Question 1

Which is not commonly offered as a reason to support protectionism and abandon free trade?

Accepted Answer

A)   maintaining military self-sufficiency
B)   increasing domestic employment
C)   allowing infant industries to mature and become competitive
D)   promoting specialization and increasing worldwide production levelsE) C) and D)
F) None of the above

Question 2

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.With a $1 dollar per unit tariff,price and total quantity sold will be:

Accepted Answer

A)   $3 and 7 units.
B)   $5 and 2 units.
C)   $7 and 3 units.
D)   $2 and 11 units.E) C) and D)
F) A) and B)

Question 3

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input.To achieve gains from specialization:

Accepted Answer

A)   India should export rice to Canada and import Canadian wheat.
B)   India should export wheat to Canada and import Canadian rice.
C)   Canada should produce both wheat and rice and not trade with India.
D)   India should produce both wheat and rice and not trade with Canada.E) None of the above
F) B) and D)

Question 4

Which of the following is an example of a land-intensive commodity?

Accepted Answer

A)   chemicals
B)   autos
C)   watches
D)   woolE) A) and B)
F) A) and C)

Question 5

As it relates to international trade,"dumping":

Accepted Answer

A)   is a form of price discrimination illegal under Canadian anti-combines laws.
B)   is the practice of selling goods in a foreign market at less than cost.
C)   constitutes a general case for permanent tariffs.
D)   is defined as selling more goods than allowed by an import quota.E) A) and C)
F) A) and D)

Question 6

-The impact of increasing,as opposed to constant costs is to:

Accepted Answer

A)   intensify and prolong the comparative advantages which any nation may have initially.
B)   expand the limits of the terms of trade.
C)   cause the basis for further specialization to disappear as nations specialize in accordance with comparative advantage.
D)   cause nations to realize economies of scale in those products in which they specialize.E) All of the above
F) C) and D)

Question 7

The basic difference in the economic effects of a tariff compared with a quota is that a:

Accepted Answer

A)   quota generates revenue for the government.
B)   tariff generates revenue for the government.
C)   tariff raises product prices,but a quota does not raise product prices.
D)   quota raises product prices,but a tariff does not raise product prices.E) B) and D)
F) A) and B)

Question 8

In a two-nation world,comparative advantage means that one nation can produce:

Accepted Answer

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

Question 9

Dumping of goods abroad:

Accepted Answer

A)   constitutes a general case for permanent tariffs.
B)   may be part of a firm's price discrimination strategy.
C)   may be part of a nation's strategy to rectify its trade deficit.
D)   drives up prices of the dumped goods.E) None of the above
F) All of the above

Question 10

-Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

Accepted Answer

A)   domestic supply curves for two countries.
B)   import demand curves for two countries.
C)   domestic demand curves for two countries.
D)   export supply curves for two countries.E) B) and D)
F) B) and C)

Question 11

Assume that by devoting all its resources to the production of X,nation Alpha can produce 40 units of X.By devoting all its resources to Y,Alpha can produce 60Y.Comparable figures for nation Beta are,60X and 40Y.
-Refer to the above information.The terms of trade will be at or within the 1X = 1 1/2 Y to 1X= 2/3 Y range.

Accepted Answer

A) True 
 B)False

Question 12

Refer to the diagrams below.Which of the following is a feasible rate at which X and Y might be exchanged?

Accepted Answer

A)   1X for 3Y
B)   1X for 1.5Y
C)   1X for 2.5Y
D)   1X for .5YE) A) and B)
F) A) and C)

Question 13

When the distribution of resources and technology changes among nations:

Accepted Answer

A)   it costs more to produce all products.
B)   the relative efficiency of producing products changes.
C)   it costs less to produce all products.
D)   each nation will specialize in producing one product.E) None of the above
F) A) and B)

Question 14

If Canadian government were to impose a quota on wristwatches imported from Switzerland,the:

Accepted Answer

A)   Canada would reduce its export of watches.
B)   prices of watches in Switzerland would rise.
C)   price of watches in Canada would remain the same,but the quantity will fall.
D)   total quantity of watches (domestically produced and imported) purchased would decline.E) None of the above
F) A) and B)

Question 15

In the theory of comparative advantage,a good should be produced in that nation where:

Accepted Answer

A)   the production possibilities line lies further to the right than the trading possibilities line.
B)   its cost is least in terms of alternative goods which might otherwise be produced.
C)   its absolute cost in terms of real resources used is least.
D)   its absolute money cost of production is least.E) A) and D)
F) A) and C)

Question 16

Dumping is the sale of a product in a foreign market:

Accepted Answer

A)   at a price below its domestic price or cost of production.
B)   that does not meet the quality standards in the domestic market.
C)   and is the principal means used to enforce nontariff barriers.
D)   and is encouraged by voluntary export restraints.E) A) and D)
F) A) and C)

Question 17

As of 2012,the Euro Zone consists of the 17 members of the EU that use the Euro as a common currency.

Accepted Answer

A) True 
 B)False

Question 18

Suppose the domestic price of copper is $1.20 per kilogram in Canada,while the world price is $1.00 per kilogram.Assuming no transportation costs,Canada will:

Accepted Answer

A)   have a domestic surplus of copper.
B)   export copper.
C)   import copper.
D)   neither export nor import copper.E) A) and B)
F) None of the above

Question 19

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 D)
F) A) and D)

Question 20

Which is a valid counterargument to the call for higher tariffs to save Canadian jobs?

Accepted Answer

A)   the need to protect Canadian workers from the dumping of foreign products
B)   strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions
C)   Canadian firms and workers must be protected from the ruinous competition of nations where wages for workers are low
D)   imports may eliminate some Canadians jobs,but they create others,so they may have little or no effect on employmentE) None of the above
F) B) and C)

Exam 17: International Trade

In a two-nation world,comparative advantage means that one nation can produce:

Correct Answer
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-The impact of increasing,as opposed to constant costs is to:

Correct Answer
verified

As of 2012,the Euro Zone consists of the 17 members of the EU that use the Euro as a common currency.

Correct Answer
verified

Dumping of goods abroad:

Correct Answer
verified

Refer to the diagrams below.Which of the following is a feasible rate at which X and Y might be exchanged?

Correct Answer
verified

Correct Answer
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Which is a valid counterargument to the call for higher tariffs to save Canadian jobs?

Correct Answer
verified

Which of the following is an example of a land-intensive commodity?

Correct Answer
verified

-Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

Correct Answer
verified

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.With a $1 dollar per unit tariff,price and total quantity sold will be:

Correct Answer
verified

The basic difference in the economic effects of a tariff compared with a quota is that a:

Correct Answer
verified

Suppose the domestic price of copper is $1.20 per kilogram in Canada,while the world price is $1.00 per kilogram.Assuming no transportation costs,Canada will:

Correct Answer
verified

Which is not commonly offered as a reason to support protectionism and abandon free trade?

Correct Answer
verified

As it relates to international trade,"dumping":

Correct Answer
verified

When the distribution of resources and technology changes among nations:

Correct Answer
verified

Dumping is the sale of a product in a foreign market:

Correct Answer
verified

If Canadian government were to impose a quota on wristwatches imported from Switzerland,the:

Correct Answer
verified

In the theory of comparative advantage,a good should be produced in that nation where:

Correct Answer
verified

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input.To achieve gains from specialization:

Correct Answer
verified

The terms of trade reflects the:

Correct Answer
verified

Exam 17: International Trade

In a two-nation world,comparative advantage means that one nation can produce:

Correct AnswerverifiedShow Answer

-The impact of increasing,as opposed to constant costs is to:

Correct AnswerverifiedShow Answer

As of 2012,the Euro Zone consists of the 17 members of the EU that use the Euro as a common currency.

Correct AnswerverifiedShow Answer

Dumping of goods abroad:

Correct AnswerverifiedShow Answer

Refer to the diagrams below.Which of the following is a feasible rate at which X and Y might be exchanged?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which is a valid counterargument to the call for higher tariffs to save Canadian jobs?

Correct AnswerverifiedShow Answer

Which of the following is an example of a land-intensive commodity?

Correct AnswerverifiedShow Answer

-Refer to the above diagram pertaining to two nations and a specific product.Lines FC and GD are:

Correct AnswerverifiedShow Answer

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.With a $1 dollar per unit tariff,price and total quantity sold will be:

Correct AnswerverifiedShow Answer

The basic difference in the economic effects of a tariff compared with a quota is that a:

Correct AnswerverifiedShow Answer

Suppose the domestic price of copper is $1.20 per kilogram in Canada,while the world price is $1.00 per kilogram.Assuming no transportation costs,Canada will:

Correct AnswerverifiedShow Answer

Which is not commonly offered as a reason to support protectionism and abandon free trade?

Correct AnswerverifiedShow Answer

As it relates to international trade,"dumping":

Correct AnswerverifiedShow Answer

When the distribution of resources and technology changes among nations:

Correct AnswerverifiedShow Answer

Dumping is the sale of a product in a foreign market:

Correct AnswerverifiedShow Answer

If Canadian government were to impose a quota on wristwatches imported from Switzerland,the:

Correct AnswerverifiedShow Answer

In the theory of comparative advantage,a good should be produced in that nation where:

Correct AnswerverifiedShow Answer

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input.To achieve gains from specialization:

Correct AnswerverifiedShow Answer

The terms of trade reflects the:

Correct AnswerverifiedShow Answer

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