Question 1

What was the General Agreement on Tariffs and Trade (GATT)?

Accepted Answer

The General Agreement on Tariffs and Tra...

Question 2

Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Accepted Answer

A)  fire.
B)  the sun.
C)  other European countries.
D)  invention of the electric light.E) A) and D)
F) B) and C)

Question 3

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Accepted Answer

A)  the product with fewer inputs than the other nation.
B)  the product at lower average cost than the other nation.
C)  the product at a lower domestic opportunity cost than the other nation.
D)  more of the product than the other nation.E) B) and D)
F) B) and C)

Question 4

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Accepted Answer

A) True 
 B)False

Question 5

The following are commonly used arguments for protection against imports, except

Accepted Answer

A)  self-sufficiency and diversification-for-stability.
B)  protection against dumping.
C)  infant industry protection.
D)  price and profit maintenance.E) A) and B)
F) None of the above

Question 6

d and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If the economy is open to international trade but a per unit tariff of $4 is imposed, then the total revenue going to domestic producers would be A) $400, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $80. B) $240, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80. C) $400, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80. D) $240, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $120." class="answers-bank-image d-inline" rel="preload" > Refer to the accompanying graph, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If the economy is open to international trade but a per unit tariff of $4 is imposed, then the total revenue going to domestic producers would be

Accepted Answer

A)  $400, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $80.
B)  $240, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80.
C)  $400, the total revenue (after tariff) going to foreign producers would be $240, and the tariff revenue going to the government would be $80.
D)  $240, the total revenue (after tariff) going to foreign producers would be $120, and the tariff revenue going to the government would be $120.E) None of the above
F) A) and C)

Question 7

d and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be A) $600, but only $240 if the domestic market were open to international trade. B) $600, but only $120 if the domestic market were open to international trade. C) $500, but only $240 if the domestic market were open to international trade. D) $240, but only $120 if the domestic market were open to international trade." class="answers-bank-image d-inline" rel="preload" > Refer to the accompanying graph, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be

Accepted Answer

A)  $600, but only $240 if the domestic market were open to international trade.
B)  $600, but only $120 if the domestic market were open to international trade.
C)  $500, but only $240 if the domestic market were open to international trade.
D)  $240, but only $120 if the domestic market were open to international trade.E) B) and D)
F) A) and D)

Question 8

A nation's import demand curve for a specific product

Accepted Answer

A)  is upsloping.
B)  shows the amount of the product it will import at prices below its domestic price.
C)  lies above its export supply curve for the product.
D)  depends on domestic demand for the product, but not on domestic supply.E) B) and D)
F) B) and C)

Question 9

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade)

Accepted Answer

A)  is the absolute value of the slope of line AB.
B)  is the absolute value of the slope of line AC.
C)  could lie anywhere between the absolute value of the slopes of lines AB and AC.
D)  cannot be determined on the basis of this information.E) None of the above
F) C) and D)

Question 10

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B,

Accepted Answer

A)  mutually advantageous specialization and trade between A and B may still be possible.
B)  we can conclude that A is an industrially advanced economy and B is a developing economy.
C)  it will necessarily be advantageous for B to import both X and Y from A.
D)  then there is no possible basis for mutually advantageous specialization and trade between A and B.E) A) and C)
F) B) and C)

Question 11

Trade protection in most instances transfers wealth from consumers to domestic producers and government.

Accepted Answer

A) True 
 B)False

Question 12

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Accepted Answer

A)  Nation A has the absolute advantage over Nation B in producing cloth.
B)  Nation B has the absolute advantage over Nation A in producing cloth.
C)  Nation A has the comparative advantage over Nation B in producing cloth.
D)  Nation B has the comparative advantage over Nation A in producing cloth.E) A) and D)
F) A) and B)

Question 13

d) , and Column 3 is the quantity supplied domestically (Qₛd) . At what price will Country Y export 100 units of the product? A) $9.00 B) $8.00 C) $7.00 D) $6.00" class="answers-bank-image d-inline" rel="preload" > The accompanying table gives data for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Qd) , and Column 3 is the quantity supplied domestically (Qₛd) . At what price will Country Y export 100 units of the product?

Accepted Answer

A)  $9.00
B)  $8.00
C)  $7.00
D)  $6.00E) None of the above
F) A) and D)

Question 14

If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation.  Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations?

Accepted Answer

A)  0.5 unit of oil for 1 unit of aluminum
B)  0.5 unit of oil for 2 units of aluminum
C)  1 unit of oil for 0.4 unit of aluminum
D)  1 unit of oil for 4 units of aluminumE) A) and B)
F) A) and C)

Question 15

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

Question 16

Tariffs and import quotas meant to increase domestic employment also eliminate domestic jobs in export industries.

Accepted Answer

A) True 
 B)False

Question 17

A tariff can best be described as

Accepted Answer

A)  an excise tax on an imported good.
B)  a government payment to domestic producers to enable them to sell competitively in world markets.
C)  an excise tax on an exported good.
D)  a law that sets a limit on the amount of a good that can be imported.E) A) and B)
F) B) and D)

Question 18

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 19

A major goal of the World Trade Organization is to

Accepted Answer

A)  increase the protection of producers against foreign trade competition.
B)  encourage bilateral trade agreements between nations.
C)  liberalize international trade among nations.
D)  maximize tariff revenue for governments.E) A) and B)
F) A) and C)

Question 20

Which organization meets regularly to establish rules and settle disputes related to international trade?

Accepted Answer

A)  the United Nations Commission on Trade Law
B)  the United Nations Conference on Trade and Development
C)  the World Trade Organization
D)  the World Economic ForumE) A) and C)
F) A) and B)

Exam 26: International Trade

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade)

Correct AnswerverifiedShow Answer

If Nation A requires more resources to produce each bale of cloth than Nation B does, then we say that

Correct AnswerverifiedShow Answer

Trade protection in most instances transfers wealth from consumers to domestic producers and government.

Correct AnswerverifiedShow Answer

What was the General Agreement on Tariffs and Trade (GATT)?

Correct AnswerverifiedThe General Agreement on Tariffs and Tra...View AnswerShow Answer

A nation's import demand curve for a specific product

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which organization meets regularly to establish rules and settle disputes related to international trade?

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The accompanying table gives data for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Qd) , and Column 3 is the quantity supplied domestically (Qₛd) . At what price will Country Y export 100 units of the product?

Correct AnswerverifiedShow Answer

During the Great Depression, most nations lowered tariffs and abolished import quotas to encourage the flow of trade.

Correct AnswerverifiedShow Answer

A major goal of the World Trade Organization is to

Correct AnswerverifiedShow Answer

Refer to the accompanying graph, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If the economy is open to international trade but a per unit tariff of $4 is imposed, then the total revenue going to domestic producers would be

Correct AnswerverifiedShow Answer

Tariffs and import quotas meant to increase domestic employment also eliminate domestic jobs in export industries.

Correct AnswerverifiedShow Answer

In a two-nation world, comparative advantage in the production of a particular product means that one nation can produce

Correct AnswerverifiedShow Answer

A tariff can best be described as

Correct AnswerverifiedShow Answer

Refer to the accompanying graph, where Sd and Dd are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be

Correct AnswerverifiedShow Answer

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B,

Correct AnswerverifiedShow Answer

The following are commonly used arguments for protection against imports, except

Correct AnswerverifiedShow Answer

If Nations Quirk and Turk only produce aluminum or oil, the accompanying table shows the maximum output of each nation. Which one of the following terms of trade is most likely to produce mutually beneficial exchange between the two nations?

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

Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from

Correct AnswerverifiedShow Answer

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The General Agreement on Tariffs and Tra...
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The accompanying table gives data for Country Y. Column 1 is the price of a product. Column 2 is the quantity demanded domestically (Q_d) , and Column 3 is the quantity supplied domestically (Qₛ_d) . At what price will Country Y export 100 units of the product?

Correct Answer
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Correct Answer
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Refer to the accompanying graph, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If the economy is open to international trade but a per unit tariff of $4 is imposed, then the total revenue going to domestic producers would be

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Refer to the accompanying graph, where S_d and D_d are the domestic supply and demand curves for a product. The world price of the product is $6. If this market were closed to international trade, the total revenue that would go to domestic producers would be

Correct Answer
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Correct Answer
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Correct Answer
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