Question 1

By tradition, Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses, they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Accepted Answer

A)  beggar my neighbor.
B)  helpfulism.
C)  strategic trade policy.
D)  dumping.E) B) and D)
F) A) and D)

Question 2

The effect of opening trade between countries is

Accepted Answer

A)  living standards rise in the country with efficient, high-pay workers.
B)  both countries can exploit comparative advantage and increase productivity.
C)  total world production increases as both countries specialize in specific goods.
D)  All of the above are correct.E) B) and D)
F) A) and D)

Question 3

Variability in exchange rates of currencies used in international trade

Accepted Answer

A)  causes a complete breakdown of trade.
B)  renders the theory of gains from trade null in practice.
C)  brings with it a host of complications in trade policy.
D)  has no impact on trade.E) A) and B)
F) A) and D)

Question 4

If South Korea has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Accepted Answer

A) True 
 B)False

Question 5

Tariffs are different from quotas because they

Accepted Answer

A)  increase government revenue.
B)  increase profits.
C)  increase the quantity traded.
D)  place all the burden on foreigners.E) All of the above
F) B) and D)

Question 6

If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world)  output?

Accepted Answer

A)  It will increase.
B)  It will decrease.
C)  It will be unchanged in both countries.
D)  It will rise in one country and fall in the other, but the total is unchanged.
E)  Uncertain; economic theory has no answer to this question.F) A) and C)
G) A) and B)

Question 7

In discussing trade, it is ____ that matters rather than ____.

Accepted Answer

A)  absolute advantage; elastic advantage
B)  comparative advantage; absolute advantage
C)  entire advantage; comparative advantage
D)  elastic advantage; entire advantage
E)  declarative advantage; absolute advantageF) D) and E)
G) C) and E)

Question 8

If every country uses tariffs, everyone is likely to lose.

Accepted Answer

A) True 
 B)False

Question 9

David Ricardo discovered that two countries can still gain by trading even if one country is more efficient in the production of every commodity.Ricardo's discovery is called the law of

Accepted Answer

A)  comparative advantage.
B)  absolute advantage.
C)  compensating balances.
D)  increasing returns.E) B) and D)
F) B) and C)

Question 10

If a nation has an absolute advantage in the production of a good,

Accepted Answer

A)  it can produce that good at a lower opportunity cost than its trading partner.
B)  it can produce that good using fewer resources than its trading partner.
C)  it will specialize in the production of that good and export it.
D)  all of these.E) A) and D)
F) None of the above

Question 11

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

Accepted Answer

Low-paid workers may also be low-product...

Question 12

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Accepted Answer

A) True 
 B)False

Question 13

The infant industry argument is valid when

Accepted Answer

A)  a new industry is suffering financial losses.
B)  a new industry is less efficient than foreign competitors.
C)  the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected.
D)  the industry is not likely to be profitable in the future.E) None of the above
F) A) and D)

Question 14

Absolute advantage is a comparison among producers based on productivity.

Accepted Answer

A) True 
 B)False

Question 15

Suppose the South had won the Civil War, and trade no longer took place between Northern and Southern states.Explain whether the sum of the North and South GDPs would have been higher or lower than with the current United States.

Accepted Answer

North and South added together would hav...

Exam 34: International Trade and Comparative Advantage

If every country uses tariffs, everyone is likely to lose.

Correct Answer
verified

Absolute advantage is a comparison among producers based on productivity.

Correct Answer
verified

If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?

Correct Answer
verified

Variability in exchange rates of currencies used in international trade

Correct Answer
verified

The infant industry argument is valid when

Correct Answer
verified

Tariffs are different from quotas because they

Correct Answer
verified

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Correct Answer
verified

In discussing trade, it is that matters rather than .

Correct Answer
verified

Suppose the South had won the Civil War, and trade no longer took place between Northern and Southern states.Explain whether the sum of the North and South GDPs would have been higher or lower than with the current United States.

Correct Answer
verified
North and South added together would hav...
View Answer

David Ricardo discovered that two countries can still gain by trading even if one country is more efficient in the production of every commodity.Ricardo's discovery is called the law of

Correct Answer
verified

By tradition, Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses, they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Correct Answer
verified

If South Korea has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Correct Answer
verified

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

Correct Answer
verified
Low-paid workers may also be low-product...
View Answer

The effect of opening trade between countries is

Correct Answer
verified

If a nation has an absolute advantage in the production of a good,

Correct Answer
verified

Exam 34: International Trade and Comparative Advantage

If every country uses tariffs, everyone is likely to lose.

Correct AnswerverifiedShow Answer

Absolute advantage is a comparison among producers based on productivity.

Correct AnswerverifiedShow Answer

If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?

Correct AnswerverifiedShow Answer

Variability in exchange rates of currencies used in international trade

Correct AnswerverifiedShow Answer

The infant industry argument is valid when

Correct AnswerverifiedShow Answer

Tariffs are different from quotas because they

Correct AnswerverifiedShow Answer

Both tariffs and quotas will restrict supplies coming into the country from abroad.

Correct AnswerverifiedShow Answer

In discussing trade, it is ____ that matters rather than ____.

Correct AnswerverifiedShow Answer

Suppose the South had won the Civil War, and trade no longer took place between Northern and Southern states.Explain whether the sum of the North and South GDPs would have been higher or lower than with the current United States.

Correct AnswerverifiedNorth and South added together would hav...View AnswerShow Answer

David Ricardo discovered that two countries can still gain by trading even if one country is more efficient in the production of every commodity.Ricardo's discovery is called the law of

Correct AnswerverifiedShow Answer

By tradition, Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses, they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Correct AnswerverifiedShow Answer

If South Korea has an absolute advantage in the production of an item, it must also have a comparative advantage in the production of that item.

Correct AnswerverifiedShow Answer

"I oppose a free trade agreement with Mexico because American workers will lose jobs to low-paid Mexican workers." Explain whether you agree or disagree with this statement.

Correct AnswerverifiedLow-paid workers may also be low-product...View AnswerShow Answer

The effect of opening trade between countries is

Correct AnswerverifiedShow Answer

If a nation has an absolute advantage in the production of a good,

Correct AnswerverifiedShow Answer

Correct Answer
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In discussing trade, it is that matters rather than .

Correct Answer
verified

Correct Answer
verified
North and South added together would hav...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Low-paid workers may also be low-product...
View Answer

Correct Answer
verified

Correct Answer
verified