Question 1

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Accepted Answer

A)  it has no validity on noneconomic grounds.
B)  it is unrelated to the United States' ability to wage war.
C)  other nations will retaliate with tariffs against U.S. producers of war material.
D)  industries with only the most peripheral relationship to defense are likely to invoke this argument on their behalf.E) None of the above
F) B) and C)

Question 2

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 D)

Question 3

A quota sets the maximum amount of a good that is permitted into a country.

Accepted Answer

A) True 
 B)False

Question 4

How does the imposition of a tariff reduce the price of imports?

Accepted Answer

A)  At the lower quantity supplied, the price to the importer is lower than if there were free trade.
B)  At the lower quantity demanded, the price to the importer is lower than if there were free trade.
C)  Supply of the product is increased from domestic production, reducing the price of the imports.
D)  Demand for the product is decreased, so that price must fall.E) B) and C)
F) A) and C)

Question 5

Equilibrium price in international trade is the common price between exporting and importing countries.

Accepted Answer

A) True 
 B)False

Question 6

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

Accepted Answer

A) True 
 B)False

Question 7

"Protection" is designed to help

Accepted Answer

A)  firms whose relative inefficiency does not permit successful competition with imports.
B)  workers who have very high productivity, and cannot survive against low-paid foreign workers.
C)  government that needs revenue from tariffs and quotas to cover government spending.
D)  firms that are highly efficient and cannot survive against low-price foreign imports.E) A) and D)
F) None of the above

Question 8

Comparing international trade with trade among the different states of the United States shows that

Accepted Answer

A)  the logic of international trade is quite different from that of intranational trade.
B)  the basic reasons for trade are equally applicable within a country or among countries.
C)  there is no need to study international trade as a special subject.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 9

If gains from trade are based solely on comparative advantage, and if all countries have the same opportunity costs of production, then there are no gains from trade.

Accepted Answer

A) True 
 B)False

Question 10

A tariff has one distinct advantage over a quota. It increases tax revenues to the government.

Accepted Answer

A) True 
 B)False

Question 11

If a nation has "cheap labor,"

Accepted Answer

A)  it can still benefit from trade.
B)  other nations can still compete with it.
C)  it cannot have a comparative advantage in everything.
D)  All of the above are true.E) B) and C)
F) None of the above

Question 12

After the American Civil War, many prominent Southerners lamented the fact that the South "overproduced" cotton and "underproduced" food. In fact, the South did import a very large percentage of its food. Nevertheless, rather than reduce cotton production and grow more food, Southern farmers did the opposite because

Accepted Answer

A)  they were irrational and distraught over the loss of slavery.
B)  the South had a comparative advantage in cotton production.
C)  the North had a comparative advantage in cotton production.
D)  corn was absolutely cheaper to produce in the North.E) None of the above
F) B) and D)

Question 13

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week. From these numbers, we can conclude

Accepted Answer

A)  Captain Canada has a comparative advantage in the production of hockey sticks.
B)  Captain Germany has a comparative advantage in the production of maple syrup.
C)  Captain Canada has an absolute advantage in the production of hockey sticks.
D)  All of the above conclusions are correct.E) A) and B)
F) A) and C)

Question 14

A tariff is a tax on imports.

Accepted Answer

A) True 
 B)False

Question 15

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Accepted Answer

A) True 
 B)False

Question 16

The Trade Adjustment Assistance program is intended to help

Accepted Answer

A)  businesses that seek to expand exports into protected foreign markets.
B)  local governments that are harmed when businesses fail as imports increase.
C)  protected industries obtain improved technology in order to increase productivity.
D)  workers and businesses that lose markets because of increases in imports.E) All of the above
F) A) and C)

Question 17

An import quota on a product normally does all of the following except

Accepted Answer

A)  reduces the volume of that product traded.
B)  raises the price in the importing country.
C)  increases the price everywhere.
D)  reduces the price in the exporting country.E) A) and B)
F) A) and C)

Question 18

Exports are goods produced domestically and sold abroad.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following positions would a mercantilist support?

Accepted Answer

A)  Trade in manufacturing goods is good for the United States.
B)  Imports to the United States from Japan are beneficial to the United States.
C)  Exports from Japan to the United Kingdom are beneficial to Japan.
D)  Movement of labor from the United Kingdom to the United States is beneficial to the United States.E) B) and C)
F) None of the above

Question 20

How can tariffs lead to a situation in which all parties to a trade lose?

Accepted Answer

In effect, a tariff amounts to governmen...

Exam 21: International Trade and Comparative Advantage

Comparing international trade with trade among the different states of the United States shows that

Correct Answer
verified

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Correct Answer
verified

An import quota on a product normally does all of the following except

Correct Answer
verified

"Protection" is designed to help

Correct Answer
verified

Correct Answer
verified

Which of the following positions would a mercantilist support?

Correct Answer
verified

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

Correct Answer
verified

How does the imposition of a tariff reduce the price of imports?

Correct Answer
verified

A quota sets the maximum amount of a good that is permitted into a country.

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

If gains from trade are based solely on comparative advantage, and if all countries have the same opportunity costs of production, then there are no gains from trade.

Correct Answer
verified

Exports are goods produced domestically and sold abroad.

Correct Answer
verified

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week. From these numbers, we can conclude

Correct Answer
verified

How can tariffs lead to a situation in which all parties to a trade lose?

Correct Answer
verified
In effect, a tariff amounts to governmen...
View Answer

Equilibrium price in international trade is the common price between exporting and importing countries.

Correct Answer
verified

A tariff has one distinct advantage over a quota. It increases tax revenues to the government.

Correct Answer
verified

A tariff is a tax on imports.

Correct Answer
verified

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Correct Answer
verified

If a nation has "cheap labor,"

Correct Answer
verified

The Trade Adjustment Assistance program is intended to help

Correct Answer
verified

Exam 21: International Trade and Comparative Advantage

Comparing international trade with trade among the different states of the United States shows that

Correct AnswerverifiedShow Answer

Many countries impose tariffs or quotas to protect the domestic industry from competition.

Correct AnswerverifiedShow Answer

An import quota on a product normally does all of the following except

Correct AnswerverifiedShow Answer

"Protection" is designed to help

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following positions would a mercantilist support?

Correct AnswerverifiedShow Answer

If one country has an absolute advantage in every commodity, there is no reason for it to trade.

Correct AnswerverifiedShow Answer

How does the imposition of a tariff reduce the price of imports?

Correct AnswerverifiedShow Answer

A quota sets the maximum amount of a good that is permitted into a country.

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

If gains from trade are based solely on comparative advantage, and if all countries have the same opportunity costs of production, then there are no gains from trade.

Correct AnswerverifiedShow Answer

Exports are goods produced domestically and sold abroad.

Correct AnswerverifiedShow Answer

Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or 10 gallons of maple syrup in a typical work week. From these numbers, we can conclude

Correct AnswerverifiedShow Answer

How can tariffs lead to a situation in which all parties to a trade lose?

Correct AnswerverifiedIn effect, a tariff amounts to governmen...View AnswerShow Answer

Equilibrium price in international trade is the common price between exporting and importing countries.

Correct AnswerverifiedShow Answer

A tariff has one distinct advantage over a quota. It increases tax revenues to the government.

Correct AnswerverifiedShow Answer

A tariff is a tax on imports.

Correct AnswerverifiedShow Answer

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Correct AnswerverifiedShow Answer

If a nation has "cheap labor,"

Correct AnswerverifiedShow Answer

The Trade Adjustment Assistance program is intended to help

Correct AnswerverifiedShow Answer

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In effect, a tariff amounts to governmen...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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