Ch 6 MyEconLab
As illustrated in the diagram to the right, whena nation moves from autarky for free trade, economic surplus increases by the areas represented by
C + D
the diagram on the right represents a tariff imposed on an individual market. the total deadweight loss (loss in economic surplus) from this tariff is illustrated by areas
C and D
suppose the base year is 2001. looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP?
RGDP<BGDP because prices are rising
which of the following equations sums up the components of GDP
Y=C+I+G+NX
real GDP per capita is often used as a measure of general well-being. while increase in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being?
all of the above.
the World Trade Organization (WTO)
all of the above.
why do some people oppose the World Trade Organization(WTO)?
all of the above.
exports
are goods and services produced domestically but sold to other countries
Tariffs
are taxes imposed by a government on imports of a good into a country
among the main sources of comparative advantage are the following:
climate and natural resources, relative abundance of
based on the above table and graph, which of the following statements regarding total production and total income is true?
each measure of production and income gives a different value for total production and income
the table and figure above show GDP in terms of the total income received by households, use the table and figure to help determine which of the following statements about the division of income is false
gross domestic income is measured precisely
dumping
is selling a product for a price below its cost of production.
comparative advantage
is the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors
one effect of tariffs and quotas
is to cost jobs outside the industries immediately affected.
comparative advantage 02
may change as time passes and circumstances change.
disposable personal income is
personal income minus personal taxes
which of the following would be included in the gross national product (GNP) of the united states?
production from a U.S firm that operates in Mexico
consider the following simple economy that produces only 3 goods:
real GDP is 2009 equals $6680
opportunity cost
the highest-valued alternative that must be given up to enage in an activity
who is harmed when individual nations move form autarky to free trade?
the owners of the firms that went out of business.
use the graph above showing the percentage of GDP comprised of goods and services to help identify which of the following statements is true
the percentage of U.S GDP of goods has fallen consistently since at least 1980
the primary difference between a quota and a voluntary export restraint (VER) is that
the quota is unilaterally imposed by one nation on the other while the VER is the result of negotiations between nations.
some politicians argue that eliminating U.S tariffs and quotas would help the U.S economy only if other countries eliminated their tariffs and quotas in exchange.
this statement is false; the U.S economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.
the largest component of gross domestic income is
wages
what are the 4 categories of income?
wages, interest, rent, and profit
for the data, the base year for calculating GDP is 2000. use the graph to help determine which one of the following statements regarding nominal and real GDP is FALSE
when nominal GDP increase, real GDP falls.
in addition to tariffs and quotas, governments sometimes erect other barriers to trade. for example, all governments require that imports meet certain health and safety requirements. many governments also restrict imports of certain produces on national security grounds. explain whether you agree or disagree with the following statement: sometimes, however, governments use these requirements to shield firms from foreign competition
yes, sometimes governments impose stricter health and safety requirements on imported goods than on goods produced by domestic firms.
why is GDP an imperfect measurement of total production in the economy?
GDP does not include household production form the underground economy
national income is
GDP minus depreciation
by trading, countries are able to consume more than they could without trade. this outcome is possible because
all of the above
imports
are goods and services bought domestically but produced in other countries.
____is a situation in which a country does not trade with other countries. The___is the ratio at which a country can trade its exports for imports from other countries.
autasky, terms of trade
indicate whether each of the following is a final good, an intermediate good or neighter
coffee beans---intermediate good one share of goole stock--neither a new pick up truck purchased by a consumer----final good a new home purchased by a family
the figure above shows the values of the components of GDP for the year 2006. based on the data shown, which of the following statements regarding the components of GDP are false?
consumer spending on services is less than the sum of spending on durable and non durable goods.
what are the 4 major categories of expenditure?
consumption, investment, government purchases, and net exports.
Personal income is
national income minus retained corporate earnings plus government transfer payment and interest on government bonds.
we do not see complete specialization in the real world because
not all goods and services are traded internationally, production of most goods involves increasing opportunity costs, and tastes for product differ.
protectionism is the use of trade barriers to shield domestic firms from foreign competition. protectionism is usually justified on the basis of several arguments which include
saving jobs, protecting infant industries, and protecting national security.
