Question 1

In a typical month in the United States:

Accepted Answer

A)   almost 1.0 million jobs are lost because of unfair international trade.
B)   several hundred thousand jobs are lost and several hundred thousand jobs are gained.
C)   the unemployment rate averages 8.7 percent.
D)   All of these observations are correct.E) All of the above
F) A) and D)

Question 2

Reference: Ref 9-5 (Figure: A Tariff on Imports)  Refer to the figure. Suppose the government intervenes with a $2 tariff; the total value of deadweight loss as a result of the tariff is:

Accepted Answer

A)   $150 million.
B)   $200 million.
C)   $400 million.
D)   $550 million.E) A) and D)
F) A) and C)

Question 3

Imposing a restrictive quota on the import of sugar will likely:

Accepted Answer

A)   increase the price of sugar and decrease the quantity consumed.
B)   increase the price of sugar and increase the quantity consumed.
C)   leave the price of sugar unchanged and decrease the quantity consumed.
D)   leave the price of sugar unchanged and increase the quantity consumed.E) A) and B)
F) A) and C)

Question 4

A trade quota on imports:

Accepted Answer

A)   benefits domestic producers and hurts domestic consumers.
B)   benefits domestic consumers and hurts domestic producers.
C)   benefits both domestic producers and domestic consumers.
D)   hurts both domestic producers and domestic consumers.E) None of the above
F) A) and D)

Question 5

Reference: Ref 9-3 (Figure: Foreign Trade)  Refer to the figure. What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Accepted Answer

A)   $30,000
B)   $5,000
C)   $2,500
D)   $22,500E) A) and B)
F) C) and D)

Question 6

Economists consider tariffs to be:

Accepted Answer

A)   necessary.
B)   beneficial to domestic consumers.
C)   harmful to domestic producers.
D)   obstacles that reduce gains from trade.E) All of the above
F) None of the above

Question 7

The benefits of trade include: 
I. greater productivity due to specialization. 
II. higher output due to specialization according to comparative advantage. 
III. increased welfare when preferences differ.

Accepted Answer

A)   I and II only
B)   II and III only
C)   I and III only
D)   I, II, and IIIE) B) and C)
F) A) and C)

Question 8

A tariff is a:

Accepted Answer

A)   tax on imports.
B)   subsidy on exports.
C)   restriction on the quantity of domestic goods consumed by foreigners.
D)   restriction on the quantity of imports from foreign producers.E) A) and D)
F) A) and B)

Question 9

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Accepted Answer

A) True 
 B)False

Question 10

With free trade, the domestic price of a good must be equal to the world price of a good.

Accepted Answer

A) True 
 B)False

Question 11

Which, if any, of the following conditions for efficient market functioning do tariffs and quotas violate? I. demanders with the highest willingness to pay purchase the supply of goods II. producers with the lowest costs produce and sell the supply of goods III. the sum of consumer and producer surplus is maximized

Accepted Answer

A)   I only
B)   II and III only
C)   I, II, and III
D)   III onlyE) C) and D)
F) B) and D)

Question 12

Suppose a government is facing accusations of allowing domestic jobs to be lost to foreign labor in other countries. How can the government address these concerns? I. Governments can ensure that unemployment insurance and strong education programs exist to help workers retrain for new jobs. II. Governments can stress the importance of job creation in those industries that benefit from international trade, and encourage job creation in those industries. III. Governments can set up extensive trade restrictions to limit the impact of foreign firms on domestic production.

Accepted Answer

A)   I only
B)   II and III only
C)   I and II only
D)   I, II, and IIIE) A) and B)
F) C) and D)

Question 13

If the United States imports teacups from other countries, then U.S. producers of teacups are better off, and U.S. consumers of teacups are worse off, as a result of trade.

Accepted Answer

A) True 
 B)False

Question 14

Trade restrictions based on national security concerns:

Accepted Answer

A)   might be beneficial in certain cases, like vaccinations.
B)   have never been granted in the United States.
C)   have no merit and are always unwise.
D)   give little incentive for industry lobbyists to declare their product vital for national security purposes.E) C) and D)
F) A) and B)

Question 15

Reference: Ref 9-2 (Figure: Foreign Trade with a Tariff)  Refer to the figure. A $1 tariff results in:

Accepted Answer

A)   an increase in imports of 80 million units.
B)   a decrease in imports of 80 million units.
C)   an increase in imports of 100 million units.
D)   a decrease in imports of 100 million units.E) A) and C)
F) B) and D)

Question 16

Economic growth requires:

Accepted Answer

A)   job destruction.
B)   trade barriers.
C)   government intervention.
D)   job creation.E) A) and B)
F) C) and D)

Question 17

Figure: Foreign Trade with a Tariff  Reference: Ref 9-2 (Figure: Foreign Trade with a Tariff)  Refer to the figure. A $1 tariff generates increased domestic production by:

Accepted Answer

A)   $40 million units.
B)   $90 million units.
C)   $140 million units.
D)   $180 million units.E) All of the above
F) A) and D)

Question 18

Without trade restrictions the price of tennis shoes is $30, and with trade restrictions the price of tennis shoes is $45. The difference in the two prices reflects:

Accepted Answer

A)   per-unit profits.
B)   the value of the extra resources for domestic production of an additional pair of tennis shoes.
C)   the gain in consumer surplus from free trade.
D)   All of the answers are correct.E) A) and B)
F) A) and C)

Exam 9: International Trade

Economic growth requires:

Correct Answer
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Economists consider tariffs to be:

Correct Answer
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In a typical month in the United States:

Correct Answer
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The benefits of trade include: I. greater productivity due to specialization. II. higher output due to specialization according to comparative advantage. III. increased welfare when preferences differ.

Correct Answer
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Without trade restrictions the price of tennis shoes is $30, and with trade restrictions the price of tennis shoes is $45. The difference in the two prices reflects:

Correct Answer
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Trade restrictions based on national security concerns:

Correct Answer
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If the United States imports teacups from other countries, then U.S. producers of teacups are better off, and U.S. consumers of teacups are worse off, as a result of trade.

Correct Answer
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With free trade, the domestic price of a good must be equal to the world price of a good.

Correct Answer
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A tariff is a:

Correct Answer
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Figure: Foreign Trade with a Tariff Reference: Ref 9-2 (Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff generates increased domestic production by:

Correct Answer
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Reference: Ref 9-2 (Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff results in:

Correct Answer
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Reference: Ref 9-5 (Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total value of deadweight loss as a result of the tariff is:

Correct Answer
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Reference: Ref 9-3 (Figure: Foreign Trade) Refer to the figure. What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Correct Answer
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Imposing a restrictive quota on the import of sugar will likely:

Correct Answer
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A trade quota on imports:

Correct Answer
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If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct Answer
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Exam 9: International Trade

Economic growth requires:

Correct AnswerverifiedShow Answer

Economists consider tariffs to be:

Correct AnswerverifiedShow Answer

In a typical month in the United States:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The benefits of trade include: I. greater productivity due to specialization. II. higher output due to specialization according to comparative advantage. III. increased welfare when preferences differ.

Correct AnswerverifiedShow Answer

Without trade restrictions the price of tennis shoes is $30, and with trade restrictions the price of tennis shoes is $45. The difference in the two prices reflects:

Correct AnswerverifiedShow Answer

Trade restrictions based on national security concerns:

Correct AnswerverifiedShow Answer

If the United States imports teacups from other countries, then U.S. producers of teacups are better off, and U.S. consumers of teacups are worse off, as a result of trade.

Correct AnswerverifiedShow Answer

With free trade, the domestic price of a good must be equal to the world price of a good.

Correct AnswerverifiedShow Answer

A tariff is a:

Correct AnswerverifiedShow Answer

Figure: Foreign Trade with a Tariff Reference: Ref 9-2 (Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff generates increased domestic production by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Reference: Ref 9-2 (Figure: Foreign Trade with a Tariff) Refer to the figure. A $1 tariff results in:

Correct AnswerverifiedShow Answer

Reference: Ref 9-5 (Figure: A Tariff on Imports) Refer to the figure. Suppose the government intervenes with a $2 tariff; the total value of deadweight loss as a result of the tariff is:

Correct AnswerverifiedShow Answer

Reference: Ref 9-3 (Figure: Foreign Trade) Refer to the figure. What is the dollar value of wasted resources as a result of prohibiting trade in this market?

Correct AnswerverifiedShow Answer

Imposing a restrictive quota on the import of sugar will likely:

Correct AnswerverifiedShow Answer

A trade quota on imports:

Correct AnswerverifiedShow Answer

If the world price of a good is greater than the domestic price in a country that can engage in international trade, then that country becomes an importer of that good.

Correct AnswerverifiedShow Answer

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