Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Dif f i c ul t y : 01 Easy
134. Critics of the World Trade Organization (WTO) say that liberalized world trade does
all of the following except
135. Which of the U.S. industries below has not seen major shutdowns and layoffs because
of free foreign trade?
136. Trade adjustment assistance
40-82
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B. guarantees jobs for all workers displaced by imports or plant relocations abroad.
C. provides assistance to about 20 percent of unemployed U.S. workers each year.
D.
provides cash assistance for workers displaced by imports or plant relocations abroad.
137. Economists who criticize trade adjustment assistance argue that
138. "Offshoring" refers to
40-83
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
T o p i c : Multilateral Trade Agreements and Free-Trade Zones
139. Which of the following best describes economists' general assessment of the impacts
of offshoring?
140. (Consider This) The greatest benefit to an economy from international trade is
141. (Consider This) Madison, the CPA, is faster than Mason, the house painter, at both
accounting services and painting. This means that
40-84
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C. Madison should trade her accounting services for Mason's painting services, so long as
Madison is relatively more efficient at painting.
D. Madison has the comparative advantage in both services.
142. (Consider This) According to Dallas Federal Reserve economist W. Michael Cox,
taken to its extreme, the logic of "buying American" implies that
143. (Last Word) Frederic Bastiat's satirical argument against protectionism called for
protecting domestic producers from
40-85
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: I
T o p i c : The Case for Protection: A Critical Review
144. (Last Word) Frederic Bastiat's "Petition of the Candlemakers" most directly refutes
which of the following arguments for protectionism?
True / False Questions
145. The percentage of the United States' domestic output that is derived from international
trade is higher than that for any other industrially advanced nation.
146. In 2015, the United States had its first-ever trade surplus with OPEC.
40-86
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Remember
Dif f i c u l t y :
01 Easy
Learning Objective: 40-01 List and discuss several key facts about international trade.
Test Bank: I
Topi c :
Some Key Trade Facts
147. It is impossible for a nation to have a comparative advantage in producing everything.
148. The nation that has a comparative advantage in a particular product will be the only
world exporter of that product.
149. International trade based on the principle of comparative advantage creates a more
efficient allocation of world economic resources.
40-87
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: I
Topi c :
The Economic Basis for Trade
150. The law of increasing opportunity costs limits international specialization.
151. 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. Therefore, Alpha should specialize
in Y and Beta in X.
152. 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. The terms of trade will be at or
within the 1X = 1½Y to 1X = ⅔Y range.
40-88
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
and trade add to a nations output.
Test Bank: I
Topi c :
The Economic Basis for Trade
153. 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. Alpha would prefer terms of trade
at, or close to, 1X = 1½Y.
154. 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 60 Y.
Comparable figures for nation Beta are 60 X and 40 Y. Beta would prefer terms of trade
at, or close to, 1X = 1½Y.
155. 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. If Alpha had produced 20X and
30Y and Beta had produced 30X and 20Y before specialization and trade, then we can say
that the gains from specialization and trade are 10X and 10Y.
40-89
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Analytical Thinking
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Analyze
Difficulty: 03 Hard
Learning Objective: 40-02 Define comparative advantage, and demonstrate how specialization
and trade add to a nations output.
Learning Objective: 40-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I
T o p i c : The Economic Basis for Trade
Topic: Trade Barriers and Export Subsidies
156. Assume that by devoting all its resources to the production of X, nation Alpha can
produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y.
Comparable figures for nation Beta are 60X and 40Y. There is no basis for trade between
Alpha and Beta, because Beta has an absolute advantage in the production of both goods.
157. Assume that by devoting all its resources to the production of X, nation Alpha can
produce 20 units of X. By devoting all its resources to Y, Alpha can produce 30Y.
Comparable figures for nation Beta are 60X and 40Y. Alpha would prefer terms of trade
at, or close to, 1X = 2/3Y.
158. A nation's export supply curve is downsloping, and its import demand curve is
upsloping.
159. The equilibrium world price of a product equates the quantities of exports supplied
and imports demanded.
160. Economists prefer free trade to tariffs and prefer tariffs to import quotas.
161. Tariffs create larger gains to domestic producers than losses to domestic consumers.
162. A side benefit of international trade is that it links national interests and increases the
opportunity costs of war.
163. During the Great Depression, most nations lowered tariffs and abolished import quotas
to encourage the flow of trade.
164. Barriers to free trade impair efficiency in the international allocation of resources.
40-92
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Analytical Thinking
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Analyze
Difficult y : 03 Hard
Learning Objective: 40-04 Analyze the economic effects of tariffs and quotas.
Learning Objective: 40-05 Analyze the validity of the most frequently presented arguments for
protectionism.
Test Bank: I
Topi c :
The Case for Protection: A Critical Review
T o p i c : Trade Barriers and Export Subsidies
165. The World Trade Organization comprises 28 European nations and is dedicated to
abolishing trade barriers and integrating their economies.
166. The World Trade Organization (WTO) is an international organization designed to
provide short-term advances of foreign monies to those nations faced with trade deficits.
167. Trade adjustment assistance provides subsidies to companies that have lost business to
foreign firms.
40-93
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
Dif f i c u l t y :
01 Easy
Learning Objective: 40-06 Identify and explain the objectives of GATT, WTO, EU, eurozone,
and NAFTA, and discuss offshoring and trade adjustment assistance.
Test Bank: I
Topi c :
Multilateral Trade Agreements and Free-Trade Zones
168. Offshoring benefits some firms by reducing their producing costs and maintaining their
global competitiveness.
169. Economists generally view offshoring as detrimental to the U.S. economy.
Multiple Choice Questions
170. The term trade deficit refers to a situation where
40-94
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y : Keyboard Navigation
Blooms: Remember
Dif f i c ul t y : 01 Easy
Learning Objective: 40-01 List and discuss several key facts about international trade.
Test Bank: II
Topic:
Some Key Trade Facts
171. Which nation had the largest share of world exports in 2014?
172. In the United States, exports of goods and services accounted for about what
percentage of GDP (total output) in 2014?
173. Which of the following countries had the smallest share of exports as a percentage of
GDP in 2014?
40-95
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
C. United Kingdom
D.
United States
174. In which of the following countries did exports account for the biggest percentage of
GDP in 2014?
175. Which country is the United States' largest trading partner in terms of volume of trade?
176. Which of the following product groups is a leading export of the United States?
40-96
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A. home appliances
B. metals
C.
agricultural products
D. computers
177. Which of the following products is a leading import of the United States?
178. Starting in 2012, an important shift occurred in the U.S. trade in petroleum, which was
179. In 2015, U.S. exports of services U.S. imports of services by about .
180. Benefits from international trade are based on differences in the following areas,
except
181. A nation with abundant capital resources tends to be an exporter of
40-98
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: II
Topic:
The Economic Basis for Trade
182. A natural-resource abundant nation would be expected to export a land-intensive
commodity such as
183. What other economic process needs to accompany international trade, for nations to
benefit from such trade?
184. A basic assumption in comparing the production possibilities curves of two nations is
that those possibilities curves reflect differences in
40-99
185. The slopes of the production possibilities curves for two nations reflect the
186. If Nation A requires more resources to produce each bale of cloth than Nation B does,
then we say that
187. Adam Smith recognized the benefits from trade based on , and David Ricardo
recognized the benefits from trade based on .
188. The ratio at which nations will exchange one product for another is known as the
189. Specialization and trade between individuals or between nations leads to
