign trade, reducing the gains from trade.E) B) and C)
F) A) and D)

Exam 40: International Trade

Trade adjustment assistance provides subsidies to companies that have lost business to foreign firms.

Correct Answer
verified

In terms of trade volume in the past many years, China has been the largest trading partner of the United States.

Correct Answer
verified

Economists who criticize trade adjustment assistance argue that

Correct Answer
verified

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

In effect, tariffs on imports are

Correct Answer
verified

Other things equal, a tariff is

Correct Answer
verified

The "eurozone"

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.The terms of trade will be at or within the 1X = 1½Y to 1X = ⅔Y range.

Correct Answer
verified

In which of the following countries did exports account for the biggest percentage of GDP in 2014?

Correct Answer
verified

Dumping is the sale of a product in a foreign market

Correct Answer
verified

If a nation has a comparative advantage in the production of X, this means the nation

Correct Answer
verified

The ratio at which nations will exchange one product for another is known as the

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which of the following is a valid counterargument to the call for higher tariffs to save U.S.jobs?

Correct Answer
verified

The World Trade Organization was established by the United States to force other nations to open their markets to U.S.goods.

Correct Answer
verified

NAFTA

Correct Answer
verified

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

Correct Answer
verified

Trade adjustment assistance

Correct Answer
verified

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

Correct Answer
verified

Exam 40: International Trade

Trade adjustment assistance provides subsidies to companies that have lost business to foreign firms.

Correct AnswerverifiedShow Answer

In terms of trade volume in the past many years, China has been the largest trading partner of the United States.

Correct AnswerverifiedShow Answer

Economists who criticize trade adjustment assistance argue that

Correct AnswerverifiedShow Answer

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

In effect, tariffs on imports are

Correct AnswerverifiedShow Answer

Other things equal, a tariff is

Correct AnswerverifiedShow Answer

The "eurozone"

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.The terms of trade will be at or within the 1X = 1½Y to 1X = ⅔Y range.

Correct AnswerverifiedShow Answer

In which of the following countries did exports account for the biggest percentage of GDP in 2014?

Correct AnswerverifiedShow Answer

Dumping is the sale of a product in a foreign market

Correct AnswerverifiedShow Answer

If a nation has a comparative advantage in the production of X, this means the nation

Correct AnswerverifiedShow Answer

The ratio at which nations will exchange one product for another is known as the

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following is a valid counterargument to the call for higher tariffs to save U.S.jobs?

Correct AnswerverifiedShow Answer

The World Trade Organization was established by the United States to force other nations to open their markets to U.S.goods.

Correct AnswerverifiedShow Answer

NAFTA

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Trade adjustment assistance

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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