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1. The mercantilists would have objected to:
a.
Export promotion policies initiated by the government
b.
The use of tariffs or quotas to restrict imports
c.
Trade policies designed to accumulate gold and other precious metals
d.
International trade based on open markets
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
2. Unlike the mercantilists, Adam Smith maintained that:
a.
Trade benefits one nation only at the expense of another nation
b.
Government control of trade leads to maximum economic welfare
c.
All nations can gain from free international trade
d.
The world’s output of goods must remain constant over time
ANSWER:
c
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
3. The trading principle formulated by Adam Smith maintained that:
a.
International prices are determined from the demand side of the market
b.
Differences in resource endowments determine comparative advantage
c.
Differences in income levels govern world trade patterns
d.
Absolute cost differences determine the immediate basis for trade
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
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NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
4. Unlike Adam Smith, David Ricardo’s trading principle emphasizes the:
a.
Demand side of the market
b.
Supply side of the market
c.
Role of comparative costs
d.
Role of absolute costs
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
5. When a nation requires fewer resources than another nation to produce a product, the nation is said to have a:
a.
Absolute advantage in the production of the product
b.
Comparative advantage in the production of the product
c.
Lower marginal rate of transformation for the product
d.
Lower opportunity cost of producing the product
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
6. According to the principle of comparative advantage, specialization and trade increase a nation’s total output since:
a.
Resources are directed to their highest productivity
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b.
The output of the nation’s trading partner declines
c.
The nation can produce outside of its production possibilities curve
d.
The problem of unemployment is eliminated
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
7. In a two-product, two-country world, international trade can lead to increases in:
a.
Consumer welfare only if output of both products is increased
b.
Output of both products and consumer welfare in both countries
c.
Total production of both products, but not consumer welfare in both countries
d.
Consumer welfare in both countries, but not total production of both products
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
8. As a result of international trade, specialization in production tends to be:
a.
Complete with constant costs—complete with increasing costs
b.
Complete with constant costs—incomplete with increasing costs
c.
Incomplete with constant costs—complete with increasing costs
d.
Incomplete with constant costs—incomplete with increasing costs
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
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STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
9. A nation that gains from trade will find its consumption point being located:
a.
Inside its production possibilities curve
b.
Along its production possibilities curve
c.
Outside its production possibilities curve
d.
None of the above
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
Table 2.1. Output Possibilities of the U.S. and the U.K.
Output per Worker per day
Country
Tons of Steel
Televisions
United States
5
45
United Kingdom
10
20
10. Referring to Table 2.1, the United States has the absolute advantage in the production of:
a.
Steel
b.
Televisions
c.
Both steel and televisions
d.
Neither steel nor televisions
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Analyze
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DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
11. Referring to Table 2.1, the United Kingdom has a comparative advantage in the production of:
a.
Steel
b.
Televisions
c.
Both steel and televisions
d.
Neither steel nor televisions
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
12. Refer to Table 2.1. If trade opens up between the United States and the United Kingdom, American firms should
specialize in producing:
a.
Steel
b.
Televisions
c.
Both steel and televisions
d.
Neither steel nor televisions
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
13. Referring to Table 2.1, the opportunity cost of producing one ton of steel in the United States is:
a.
3 televisions
b.
10 televisions
c.
20 televisions
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d.
45 televisions
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
14. Refer to Table 2.1. Mutually advantageous trade will occur between the United States and the United Kingdom so
long as one ton of steel trades for:
a.
At least 1 television, but no more than 2 televisions
b.
At least 2 televisions, but no more than 3 televisions
c.
At least 3 televisions, but no more than 4 televisions
d.
At least 4 televisions, but no more than 5 televisions
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
15. Referring to Table 2.1, the United Kingdom gains most from trade if:
a.
1 ton of steel trades for 2 televisions
b.
1 ton of steel trades for 3 televisions
c.
2 tons of steel trade for 4 televisions
d.
2 tons of steel trade for 5 televisions
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.1
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NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Analyze
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
16. Concerning international trade restrictions, which of the following is false? Trade restrictions:
a.
Limit specialization and the division of labor
b.
Reduce the volume of trade and the gains from trade
c.
Cause nations to produce inside their production possibilities curves
d.
May result in a country producing some of the product of its comparative disadvantage
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
17. If a production possibilities curve is bowed out (i.e., concave) in appearance, production occurs under conditions of:
a.
Constant opportunity costs
b.
Increasing opportunity costs
c.
Decreasing opportunity costs
d.
Zero opportunity costs
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
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18. Increasing opportunity costs suggest that:
a.
Resources are not perfectly shiftable between the production of two goods
b.
Resources are fully shiftable between the production of two goods
c.
A country’s production possibilities curve appears as a straight line
d.
A country’s production possibilities curve is bowed inward (i.e., convex) in appearance
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
19. The trading-triangle concept is used to indicate a nation’s:
a.
Exports, marginal rate of transformation, terms of trade
b.
Imports, terms of trade, marginal rate of transformation
c.
Marginal rate of transformation, imports, exports
d.
Terms of trade, exports, imports
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
20. Assuming increasing cost conditions, trade between two countries would not be likely if they have:
a.
Identical demand conditions but different supply conditions
b.
Identical supply conditions but different demand conditions
c.
Different supply conditions and different demand conditions
d.
Identical demand conditions and identical supply conditions
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
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QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Increasing-Cost Conditions
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
Table 2.2. Output possibilities for South Korea and Japan
Output per worker per day
Country
Tons of steel
VCRs
South Korea
80
40
Japan
20
20
21. Referring to Table 2.2, the opportunity cost of one VCR in Japan is:
a.
1 ton of steel
b.
2 tons of steel
c.
3 tons of steel
d.
4 tons of steel
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
22. Referring to Table 2.2, the opportunity cost of one VCR in South Korea is:
a.
1/2 ton of steel
b.
1 ton of steel
c.
1 1/2 tons of steel
d.
2 tons of steel
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
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PREFACE NAME:
Table 2.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
23. Refer to Table 2.2. According to the principle of absolute advantage, Japan should:
a.
Export steel
b.
Export VCRs
c.
Export steel and VCRs
d.
None of the above; there is no basis for gainful trade
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
24. Refer to Table 2.2. According to the principle of comparative advantage:
a.
South Korea should export steel
b.
South Korea should export steel and VCRs
c.
Japan should export steel
d.
Japan should export steel and VCRs
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
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KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
25. Refer to Table 2.2. With international trade, what would be the maximum amount of steel that South Korea would be
willing to export to Japan in exchange for each VCR?
a.
1/2 ton of steel
b.
1 ton of steel
c.
1-1/2 tons of steel
d.
2 tons of steel
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
26. Refer to Table 2.2. With international trade, what would be the maximum number of VCRs that Japan would be
willing to export to South Korea in exchange for each ton of steel?
a.
1 VCR
b.
2 VCRs
c.
3 VCRs
d.
4 VCRs
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 2.2
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
27. The earliest statement of the principle of comparative advantage is associated with:
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a.
Adam Smith
b.
David Ricardo
c.
Eli Heckscher
d.
Bertil Ohlin
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
28. If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production:
a.
Trade would depend on differences in demand conditions
b.
Trade would depend on economies of large-scale production
c.
Trade would depend on the use of different currencies
d.
There would be no basis for gainful trade
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
29. If the international terms of trade settle at a level that is between each country’s opportunity cost:
a.
There is no basis for gainful trade for either country
b.
Both countries gain from trade
c.
Only one country gains from trade
d.
One country gains and the other country loses from trade
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
30. International trade is based on the notion that:
a.
Different currencies are an obstacle to international trade
b.
Goods are more mobile internationally than are resources
c.
Resources are more mobile internationally than are goods
d.
A country’s exports should always exceed its imports
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
Figure 2.1. Production Possibilities Schedule
31. Referring to Figure 2.1, the relative cost of steel in terms of aluminum is:
a.
4.0 tons
b.
2.0 tons
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Page 14
c.
0.5 tons
d.
0.25 tons
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Figure 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
32. Referring to Figure 2.1, the relative cost of aluminum in terms of steel is:
a.
4.0 tons
b.
2.0 tons
c.
0.5 tons
d.
0.25 tons
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Figure 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
33. Refer to Figure 2.1. If the relative cost of steel were to rise, then the production possibilities schedule would:
a.
Become steeper
b.
Become flatter
c.
Shift inward in a parallel manner
d.
Shift outward in a parallel manner
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
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Page 15
PREFACE NAME:
Figure 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
34. Refer to Figure 2.1. If the relative cost of aluminum were to rise, then the production possibilities schedule would:
a.
Become steeper
b.
Become flatter
c.
Shift inward in a parallel manner
d.
Shift outward in a parallel manner
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Figure 2.1
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Production Possibilities Schedules
KEYWORDS:
BLOOM’S: Apply
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
35. When a nation achieves autarky equilibrium:
a.
Input price equals final product price
b.
Labor productivity equals the wage rate
c.
Imports equal exports
d.
Production equals consumption
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
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Page 16
36. When a nation is in autarky and maximizes its living standard, its consumption and production points are:
a.
Along the production possibilities schedule
b.
Above the production possibilities schedule
c.
Beneath the production possibilities schedule
d.
Any of the above
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
37. If Canada experiences increasing opportunity costs, its supply schedule of steel will be:
a.
Downward-sloping
b.
Upward-sloping
c.
Horizontal
d.
Vertical
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Increasing-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
38. If Canada experiences constant opportunity costs, its supply schedule of steel will be:
a.
Downward-sloping
b.
Upward-sloping
c.
Horizontal
d.
Vertical
ANSWER:
c
POINTS:
1
Copyright Cengage Learning. Powered by Cognero.
Page 17
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
39. The gains from international trade increase as:
a.
A nation consumes inside of its production possibilities schedule
b.
A nation consumes along its production possibilities schedule
c.
The international terms of trade rises above the nation’s autarky price
d.
The international terms of trade approaches the nation’s autarky price
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
40. In a two-country, two-product world, the statement “Japan enjoys a comparative advantage over France in steel
relative to bicycles” is equivalent to:
a.
France having a comparative advantage over Japan in bicycles relative to steel
b.
France having a comparative disadvantage against Japan in bicycles and steel
c.
Japan having a comparative advantage over France in steel and bicycles
d.
Japan having a comparative disadvantage against Japan in bicycles and steel
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
Copyright Cengage Learning. Powered by Cognero.
Page 18
TOPICS:
Trading Under Constant-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
41. Ricardo’s theory of comparative advantage was of limited real-world validity because it was founded on the:
a.
Labor theory of value
b.
Capital theory of value
c.
Land theory of value
d.
Entrepreneur theory of value
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
42. Assume that labor is the only factor of production and that wages in the United States equal $20 per hour while wages
in the United Kingdom equal $10 per hour. Production costs would be lower in the United States than the United
Kingdom if:
a.
U.S. labor productivity equaled 40 units per hour while U.K. labor productivity equaled 15 units per hour
b.
U.S. labor productivity equaled 30 units per hour while U.K. labor productivity equaled 20 units per hour
c.
U.S. labor productivity equaled 20 units per hour while U.K. labor productivity equaled 30 units per hour
d.
U.S. labor productivity equaled 15 units per hour while U.K. labor productivity equaled 25 units per hour
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Productions Gains From Specialization
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
43. According to Ricardo, a country will have a comparative advantage in the product in which its:
a.
Labor productivity is relatively low
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Page 19
b.
Labor productivity is relatively high
c.
Labor mobility is relatively low
d.
Labor mobility is relatively high
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
44. The Ricardian model of comparative advantage is based on all of the following assumptions except:
a.
Only two nations and two products
b.
Product quality varies among nations
c.
Labor is the only factor of production
d.
Labor can move freely within a nation
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Historical Development of Modern Trade Theory
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
45. The writings of G. MacDougall emphasized which of the following as an explanation of a country’s competitive
position?
a.
National income levels
b.
Relative endowments of natural resources
c.
Domestic tastes and preferences
d.
Labor compensation and productivity levels
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
Copyright Cengage Learning. Powered by Cognero.
Page 20
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Empirical Evidence on Comparative Advantage
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
46. The introduction of community indifference curves into our trading example focuses attention on the nation’s:
a.
Income level
b.
Resource prices
c.
Tastes and preferences
d.
Productivity level
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Increasing-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM
DATE MODIFIED:
6/22/2016 3:10 PM
47. Introducing indifference curves into our trade model permits us to determine:
a.
Where a nation chooses to locate along its production possibilities curve in autarky
b.
The precise location of a nation’s production possibilities curve
c.
Whether absolute cost or comparative cost conditions exist
d.
The currency price of one product in terms of another product
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
STATE STANDARDS:
United States – PA – DISC: Gains from trade, speciali – DISC: Gains from trade,
specialization and trade
TOPICS:
Trading Under Increasing-Cost Conditions
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:10 PM