Question 1

Which of the following assertions is not correct about the multilateral approach to free trade?

Accepted Answer

A)   The multilateral approach has the potential to result in freer trade than does the unilateral approach.
B)   The multilateral approach may have a political advantage over the unilateral approach.
C)   The multilateral approach is simpler than the unilateral approach.
D)   NAFTA and GATT both represent multilateral approaches to free trade.

Question 2

Figure 9-1
The figure illustrates the market for wool in New Zealand. 
-Refer to Figure 9-1.In the absence of trade,total surplus in New Zealand is represented by the area

Accepted Answer

A)   A + B + C.
B)   A + B + C + D + F.
C)   A + B + C + D + F + G.
D)   A + B + C + D + F + G + H.

Question 3

Trade among nations is ultimately based on

Accepted Answer

A)   absolute advantage.
B)   strategic advantage.
C)   comparative advantage.
D)   technical advantage.

Question 4

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Accepted Answer

A)   in increase in exports of low-priced goods from developing countries to developed countries.
B)   the replacement of manufacturing jobs with service jobs in developed countries.
C)   economic dislocations caused by the North American Free Trade Agreement (NAFT
A)  in the 1990s.
D)   high tariffs imposed during the Great Depression of the 1930s.

Question 5

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)   consumer surplus increases and total surplus increases in the market for that good.
B)   consumer surplus increases and total surplus decreases in the market for that good.
C)   consumer surplus decreases and total surplus increases in the market for that good.
D)   consumer surplus decreases and total surplus decreases in the market for that good.

Question 6

Both tariffs and import quotas

Accepted Answer

A)   increase the quantity of imports and raise the domestic price of the good.
B)   increase the quantity of imports and lower the domestic price of the good.
C)   decrease the quantity of imports and raise the domestic price of the good.
D)   decrease the quantity of imports and lower the domestic price of the good.

Question 7

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Accepted Answer

A)   40 percent to about 5 percent.
B)   40 percent to about 20 percent.
C)   80 percent to about 20 percent.
D)   20 percent to about 10 percent.

Question 8

Figure 9-5 
-Refer to Figure 9-5.If this country allows free trade in wagons,

Accepted Answer

A)   consumers will gain more than producers will lose.
B)   producers will gain more than consumers will lose.
C)   producers and consumers will both gain equally.
D)   producers and consumers will both lose equally.

Question 9

When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that

Accepted Answer

A)   Mooseland became an exporter of sugar.
B)   the overall economic well-being of participants in the sugar market in Mooseland fell because of trade.
C)   consumer surplus in Mooseland increased by $7 million.
D)   the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Question 10

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that

Accepted Answer

A)   both producers of automobiles and consumers of automobiles in that nation became better off as a result.
B)   the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation.
C)   the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation.
D)   even though total surplus in that nation decreased,it was still true that consumer surplus and producer surplus increased.

Question 11

The results of a 2007 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Accepted Answer

A) True 
 B)False

Question 12

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,

Accepted Answer

A)   producer surplus increases and total surplus increases in the market for that good.
B)   producer surplus increases and total surplus decreases in the market for that good.
C)   producer surplus decreases and total surplus increases in the market for that good.
D)   producer surplus decreases and total surplus decreases in the market for that good.

Question 13

A tariff is a

Accepted Answer

A)   limit on how much of a good can be exported.
B)   limit on how much of a good can be imported.
C)   tax on an exported good.
D)   tax on an imported good.

Question 14

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Accepted Answer

A)   consumer surplus increases and total surplus increases in the market for that good.
B)   consumer surplus increases and total surplus decreases in the market for that good.
C)   consumer surplus decreases and total surplus increases in the market for that good.
D)   consumer surplus decreases and total surplus decreases in the market for that good.

Question 15

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Accepted Answer

A) True 
 B)False

Question 16

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Accepted Answer

A) True 
 B)False

Question 17

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

A)   Trade restrictions make all Americans better off.
B)   Trade restrictions increase economic efficiency.
C)   Trade restrictions are necessary for economic growth.
D)   Trade restrictions are sometimes necessary for national security.

Question 19

When a country allows international trade and becomes an importer of a good,domestic producers of the good are better off,and domestic consumers of the good are worse off.

Accepted Answer

A) True 
 B)False

Question 20

How does an import quota differ from an equivalent tariff?

Accepted Answer

Both the import quota and the tariff rai...

Exam 9: Application: International Trade

How does an import quota differ from an equivalent tariff?

Correct AnswerverifiedBoth the import quota and the tariff rai...View AnswerShow Answer

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,total surplus in New Zealand is represented by the area

Correct AnswerverifiedShow Answer

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

Correct AnswerverifiedShow Answer

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Correct AnswerverifiedShow Answer

Which of the following assertions is not correct about the multilateral approach to free trade?

Correct AnswerverifiedShow Answer

Since World War II,GATT has been responsible for reducing the average tariff among member countries from about

Correct AnswerverifiedShow Answer

The General Agreement on Tariffs and Trade (GATT) was initiated in response to

Correct AnswerverifiedShow Answer

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedShow Answer

The results of a 2007 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

Correct AnswerverifiedShow Answer

Which of the following arguments for trade restrictions is often advanced?

Correct AnswerverifiedShow Answer

Both tariffs and import quotas

Correct AnswerverifiedShow Answer

When a country allows international trade and becomes an importer of a good,domestic producers of the good are better off,and domestic consumers of the good are worse off.

Correct AnswerverifiedShow Answer

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that

Correct AnswerverifiedShow Answer

Trade among nations is ultimately based on

Correct AnswerverifiedShow Answer

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,

Correct AnswerverifiedShow Answer

A tariff is a

Correct AnswerverifiedShow Answer

Figure 9-5 -Refer to Figure 9-5.If this country allows free trade in wagons,

Correct AnswerverifiedShow Answer

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good,

Correct AnswerverifiedShow Answer

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Correct AnswerverifiedShow Answer

When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that

Correct AnswerverifiedShow Answer

Correct Answer
verified
Both the import quota and the tariff rai...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified