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Chapter 20 - International Trade
100. Refer to the above data. With a $1 per unit tariff, prices (revenue per unit) received by
domestic and foreign producers respectively will be:
101. Refer to the above data. The total amount of revenue collected from a $1 per unit tariff
102. A protective tariff will:
Chapter 20 - International Trade
103. Other things equal, a tariff is:
104. In comparing a tariff and an import quota we find that:
105. Other things equal, economists would prefer:
Chapter 20 - International Trade
106. Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. The size of the import quota:
Chapter 20 - International Trade
107. Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. The effect of the import quota on domestic price and domestic
consumption is:
108. Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. Assuming there is no tariff, the import quota:
Chapter 20 - International Trade
109. Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. A tariff of Pc Pt or an import quota of wy will have the same effect
110. Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. A tariff of Pc Ptwill:
Chapter 20 - International Trade
111. Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a
product and Pc is the world price of that product. Sd + Q is the product supply curve after an
import quota is imposed. A quota of wy will:
112. Which of the following statements is false?
113. Graphical analysis of tariffs reveals that:
Chapter 20 - International Trade
114. Studies show that:
116. A high tariff on imported good X might reduce domestic employment in industry Y if:
Chapter 20 - International Trade
117. The increased-domestic-employment argument for tariff protection holds that:
118. Which of the following arguments for trade protection contends that new domestic
industries need support to establish themselves and survive?
119. Which of the following arguments for trade protection is based on the premise that a
nation should have a wide enough range of domestic industries to be self-sufficient if
necessary?
Chapter 20 - International Trade
120. Which of the following arguments contends that certain industries need to be protected in
the interest of national security?
121. A major difficulty with the argument that trade barriers are necessary because foreign
workers are paid low wages is that:
122. As it relates to international trade, dumping:
Chapter 20 - International Trade
123. Dumping of goods abroad:
124. The World Trade Organization:
125. The number of countries belonging to the World Trade Organization (WTO), as of 2010,
is about:
Chapter 20 - International Trade
126. The organization created to oversee the provisions of multilateral trade agreements,
resolve disputes under the international trade rules, and meet periodically to consider further
trade liberalization is called the:
127. The World Trade Organization was established as a successor to:
128. Which of the following was not one of the principles on which the General Agreement
on Tariffs and Trade (GATT) was established?
Chapter 20 - International Trade
129. The "Euro Zone":
130. "NAFTA" stands for:
131. Critics of the World Trade Organization (WTO) say that liberalized world trade does all
of the following except:
Chapter 20 - International Trade
132. (Consider This) The greatest benefit to an economy from international trade is:
133. (Consider This) Madison, the CPA, is faster than Mason, the house painter, at both
accounting services and painting. This means that:
134. (Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken
to its extreme, the logic of "buying American" implies that:
Chapter 20 - International Trade
135. (Last Word) Frederic Bastiat's satirical argument against protectionism called for
protecting domestic producers from:
136. (Last Word) Frederic Bastiat's Petition of the Candlemakers most directly refutes which
of the following arguments for protectionism?
137. The percentage of the United States' domestic output that is derived from international
trade is higher than that for any other industrially advanced nation.
138. It is impossible for a nation to have a comparative advantage in producing everything.
139. The nation that has a comparative advantage in a particular product will be the only
world exporter of that product.
140. International trade based on the principle of comparative advantage creates a more
efficient allocation of world economic resources.
141. The law of increasing opportunity costs limits international specialization.
Chapter 20 - International Trade
Answer the question on the basis of the following information. 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.
142. Refer to the above information. Alpha should specialize in Y and Beta in X.
143. Refer to the above information. The terms of trade will be at or within the 1X = 11/2Y to
1X = 2/3Y range.
144. Refer to the above information. Alpha would prefer terms of trade at, or close to, 1X =
11/2Y.
Chapter 20 - International Trade
145. Refer to the above information. Beta would prefer terms of trade at, or close to, 1X =
11/2Y.
146. Refer to the above information. 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.
147. Refer to the above information. There is no basis for trade between Alpha and Beta
because Beta has an absolute advantage in the production of both goods.
Chapter 20 - International Trade
148. Refer to the above information. Alpha would prefer terms of trade at, or close to, 1X =
2/3Y.
149. A nation's export supply curve is downsloping and its import demand curve is
upsloping.
150. The equilibrium world price of a product equates the quantities of exports supplied and
imports demanded.
151. Economists prefer free trade to tariffs, and prefer tariffs to import quotas.
Chapter 20 - International Trade
152. Tariffs create larger gains to domestic producers than losses to domestic consumers.
153. A side benefit of international trade is that it links national interests and increases the
opportunity costs of war.
154. During the Great Depression most nations lowered tariffs and abolished import quotas to
encourage the flow of trade.
155. Barriers to free trade impair efficiency in the international allocation of resources.
Chapter 20 - International Trade
156. The World Trade Organization is comprised of 27 European nations and dedicated to
abolishing trade barriers and integrating their economies.
157. 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.
