Question 1

In a two-nation model, the equilibrium world price will occur where:

Accepted Answer

A)  one nation's export supply curve intersects the other nation's import demand curve.
B)  both nations' exports are exactly twice the level of imports.
C)  both nations' export supply curves are horizontal.
D)  both nations' import demand curves are vertical.E) B) and D)
F) B) and C)

Question 2

Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation.If the world price of this product is $1, this nation will:

Accepted Answer

A)  export all of the product.
B)  import all of the product.
C)  import some of the product and produce some of the product domestically.
D)  neither export nor import the product.E) None of the above
F) A) and B)

Question 3

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

Question 4

The data given is for two hypothetical nations, Wat and Xat.The nations have the Production Possibilities Curves (PPC)  for units of rice and corn as given below. 1/3 unit of corn and should not specialize in production of it if the two nations decide to trade with each other. C) corn is 5 units of rice. D) corn is 1/5 unit of rice." class="answers-bank-image d-inline" rel="preload" > Refer to the above data, in country Wat, the comparative cost of 1 unit of:

Accepted Answer

A)  rice is 3 units of corn.
B)  rice is 1/3 unit of corn and should not specialize in production of it if the two nations decide to trade with each other.
C)  corn is 5 units of rice.
D)  corn is 1/5 unit of rice.E) A) and B)
F) B) and D)

Question 5

A nation's export supply curve for a specific product:

Accepted Answer

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

Question 6

Tariffs:

Accepted Answer

A)  may be imposed either to raise revenue (revenue tariffs)  or to shield domestic producers from foreign competition.
B)  are also called "import quotas."
C)  are excise taxes on goods exported abroad.
D)  are per unit subsidies designed to promote exports.E) B) and C)
F) All of the above

Question 7

Which is not a commonly heard argument for protectionism?

Accepted Answer

A)  A strong national defense requires that some military products be produced domestically.
B)  Infant industries need short-run, but not long-run, protection from foreign competition.
C)  Specialization along the lines of comparative advantage can lead to greater economic instability for a nation.
D)  When other nations' economies grow they typically import fewer goods and services.E) A) and D)
F) B) and C)

Question 8

The terms of trade reflects the:

Accepted Answer

A)  rate at which gold exchanges internationally for any domestic currency.
B)  ratio at which nations will exchange two goods.
C)  fact that the gains from trade will be equally divided.
D)  cost conditions embodied in a single country's production possibilities curve.E) B) and C)
F) B) and D)

Question 9

Refer to the above diagram pertaining to two nations and a specific product.Point G is the:

Accepted Answer

A)  domestic price for the nation represented by lines FA and FC.
B)  world equilibrium price.
C)  domestic price for the nation represented by lines GB and GD.
D)  price above the world equilibrium price.E) B) and C)
F) A) and B)

Question 10

The best example of a capital-intensive good is:

Accepted Answer

A)  chemicals.
B)  radios.
C)  wheat.
D)  wool.E) A) and D)
F) A) and C)

Question 11

If a nation has a comparative advantage in the production of X, this means the nation:

Accepted Answer

A)  cannot benefit by producing and trading this product.
B)  must give up less of other goods than other nations in producing a unit of X.
C)  has a production possibilities curve identical to those of other nations.
D)  is not subject to increasing opportunity costs.E) B) and D)
F) C) and D)

Question 12

Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all of its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that:

Accepted Answer

A)  the terms of trade will be 3X equals 1Y.
B)  Alpha should specialize in Y and Beta in X.
C)  Alpha should specialize in X and Beta in Y.
D)  there is no basis for mutually beneficial specialization and trade.E) A) and B)
F) All of the above

Question 13

The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1.  Refer to the above data.The total amount of revenue collected from a $1 per unit tariff on this product will be:

Accepted Answer

A)  $22
B)  $8
C)  $7
D)  $14E) All of the above
F) A) and B)

Question 14

The following data is for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. s is domestic quantity supplied and Qd is domestic quantity demanded.   Refer to the above data.The equilibrium world price must be lower than $4 because at $4: A) both nations want to import steel. B) both nations want to export steel. C) Beta wants to export more than Alpha. D) Alpha wants to import more than Beta." class="answers-bank-image d-inline" rel="preload" > Refer to the above data.The equilibrium world price must be lower than $4 because at $4:

Accepted Answer

A)  both nations want to import steel.
B)  both nations want to export steel.
C)  Beta wants to export more than Alpha.
D)  Alpha wants to import more than Beta.E) A) and C)
F) A) and D)

Question 15

When a tariff or quota on a product is removed, the action:

Accepted Answer

A)  benefits producers in the protected industries.
B)  benefits consumers of the product.
C)  benefits the government.
D)  hurts nations exporting the product.E) C) and D)
F) A) and C)

Question 16

Which statement is true?

Accepted Answer

A)  Comparative advantage means that total world output will be greatest when each good is produced by the nation that has the highest domestic opportunity cost.
B)  Comparative advantage means that total world output will decline when each good is produced by the nation with the lowest domestic opportunity cost.
C)  Specialization is complete among nations when opportunity costs rise as any given nation produces more of a particular product.
D)  Specialization is less than complete among nations when opportunity costs rise as any given nation produces more of a particular product.E) B) and C)
F) A) and D)

Question 17

The Doha Development Agenda is:

Accepted Answer

A)  the most recent round of trade negotiations held by the European Union.
B)  the most recent round of trade negotiations held by the NAFTA countries.
C)  the most recent round of trade negotiations held by the WTO.
D)  the most recent round of trade negotiations held by the Euro zone countries.E) B) and D)
F) B) and C)

Question 18

Which of the following countries had the highest percentage of exports as a percentage of GDP in 2015?.Use Image 17.2 Global Perspective.

Accepted Answer

A)  Belgium
B)  United States
C)  Japan
D)  SpainE) B) and C)
F) A) and D)

Question 19

Given the following production possibilities schedules, it can be seen that:

Accepted Answer

A)  Brazil has a comparative advantage in producing wine.
B)  Poland can produce more machines than Brazil.
C)  Brazil has a comparative advantage in producing machines.
D)  Poland can produce more of both goods than Brazil.E) All of the above
F) A) and B)

Question 20

Which combination of policies would entail the greatest stimulus to domestic employment and output in the short run?

Accepted Answer

A)  raising trade barriers on imports and subsidizing exports
B)  raising trade barriers on imports and imposing special taxes on exports
C)  lowering trade barriers on imports and imposing special taxes on exports
D)  lowering trade barriers on imports and subsidizing exportsE) None of the above
F) A) and D)

Exam 17: B: International Trade

Which statement is true?

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The data given is for two hypothetical nations, Wat and Xat.The nations have the Production Possibilities Curves (PPC) for units of rice and corn as given below. Refer to the above data, in country Wat, the comparative cost of 1 unit of:

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Given the following production possibilities schedules, it can be seen that:

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If a nation has a comparative advantage in the production of X, this means the nation:

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The following table is domestic supply and demand schedules for a product.Suppose that the world price of the product is $1. Refer to the above data.The total amount of revenue collected from a $1 per unit tariff on this product will be:

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The terms of trade reflects the:

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Tariffs:

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Which of the following countries had the highest percentage of exports as a percentage of GDP in 2015?.Use Image 17.2 Global Perspective.

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Assume that by devoting all of its resources to the production of X, nation Alpha can produce 40 units of X.By devoting all of its resources to Y, Alpha can produce 60Y.Comparable figures for nation Beta are 60X and 40Y.We can conclude that:

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The best example of a capital-intensive good is:

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In a two-nation model, the equilibrium world price will occur where:

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When a tariff or quota on a product is removed, the action:

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Refer to the above diagram pertaining to two nations and a specific product.Point G is the:

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The following data is for the hypothetical nations of Alpha and Beta.Qs is domestic quantity supplied and Qd is domestic quantity demanded. Refer to the above data.The equilibrium world price must be lower than $4 because at $4:

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Which is not a commonly heard argument for protectionism?

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A nation's export supply curve for a specific product:

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Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation.If the world price of this product is $1, this nation will:

Correct AnswerverifiedShow Answer

A nation's import demand curve for a specific product:

Correct AnswerverifiedShow Answer

The Doha Development Agenda is:

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Which combination of policies would entail the greatest stimulus to domestic employment and output in the short run?

Correct AnswerverifiedShow Answer

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The following data is for the hypothetical nations of Alpha and Beta.Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. Refer to the above data.The equilibrium world price must be lower than $4 because at $4:

Correct Answer
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