Question 1

Assume that a VER (voluntary export restraint)  is imposed on an imported product. The difference between the domestic price and the world price is captured by

Accepted Answer

A)   the government.
B)   foreign exporters.
C)   domestic consumers.
D)   domestic workers.E) A) and B)
F) A) and C)

Question 2

Excise taxes on imported goods that help shield domestic producers of the good are called

Accepted Answer

A)   protective tariffs.
B)   import quotas.
C)   revenue tariffs.
D)   voluntary export restrictions.E) None of the above
F) All of the above

Question 3

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Accepted Answer

A) True 
 B)False

Question 4

As of 2015, how many European nations belonged to the European Union (EU) ?

Accepted Answer

A)   All of the nations of Europe automatically belong to the EU.
B)   17
C)   28
D)   10E) C) and D)
F) A) and C)

Question 5

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

(Consider This)  According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that

Accepted Answer

A)   we should buy everything from abroad.
B)   people should only consume what they can produce themselves.
C)   consumers should only buy goods from other states.
D)   the best quality goods are found in the United States.E) A) and B)
F) A) and C)

Question 8

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 D)
F) All of the above

Question 9

Which is a valid counterargument to the infant industry argument for protective tariffs?

Accepted Answer

A)   Protective tariffs result in too many benefits for domestic firms that export goods and services.
B)   It is difficult to determine which infant industries will become mature industries with a comparative advantage.
C)   The objective would be better achieved through strategic trade policy.
D)   The objective would be better achieved by import quotas and nontariff barriers.E) All of the above
F) B) and D)

Question 10

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Accepted Answer

A)   higher combined output.
B)   higher consumption and standard of living.
C)   rising total employment.
D)   consuming combinations of products that are outside their PPCs.E) All of the above
F) A) and B)

Question 11

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 not.E) C) and D)
F) B) and D)

Question 12

A nation with abundant capital resources tends to be an exporter of

Accepted Answer

A)   labor-intensive products
B)   capital-intensive products.
C)   natural resource-based products.
D)   consumer products.E) B) and D)
F) A) and D)

Question 13

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

Accepted Answer

A) True 
 B)False

Question 14

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) C) and D)
F) A) and B)

Question 15

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) C) and D)
F) A) and D)

Question 16

Graphical analysis of tariffs reveals that

Accepted Answer

A)   they benefit domestic consumers at the expense of domestic producers.
B)   revenue gains outweigh the costs to domestic consumers.
C)   they increase domestic production of the good for which imports face tariffs.
D)   although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs.E) C) and D)
F) A) and B)

Question 17

The terms of trade will favor a larger nation over a smaller nation.

Accepted Answer

A) True 
 B)False

Question 18

In order for mutually beneficial trade to occur between two otherwise isolated nations,

Accepted Answer

A)   each nation must be able to produce at least one good absolutely cheaper than the other.
B)   each nation must be able to produce at least one good relatively cheaper than the other.
C)   each nation must face constant costs in the production of the good it exports.
D)   one nation's production must be labor-intensive, while the other nation's production is capital-intensive.E) A) and B)
F) None of the above

Question 19

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) None of the above

Question 20

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Accepted Answer

A)   a decrease in consumer prices
B)   a decrease in the tariff rates of foreign nations
C)   an increase in the number of jobs
D)   an increase in the possibility of retaliatory tariffsE) C) and D)
F) B) and C)

Exam 26: International Trade

Trade adjustment assistance

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A nation with abundant capital resources tends to be an exporter of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The percentage of the United States' domestic output that is derived from international trade is higher than that for any other industrially advanced nation.

Correct AnswerverifiedShow Answer

The so-called eurozone refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Specialization and trade based on comparative advantage allow nations to attain the following results, except

Correct AnswerverifiedShow Answer

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that

Correct AnswerverifiedShow Answer

Assume that a VER (voluntary export restraint) is imposed on an imported product. The difference between the domestic price and the world price is captured by

Correct AnswerverifiedShow Answer

Other things equal, a tariff is

Correct AnswerverifiedShow Answer

The terms of trade will favor a larger nation over a smaller nation.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Excise taxes on imported goods that help shield domestic producers of the good are called

Correct AnswerverifiedShow Answer

As of 2015, how many European nations belonged to the European Union (EU) ?

Correct AnswerverifiedShow Answer

Which is a valid counterargument to the infant industry argument for protective tariffs?

Correct AnswerverifiedShow Answer

The world price for a traded product will be between the domestic no-trade prices of the trading nations.

Correct AnswerverifiedShow Answer

In order for mutually beneficial trade to occur between two otherwise isolated nations,

Correct AnswerverifiedShow Answer

Graphical analysis of tariffs reveals that

Correct AnswerverifiedShow Answer

One major factor that serves as an economic basis for world trade is the uneven distribution of resources among nations.

Correct AnswerverifiedShow Answer

Which of the following is a likely result of imposing tariffs to increase domestic employment?

Correct AnswerverifiedShow Answer

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