Chapter 17 – International Trade: Does It Jeopardize American Jobs?
Chapter 17 International Trade: Does It Jeopardize American Jobs?
Multiple Choice
1. In 2009, trade made up ____ percent of the U.S. economy.
A) 1.3
B) 5.0
C) 11.1
D) 22.7
2. In 2009, the U.S. experienced a deficit in its balance of trade with
A) Europe.
B) Africa.
C) OPEC.
D) all of the answers are correct.
3. In 2009, the U.S. experienced a deficit in its balance of trade with
A) China.
B) Mexico.
C) Canada.
D) all of the answers are correct.
4. Which of the following are prominent exports of the U.S.?
A) petroleum
B) financial services
C) clothing
D) all of the answers are correct
5. Which of the following are prominent imports into the U.S.?
A) petroleum
B) electrical machinery and audio and video equipment
C) motor vehicles
D) all of the answers are correct
6.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
In 2009, the trading partner to whom the U.S. shipped the greatest volume of exports was
A) Mexico.
B) Canada.
C) OPEC.
D) China.
7. In 2009, the trading partner from whom the U.S. received the greatest volume of imports was
A) Mexico.
B) OPEC.
C) Europe.
D) Africa.
8. In 2009, the trading partner with which the U.S. had the largest trade deficit was
A) Africa.
B) Europe.
C) OPEC.
D) China.
9. In 2009, the U.S. trade deficit with the world was approximately
A) $470 million.
B) $634 billion.
C) $4.7 trillion.
D) $13.4 trillion.
10. Between 1995 and 2009 the U.S. trade with China went from a
A) small surplus to a larger surplus.
B) small surplus to a small deficit.
C) small deficit to a small surplus.
D) large deficit to an even larger deficit.
11. The U.S. both imports and exports significant quantities of
A) coffee.
B) industrial equipment.
C) services.
D) industrial equipment and services.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
12. The U.S. both imports and exports significant quantities of
A) aerospace products and parts.
B) petroleum and coal products.
C) electrical machinery and audio/video equipment.
D) petroleum and coal products and electrical machinery and audio/video equipment.
13. In 2009, the U.S. imports from the rest of the world were approximately
A) $1.912 billion.
B) $1,912 million.
C) $1.912 trillion.
D) $1,912 trillion.
14. In 2009, the volume of U.S. imports from China were
A) larger than the volume of U.S. imports from Canada and Mexico combined.
B) larger than the volume of U.S. imports from Mexico.
C) larger than the volume of U.S. imports from Europe.
D) none of the options are correct.
15. If a country can, with a single unit of labor, produce more of both clothing and computers
than another country, then the first country has
A) a comparative advantage in both goods.
B) an absolute advantage in both goods.
C) both a comparative and absolute advantage in both goods.
D) an absolute advantage in one good and a comparative advantage in the other.
16. Determining the comparative advantage of a country requires that you look at the economic
notion of
A) opportunity cost.
B) ceteris paribus.
C) accounting and economic profit.
D) external costs.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
17. Determining the absolute advantage of a country requires that you look at
A) opportunity cost.
B) the output per worker in each country.
C) accounting and economic profit.
D) external costs.
Answer: A
Use the following Table to answer questions 18-20
Coffee
Apples
United States
2
4
Brazil
4
2
Table 17.1
18. In Table 17.1,
A) the United States has an absolute advantage in both goods but a comparative advantage in
apples only.
B) Brazil has an absolute advantage in both goods but a comparative advantage in coffee
only.
C) the United States has an absolute and comparative advantage in apples while Brazil has
an absolute and comparative advantage in coffee.
D) the United States has an absolute and comparative advantage in both goods.
19. In Table 17.1 the United States has
A) An absolute and comparative advantage in apples.
B) An absolute and comparative advantage in coffee.
C) An absolute and comparative advantage in both goods.
D) An absolute advantage but not a comparative advantage in coffee.
20. In Table 17.1 the Brazil has
A) An absolute and comparative advantage in apples.
B) An absolute and comparative advantage in coffee.
C) An absolute and comparative advantage in both goods.
D) An absolute advantage but not a comparative advantage in coffee.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
Use the following Table to answer questions 21-23
Coffee
Apples
United States
3
3
Brazil
2
1
Table 17.2
21. In Table 17.2,
A) the United States has an absolute advantage in both goods but a comparative advantage in
apples only.
B) Brazil has an absolute advantage in both goods but a comparative advantage in coffee
only.
C) the United States has an absolute and comparative advantage in apples while Brazil has
an absolute and comparative advantage in coffee.
D) the United States has an absolute and comparative advantage in both goods.
22. In Table 17.2 the United States has
A) an absolute advantage but not a comparative advantage in apples.
B) an absolute and comparative advantage in coffee.
C) an absolute and comparative advantage in both goods.
D) an absolute advantage but not a comparative advantage in coffee.
23. In Table 17.2 the Brazil has
A) an absolute advantage but not a comparative advantage in apples.
B) an absolute and comparative advantage in coffee.
C) an absolute and comparative advantage in both goods.
D) a comparative advantage in coffee but not an absolute advantage.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
Use the following Table to answer questions 24-26
Lumber
Cars
United States
1
2
Brazil
2
1
Table 17.3
24. In Table 17.3,
A) the United States has an absolute advantage in both goods but a comparative advantage in
cars only.
B) Brazil has an absolute advantage in both goods but a comparative advantage in lumber
only.
C) the United States has an absolute and comparative advantage in Cars while Brazil has an
absolute and comparative advantage in lumber.
D) the United States has an absolute and comparative advantage in both goods.
25. In Table 17.3 the United States has
A) an absolute and comparative advantage in cars.
B) an absolute and comparative advantage in lumber.
C) an absolute and comparative advantage in both goods.
D) an absolute advantage but not a comparative advantage in lumber.
26. In Table 17.3 the Brazil has
A) an absolute and comparative advantage in cars.
B) an absolute and comparative advantage in lumber.
C) an absolute and comparative advantage in both goods.
D) an absolute advantage but not a comparative advantage in lumber.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
Use the following Table to answer questions 27-29
Lumber
Cars
United States
4
6
Brazil
3
2
Table 17.4
27. In Table 17.4
A) the United States has an absolute advantage in both goods but a comparative advantage in
cars only.
B) Brazil has an absolute advantage in both goods but a comparative advantage in lumber
only.
C) the United States has an absolute and comparative advantage in Cars while Brazil has an
absolute and comparative advantage in lumber.
D) the United States has an absolute and comparative advantage in both goods.
28. In Table 17.4 the United States has
A) an absolute advantage but not a comparative advantage in cars.
B) an absolute and comparative advantage in lumber.
C) an absolute and comparative advantage in both goods.
D) an absolute advantage but not a comparative advantage in lumber.
29. In Table 17.4 the Brazil has
A) an absolute advantage but not a comparative advantage in cars.
B) an absolute and comparative advantage in lumber.
C) an absolute and comparative advantage in both goods.
D) a comparative advantage in lumber but not an absolute advantage.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
30. If it takes one country one unit of labor to produce either a computer or a TV but it takes
the other country two units of labor to produce a computer and only one to produce a TV, then
the first country has
A) a comparative advantage in both goods.
B) an absolute advantage in both goods.
C) both a comparative and absolute advantage in both goods.
D) an absolute and comparative advantage in production of computers.
31. If it takes one country one unit of labor to produce either a computer or a TV but it takes the
other country three units of labor to produce a computer and four to produce a TV, then the
first country has
A) a comparative advantage in both goods.
B) an absolute advantage in TVs but a comparative advantage in computers.
C) an absolute advantage in TVs and computers but a comparative advantage in computers
only.
D) an absolute advantage in TVs and computers but a comparative advantage in TVs only.
32. If it takes one country two units of labor to produce a computer and three units of labor to
produce a TV but it takes the other country three units of labor to produce a computer and
four to produce a TV, then the first country has
A) a comparative advantage in both goods.
B) an absolute advantage in TVs but a comparative advantage in computers.
C) an absolute advantage in TVs and computers but a comparative advantage in computers
only.
D) an absolute advantage in TVs and computers but a comparative advantage in TVs only.
33. If it takes one country three units of labor to produce a computer and two units of labor to
produce a TV but it takes the other country four units of labor to produce a computer and five
to produce a TV, then the first country has
A) a comparative advantage in both goods.
B) an absolute advantage in TVs but a comparative advantage in computers.
C) an absolute advantage in TVs and computers but a comparative advantage in computers
only.
D) an absolute advantage in TVs and computers but a comparative advantage in TVs only.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
34. If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of
computer hardware and China can produce 4 units of software and 4 units of hardware then
A) the United States has a comparative and absolute advantage in both goods.
B) China has a comparative and absolute advantage in both goods.
C) the United States has an absolute advantage in both goods.
D) the United States has a comparative advantage in both goods.
35. If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of
computer hardware and China can produce 5 units of software and 5 units of hardware then
A) the United States has a comparative and absolute advantage in both goods.
B) China has a comparative and absolute advantage in both goods.
C) China has a comparative advantage in hardware and the U.S. has a comparative
advantage in software.
D) the United States has a comparative advantage in both goods.
36. If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of
computer hardware and China can produce 6 units of software and 6 units of hardware then
trade can make
A) the U.S. better off but not China.
B) China better off but not the U.S.
C) neither better off.
D) both better off.
37. If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of
computer hardware and China can produce 5 units of software and 5 units of hardware then
A) the United States has a comparative and absolute advantage in both goods.
B) China has a comparative and absolute advantage in both goods.
C) the United States has an absolute advantage in both goods.
D) the United States has a comparative advantage in both goods.
38. If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of
computer hardware and China can produce 6 units of software and 4 units of hardware then
A) the United States has a comparative and absolute advantage in both goods.
B) China has a comparative and absolute advantage in both goods.
C) China has a comparative advantage in hardware and the U.S. has a comparative
advantage in software.
D) the United States has a comparative advantage in both goods.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
39. If with one unit of labor the U.S. can produce 20 units of computer software and 10 units of
computer hardware and China can produce 6 units of software and 4 units of hardware then
trade can make
A) the U.S. better off but not China.
B) China better off but not the U.S.
C) neither better off.
D) both better off.
40. One of the reasons economists approve of limiting trade would be
A) the protection of national security.
B) the preservation of a high employment company.
C) the preservation of a high wage company.
D) the preservation of a large production company.
41. One of the reasons economists approve of limiting trade would be
A) the protection of the environment.
B) the preservation of a high employment company.
C) the preservation of a high wage company.
D) the preservation of a large production company.
42. One of the reasons economists approve of limiting trade would be
A) the desire not to encourage the employment of children.
B) the preservation of a high employment company.
C) the preservation of a high wage company.
D) the preservation of a large production company.
43. In the language of international trade, “dumping” is the act of
A) selling goods of substandard quality.
B) selling goods cheaper than the competition.
C) selling goods below cost so as to drive competitors out of business.
D) producing goods without consideration of their environmental consequences.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
44. Limiting trade can be accomplished with
A) tariffs.
B) quotas.
C) non-tariff regulatory barriers.
D) all of the options are correct.
45. Which of the following works to limit trade by explicitly raising prices (i.e. as a tax)?
A) Tariffs
B) Quotas
C) Non-tariff regulatory barriers
D) Buy “American advertising”
46. A country that is limiting imports of a good by requiring a lengthy inspection process is using
A) tariffs.
B) quotas.
C) non-tariff regulatory barriers.
D) buy “American advertising”.
47. A country that is limiting imports of a good by allowing only a certain number to be
imported is using
A) tariffs.
B) quotas.
C) non-tariff regulatory barriers.
D) buy “American advertising”.
48. On a supply and demand diagram, a tariff works by
A) moving the supply curve vertically down by the amount of the tariff.
B) moving the supply curve vertically up by the amount of the tariff.
C) limiting the amount that can be sold to a specific amount.
D) moving the demand curve vertically up by the amount of the tariff.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
49. A tariff will typically
A) increase the price paid by consumers.
B) increase the price, net of the tariff, that is received by sellers.
C) reduce the price paid by consumers.
D) have no effect on price.
50. A quota will typically
A) increase the price received by sellers.
B) reduce the price received by sellers.
C) reduce the price paid by consumers.
D) have no effect on price.
51. A tariff will typically
A) increase the price, net of the tariff, that is received by sellers.
B) reduce the price, net of the tariff, that is received by sellers.
C) increase the price paid by consumers.
D) reduce the price, net of the tariff, that is received by sellers and increase the price paid by
consumers.
52. A quota will typically
A) increase the price received by sellers.
B) reduce the price received by sellers.
C) increase the price paid by consumers.
D) increate the price received by sellers and increase the price paid by consumers.
53. In 2007, the trading partner with whom we had the largest trade deficit was
A) China.
B) Europe.
C) OPEC.
D) Japan.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
54. In 2009, U.S. exports to the rest of the world were approximately
A) $904.3 million.
B) $211.1 billion.
C) $1,278.1 billion.
D) $1,871.1 billion.
55. If France limits the showing of U.S. produced television shows to 2 hours per day
A) this is the same as a quota.
B) this is the same as a tariff.
C) this make U.S. producers of television wealthier that they would otherwise be.
D) economists would not call this a limit on trade since it is a service.
56. If England limits the playing of U.S. music to no more than 5 hours per day
A) this is the same as a quota.
B) this is the same as a tariff.
C) this make U.S. producers of television wealthier that they would otherwise be.
D) economists would not call this a limit on trade since it is a service.
57. If the opportunity cost of producing a ton of coffee in the U.S. is twenty tons of rice, while
the opportunity cost of producing coffee in Costa Rica is two tons of rice,
A) the U.S. has a comparative advantage in rice production.
B) Costa Rica has a comparative advantage in rice production.
C) the U.S. has a comparative advantage in coffee production.
D) the U.S. would be better off not trading with Costa Rica.
58. The country with a comparative advantage in production of a good or service is the country
with the
A) absolute advantage in production of that good or service.
B) absolute advantage in production of some other good or service.
C) lowest opportunity cost of producing that good or service.
D) ability to produce the larges quantity of that good or service.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
59. If the opportunity cost of producing a ton of coffee in the U.S. is sixteen tons of rice, while
the opportunity cost of producing a ton of coffee in Costa Rica is four tons of rice, the U.S.
and Costa Rica could both benefit from specialization and trade if the terms of trade
(measured in tons of rice delivered per ton of coffee received) were any number between
A) one and four.
B) one and sixteen.
C) four and sixteen.
D) eight and sixteen.
60. If the opportunity cost of producing a ton of coffee in the U.S. is twenty tons of rice, while
the opportunity cost of producing a ton coffee in Costa Rica is four tons of rice and the terms
of trade is ten tons of rice delivered per ton of coffee received,
A) the U.S. can benefit by trading rice to Costa Rica for coffee.
B) Costa Rica can benefit by trading rice to the U.S. for coffee.
C) Costa Rica can benefit by trading coffee to the U.S. for rice.
D) the U.S. can benefit by trading rice to Costa Rica for coffee and Costa Rica can benefit
by trading coffee to the U.S. for rice.
61. Comparative advantage in production of the good measured on the horizontal axis is
identified with a straight-line production possibilities frontier that has a slope that is
A) larger in magnitude (or absolute value).
B) smaller in magnitude (or absolute value).
C) positive.
D) larger in magnitude (or absolute value.) and positive.
62. A quota that limits U.S. imports of cane sugar
A) harms U.S. sugar consumers.
B) helps U.S. cane sugar producers.
C) helps U.S. corn syrup (sweetener) producers.
D) all of the options are correct.
63. A quota that limits U.S. imports of cane sugar
A) harms U.S. consumers more than it helps U.S. producers.
B) helps U.S. producers more than it hurts U.S. consumers.
C) harms foreign producers more than it helps U.S. producers.
D) helps both U.S. consumers and U.S. producers at the expense of foreign producers.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
64. Of approximately 140 million jobs in the U.S., each year approximately
A) 31 million are eliminated and 30 million are created.
B) 30 million are eliminated and 31 million are created.
C) all jobs eliminated are attributable to global outsourcing.
D) all jobs eliminated pay lower wages than the new jobs created.
65. Jobs in the U.S. textile industry can be saved by imposing tariffs upon textiles imported into
the U.S., but the cost to U.S. consumers is estimated to be approximately
A) $23,000 annually per job saved.
B) $49,000 annually per job saved.
C) $94,000 annually, per job saved.
D) $148,000 annually, per job saved.
66. If a textile worker earns $38,000 per year working in the textile mill on a job that was saved
by a protective tariff costing consumers $148,000 per year (for that job alone), the textile
worker could be paid $48,000 to stay at home all day watching TV when the protective tariff
is eliminated, and consumers would still be better off by approximately
A) $18,000 per year.
B) $48,000 per year.
C) $100,000 per year.
D) $168,000 per year.
67. Imports of Japanese passenger vehicles into the U.S. tend to
A) harm U.S. consumers and help Japanese automakers.
B) help U.S. consumers and harm U.S. automakers.
C) help U.S. consumers and harm Japanese automakers.
D) harm Japanese consumers and help U.S. automakers.
68. Exports of U.S. rice to Japan tend to
A) harm U.S. consumers and help Japanese rice producers.
B) help U.S. consumers and harm U.S. rice producers.
C) help U.S. consumers and harm Japanese rice producers.
D) help Japanese consumers and harm Japanese rice producers.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
69. Tariffs imposed upon U.S. rice imported into Japan tend to
A) harm Japanese consumers and help Japanese rice producers.
B) help U.S. consumers and harm Japanese rice producers.
C) help U.S. consumers and harm Japanese rice producers.
D) help Japanese consumers and harm Japanese rice producers.
70. Tariffs imposed upon Japanese passenger vehicle imports into the U.S. tend to
A) harm U.S. consumers and help Japanese automakers.
B) help U.S. consumers and harm U.S. automakers.
C) harm U.S. consumers and help U.S. automakers.
D) harm Japanese consumers and help U.S. automakers.
71. The United States has a trade surplus in
A) services.
B) petroleum.
C) autos.
D) optics.
72. The largest trading partner for the United States is
A) Mexico.
B) Canada.
C) China.
D) Saudi Arabia.
73. Trade as a percentage of GDP has
A) remained constant for the last 50 years.
B) increased over the last 50 years.
C) decreased over the last 50 years.
D) increased from 1960 to 1980 but has been steady since.
74. Imports into the United States (as a percentage of GDP) have
A) remained constant for the last 50 years.
B) increased over the last 50 years.
C) decreased over the last 50 years.
D) increased from 1960 to 1980 but has been steady since.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
75. Exports from the United States (as a percentage of GDP) have
A) remained constant for the last 50 years.
B) increased over the last 50 years.
C) decreased over the last 50 years.
D) increased from 1960 to 1980 but has been steady since.
76. The trading partner where the deficit has increased the most in the last 20 years is
A) China.
B) Mexico.
C) Canada.
D) Saudi Arabia.
77. Of the arguments for limiting trade which one is the most appealing to economists
A) helping an industry that is in trouble.
B) protecting the jobs of citizens.
C) protecting the profits of companies.
D) preventing other countries from getting a comparative advantage by their use of
environmentally irresponsible actions.
78. Of the arguments for limiting trade which one is the most appealing to economists
A) helping an industry that is in trouble.
B) protecting the jobs of citizens.
C) protecting the profits of companies.
D) preventing other countries from getting a comparative advantage by their use of child
labor.
79. Of the arguments for limiting trade which one is the most appealing to economists
A) helping an industry that is in trouble.
B) protecting the jobs of citizens.
C) protecting the profits of companies.
D) protecting an industry important to a nation’s defense.
Chapter 17 – International Trade: Does It Jeopardize American Jobs?
80. Of the arguments for limiting trade which one is the most appealing to economists
A) helping an industry that is in trouble.
B) protecting the jobs of citizens.
C) protecting the profits of companies.
D) protecting an industry important to a nation’s identity or culture.
81. Per job saved, consumers lose
A) slightly less than those jobs pay.
B) about the same as those jobs pay.
C) significantly more than those jobs pay.
D) significantly less than those jobs pay
True/False
82. It is impossible to export or import services.
A) True
B) False
83. Protectionism is generally a cost effective method of saving jobs.
A) True
B) False
84. Trade sanctions have generally been an effective diplomatic weapon in changing the
behavior of rogue countries.
A) True
B) False
85. If, with a single unit of labor, a country can produce more of both clothing and computers
than another country, economics suggests that there is no opportunity for mutually beneficial
trade between the countries.
A) True
B) False