Question 1

As a result of pure free trade in a commodity, the

Accepted Answer

A)  price of the commodity must be the same in all countries.
B)  total quantity imported will exceed the total quantity exported.
C)  price of the commodity will be higher in the producing country.
D)  price of the commodity will be lower in the producing country.E) All of the above
F) C) and D)

Question 2

Mercantilism is a doctrine that holds that exports are good for a country, whereas imports are harmful.

Accepted Answer

A) True 
 B)False  True

Question 3

One of the main reasons that people want to limit imports is the

Accepted Answer

A)  fear that imports will decrease the income of Americans.
B)  idea that cheap foreign labor destroys American jobs.
C)  concept that if trade benefits another country, it must harm the United States.
D)  All of the above are correct.E) All of the above
F) A) and B)

Question 4

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Accepted Answer

National defense arguments can be made f...

Question 5

Imports are goods produced abroad and sold domestically.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

Political factors influence international trade because

Accepted Answer

A)  foreign trade always involves at least two governments.
B)  foreign governments are much less concerned with the welfare of citizens in other countries.
C)  foreign governments often establish impediments to free international trade.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 9

An essential point, among many, in the refutation of the "cheap foreign labor" argument is that

Accepted Answer

A)  foreign workers have a lower standard of living.
B)  foreign workers are less productive.
C)  low foreign wages mean fewer exports for the United States.
D)  the United States does not benefit from cheap foreign labor so the goods should be kept out.E) None of the above
F) A) and B)

Question 10

In a situation of free trade,

Accepted Answer

A)  countries with comparative advantage will export more than countries with comparative disadvantage import.
B)  the total quantity of an item exported will be greater than the total quantity imported.
C)  importing countries will always produce some good, so that total quantity imported is less than total quantity exported.
D)  the total quantity of an item exported will equal the total quantity imported.E) A) and C)
F) A) and B)

Question 11

Figure 34-9 ​

In Figure 34-9, Pestoland exports pasta to Pastaland. Equilibrium will occur when

Accepted Answer

A)  points E and B are reached simultaneously.
B)  either E or B is reached.
C)  exports equal imports.
D)  exports are maximized.E) C) and D)
F) A) and D)

Question 12

Figure 34-5 ​

From the graph in Figure 34-5 (curves show output per unit of labor input) , one can infer that

Accepted Answer

A)  Japan has an absolute advantage in TVs and computers, but a comparative advantage only in TVs.
B)  Japan has only a comparative advantage in TVs.
C)  Japan has an absolute advantage in both TVs and computers, but a comparative advantage only in computers.
D)  China has a comparative advantage in computers.E) B) and D)
F) A) and B)

Question 13

When a country removes a specific import restriction, it always benefits every worker in that country.

Accepted Answer

A) True 
 B)False

Question 14

A program of protection that results in preserving jobs in certain industries

Accepted Answer

A)  raises average productivity in all sectors of the economy.
B)  does so at very high cost to consumers of the products from those industries.
C)  is an efficient way to preserve employment and is cheaper than other forms of maintaining full employment.
D)  is an effective way of encouraging innovation and improvement in production.E) B) and D)
F) A) and C)

Question 15

Ideally, a free trade policy should be accompanied by

Accepted Answer

A)  a public education program to make the benefits known.
B)  open borders and amnesty for all undocumented workers.
C)  programs to ensure no one loses a job as a result of foreign competition.
D)  programs to assist workers who lose their jobs to foreign competition.E) A) and C)
F) B) and C)

Question 16

The United States has relatively low tariffs.

Accepted Answer

A) True 
 B)False  True

Question 17

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

Accepted Answer

A) True 
 B)False

Question 18

Trade between nations usually means that

Accepted Answer

A)  one country is richer than another.
B)  one country becomes richer while the other becomes poorer.
C)  both trading nations show some gains.
D)  one trading country is trying to "beggar its neighbor."E) A) and C)
F) A) and D)

Question 19

If a country's productivity doubles for everything it produces, this will not alter its prior pattern of specialization because it has not altered its comparative advantage.

Accepted Answer

A) True 
 B)False

Question 20

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

Accepted Answer

A)  A: maximum, B: zero
B)  A: maximum, B: maximum
C)  A: zero, B: maximum
D)  A: zero, B: minimumE) All of the above
F) None of the above A

Exam 21: International Trade and Comparative Advantage

As a result of pure free trade in a commodity, the

Correct AnswerverifiedShow Answer

Mercantilism is a doctrine that holds that exports are good for a country, whereas imports are harmful.

Correct AnswerverifiedTrue

One of the main reasons that people want to limit imports is the

Correct AnswerverifiedShow Answer

Discuss national defense, infant industry, and strategic trade as arguments for protection.

Correct AnswerverifiedNational defense arguments can be made f...View AnswerShow Answer

Imports are goods produced abroad and sold domestically.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Political factors influence international trade because

Correct AnswerverifiedShow Answer

An essential point, among many, in the refutation of the "cheap foreign labor" argument is that

Correct AnswerverifiedShow Answer

In a situation of free trade,

Correct AnswerverifiedShow Answer

Figure 34-9 ​ In Figure 34-9, Pestoland exports pasta to Pastaland. Equilibrium will occur when

Correct AnswerverifiedShow Answer

Figure 34-5 ​ From the graph in Figure 34-5 (curves show output per unit of labor input) , one can infer that

Correct AnswerverifiedShow Answer

When a country removes a specific import restriction, it always benefits every worker in that country.

Correct AnswerverifiedShow Answer

A program of protection that results in preserving jobs in certain industries

Correct AnswerverifiedShow Answer

Ideally, a free trade policy should be accompanied by

Correct AnswerverifiedShow Answer

The United States has relatively low tariffs.

Correct AnswerverifiedTrue

Comparative advantage, not absolute advantage, determines the decision to specialize in production.

Correct AnswerverifiedShow Answer

Trade between nations usually means that

Correct AnswerverifiedShow Answer

If a country's productivity doubles for everything it produces, this will not alter its prior pattern of specialization because it has not altered its comparative advantage.

Correct AnswerverifiedShow Answer

What would be the output combination for two products A and B on the production possibility frontier, if a country uses its entire resources for producing A?

Correct AnswerverifiedA

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified
National defense arguments can be made f...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 34-9 In Figure 34-9, Pestoland exports pasta to Pastaland. Equilibrium will occur when

Correct Answer
verified

Figure 34-5 From the graph in Figure 34-5 (curves show output per unit of labor input) , one can infer that

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A