Question 1

The following data is for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded.
 s is domestic quantity supplied and Qd is domestic quantity demanded.    -Refer to the above data. The equilibrium world price of steel must be between: A)  $5 and $4. B)  $4 and $3. C)  $3 and $2. D)  $2 and $1." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above data. The equilibrium world price of steel must be between:

Accepted Answer

A)   $5 and $4.
B)   $4 and $3.
C)   $3 and $2.
D)   $2 and $1.E) None of the above
F) All 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) B) and D)

Question 3

The terms of trade will favour a larger nation over a smaller nation.

Accepted Answer

A) True 
 B)False

Question 4

A tax on an imported product is a(n) :

Accepted Answer

A)   tariff.
B)   quota.
C)   import subsidy.
D)   export subsidy.E) A) and B)
F) C) and D)

Question 5

Which 1993 economic agreement established a major free-trade zone in the western hemisphere?

Accepted Answer

A)   the formation of the European Union
B)   the North American Free Trade Agreement
C)   the Reciprocal Trade Agreements Act
D)   the Doha Development AgendaE) B) and C)
F) A) and D)

Question 6

A major goal of the World Trade Organization (WTO)  is to:

Accepted Answer

A)   increase the protection of producers against foreign trade competition.
B)   encourage bilateral trade agreements between nations.
C)   liberalize international trade among nations.
D)   maximize tariff revenue for governments.E) All of the above
F) A) and D)

Question 7

Production possibilities data for Gamma and Sigma. All data are in tons.
Gamma production possibilities:
  Sigma production possibilities:
 
-On the basis of the above information:

Accepted Answer

A)   Gamma should export both tea and pots to Sigma.
B)   Sigma should export tea to Gamma and Gamma should export pots to Sigma.
C)   Gamma should export tea to Sigma and Sigma should export pots to Gamma.
D)   Gamma should export tea to Sigma, but it will not be profitable for the two nations to exchange pots.E) A) and D)
F) A) and C)

Question 8

The following data is for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded.
 s is domestic quantity supplied and Qd is domestic quantity demanded.    -Refer to the above data. At a world price of $2: A)  Alpha will want to import 20 units of steel. B)  Beta will want to export 20 units of steel. C)  Alpha will want to export 20 units of steel. D)  neither country will want to import steel." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above data. At a world price of $2:

Accepted Answer

A)   Alpha will want to import 20 units of steel.
B)   Beta will want to export 20 units of steel.
C)   Alpha will want to export 20 units of steel.
D)   neither country will want to import steel.E) None of the above
F) A) and D)

Question 9

Free trade based on comparative advantage is economically beneficial because:

Accepted Answer

A)   it promotes an efficient allocation of world resources.
B)   it increases competition.
C)   it provides consumers with a wider range of products.
D)   of all of the above reasons.E) B) and C)
F) All of the above

Question 10

-Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product. The export supply curves for the two nations are represented by lines:

Accepted Answer

A)   5 and 7.
B)   5 and 6.
C)   6 and 8.
D)   7 and 8.E) A) and D)
F) None of the above

Question 11

Which combination of policies would entail the greatest stimulus to domestic employment and output in the short run?

Accepted Answer

A)   raising trade barriers on imports and subsidizing exports
B)   raising trade barriers on imports and imposing special taxes on exports
C)   lowering trade barriers on imports and imposing special taxes on exports
D)   lowering trade barriers on imports and subsidizing exportsE) A) and B)
F) A) and D)

Question 12

Production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
 
-Refer to the above data. Assume the production possibilities in Beta double at alternatives A through E while remaining as shown in the table for Alpha. As a result Beta should:

Accepted Answer

A)   continue to specialize in producing chips.
B)   continue to specialize in fishing.
C)   no longer specialize and trade.
D)   specialize both in fishing and in producing chips and sell the surplus to Alpha.E) A) and D)
F) A) and C)

Question 13

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) A) and D)
F) A) and C)

Question 14

The data embodied in the below diagrams suggest that:

Accepted Answer

A)   Italy should export X and Greece should export Y.
B)   Greece should export X and Italy should export Y.
C)   production in both countries is subject to increasing costs.
D)   Italy should import both X and Y from Greece.E) C) and D)
F) A) and C)

Question 15

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) B) and D)
F) None of the above

Question 16

Consider two countries which trade with each other. The degree of specialization according to their respective comparative advantages will be greater if the countries face:

Accepted Answer

A)   constant costs.
B)   high tariffs.
C)   low unemployment rates.
D)   increasing costs.E) A) and B)
F) A) and C)

Question 17

The long-run effect of tariffs is:

Accepted Answer

A)   an increase in domestic employment.
B)   an increase in export businesses.
C)   a reallocation of domestic workers from export industries to protected domestic industries.
D)   a reallocation of consumer spending to imported products over domestically-produced products.E) None of the above
F) C) and D)

Question 18

The following is the Production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
 
-The above data show that:

Accepted Answer

A)   Beta has a comparative advantage in producing chips.
B)   Alpha has a comparative advantage in catching fish.
C)   Alpha is subject to constant costs and Beta is subject to increasing costs.
D)   Beta is more efficient than Alpha.E) None of the above
F) All of the above

Question 19

The best example of a land-intensive commodity is:

Accepted Answer

A)   cameras.
B)   radios.
C)   meat.
D)   chemicals.E) All of the above
F) A) and D)

Question 20

GATT was an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

Accepted Answer

A) True 
 B)False

Exam 16: International Trade

Consider two countries which trade with each other. The degree of specialization according to their respective comparative advantages will be greater if the countries face:

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

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The following data is for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. -Refer to the above data. The equilibrium world price of steel must be between:

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A tax on an imported product is a(n) :

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Production possibilities data for Gamma and Sigma. All data are in tons. Gamma production possibilities: Sigma production possibilities: -On the basis of the above information:

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When the distribution of resources and technology changes among nations:

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The long-run effect of tariffs is:

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-Refer to the above graph which shows the import demand and export supply curves for two nations that produce a product. The export supply curves for the two nations are represented by lines:

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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:

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Production possibilities data for two countries, Alpha and Beta, which have populations of equal size. -Refer to the above data. Assume the production possibilities in Beta double at alternatives A through E while remaining as shown in the table for Alpha. As a result Beta should:

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Which combination of policies would entail the greatest stimulus to domestic employment and output in the short run?

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The terms of trade will favour a larger nation over a smaller nation.

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The best example of a land-intensive commodity is:

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The following data is for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. -Refer to the above data. At a world price of $2:

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Free trade based on comparative advantage is economically beneficial because:

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Which 1993 economic agreement established a major free-trade zone in the western hemisphere?

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A major goal of the World Trade Organization (WTO) is to:

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GATT was an international organization designed to provide short-term advances of foreign monies to those nations faced with trade deficits.

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The data embodied in the below diagrams suggest that:

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The following is the Production possibilities data for two countries, Alpha and Beta, which have populations of equal size. -The above data show that:

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The following data is for the hypothetical nations of Alpha and Beta. Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. -Refer to the above data. The equilibrium world price of steel must be between:

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The following data is for the hypothetical nations of Alpha and Beta. Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. -Refer to the above data. At a world price of $2:

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