Chapter 9 Econ
What is the argument for this import quota on sugar? The argument is ______ because ______.
1. The import quota protects U.S. jobs. 2. incorrect; sugar growers would be more efficiently employed producing things in which the United States has a comparative advantage
Which of the following activities is an example of dumping?
Dell exports PCs to India at a price 20 percent lower than the cost of producing them.
The fall in net exports _______.
decreases GDP
In 2016, R was $12 billion; W was $37 billion; U was $11 billion; J was $15 billion; and Z was $2 billion. Calculate total expenditure and total income.
Total expenditure is $65 billion. Part 2 Total income is $65 billion.
U.S. exports are _____ produced in _____ and sold in _____.
goods and services; the United States; any other country
Which of the following is an example of an import quota? The United States _____ .
limits the quantity of auto parts that U.S. car makers may buy from China
What is rent seeking? Rent seeking is _____.
lobbying and other political activity that aims to capture the gains from trade
Imports of goods and services are items that _____ in the United States _____ the rest of the world.
households, firms, and governments; buy from
The quantity of U.S. exports to Mexico has _______ and the U.S. government's tariff revenue from trade with Mexico has _______.
increased; decreased
With free international trade, U.S. consumer surplus _______ and U.S. producer surplus _______.
increases by area A + B; decreases by area B
If the world price of a pair of shoes is $20 and Brazil opens up and trades internationally, producer surplus in Brazil _______ and consumer surplus in Brazil _______.
increases by area C + D; decreases by area C
With free trade between the United States and Canada, the United States exports tomatoes and Canada exports maple syrup. U.S. consumers _______.
of maple syrup gain more than U.S. producers of maple syrup lose3
A tariff is a _____ imposed on a good when it is _____.
tax; imported
Exports of goods and services are items that firms in _____ produce and sell to _____.
the United States; any other country
Saving is the amount of income that is _____ in net taxes or spent on _____ goods and services.
not paid; consumption
Which of the following is an example of the infant-industry argument? Our biotech industry _____ .
will have a comparative advantage when learning-by-doing lowers our cost of production
If Korea imposes an import quota on U.S. oranges, losers include Korean _______ of oranges and U.S. _______ of oranges.
consumers; producers
Depreciation is the _____ in the value of _____ that results from its use and from obsolescence.
decrease; capital
_______ has a comparative advantage in producing shoes. With trade between Brazil and the United States, _______ exports shoes. The price of shoes in the importing country _______ and the quantity produced by the importing country _______. _______ from this trade.
1. Brazil; brazil 2. Falls; Decreases 3. Both Brazil and the United States gain
The United States is using the anti-dumping argument that _______. The U.S. argument is misguided because ______.
1. Canadian lumber producers are selling lumber in the United States below the cost of production 2. it is difficult to determine whether foreign producers are selling at prices below their costs and it is unlikely that they would want to do so
Carrier Corporation can manufacture air conditioners in Mexico at a lower cost than in Indiana. The government of Indiana offers Carrier big tax breaks to manufacture in Indiana. This tax incentive is in the self-interest of ______ in the social interest. During the 2016 election campaign, Donald Trump said that NAFTA is a bad deal for America and he said he would end it. Based on what you have learned in this chapter, is he correct and why?
1. Carrier and its Indiana workers, but it is not 2. He is not correct because there are net gains from free international trade.
Suppose that the world price of sugar is 10¢ a pound, the United States does not trade internationally, and the U.S. equilibrium price of sugar is 20¢ a pound. The United States then begins to trade internationally. How does the price of sugar in the United States change? Do U.S. consumers buy more or less sugar? Do U.S. sugar growers produce more or less sugar? does the United States export or import sugar? The price of sugar in the United States _______. U.S. consumers buy _______ sugar. U.S. sugar growers produce _______ sugar. The United States _______ sugar.
1. Falls; More 2. Less; imports
Japan's arguments for restricting imports of Californian rice are that ______. The arguments are ______ because ______. Who loses from this restriction in trade?
1. Japanese farmers must be protected from cheaper but inferior foreign rice 2. incorrect; Japanese consumers would pay a higher price for Japanese rice if it were truly better than U.S. rice 3. Californian producers and Japanese consumers
_______ from this trade in roses and would lobby for a tariff on roses. When the government imposes a tariff on rose imports, the U.S. consumer surplus that is redistributed to U.S. producers is area _______. When the government imposes a tariff on rose imports, the government's tariff revenue is area _______.
1. Rose producers in the United States lose 2. B 3. D
GDP increased at an annual rate of 4.6 percent in the first quarter of 2019. Government expenditure grew at 7 percent, but consumption expenditure grew at a rate of 6.7 percent. Investment and exports shrank. Source: BEA, July 26, 2019 Use the figure to indicte the flows in which the items in the news clip occur. How can GDP increase at a rate of 4.6 percent if consumption expenditure increased at a rate of 6.7 percent? In the figure, _______. It is possible for GDP to increase by only 4.6 percent when consumption expenditure grew at a 6.7 percent rate because
1. U is government expenditure on goods and services and J is investment 2. the sum of investment and net exports grew at a negative rate
_______ will gain and _______ will lose from the restrictions on imports of solar panels and washing machines. With an import restriction on solar panels and washing machines, we can expect their prices to _______.
1. U.S. producers of solar panels and washing machines and the U.S. government; U.S. consumers 2. Rise
The two approaches to measuring GDP described in the news clip are the _______. The news clip is incorrect that the value of production is _______.
1. expenditure approach and the income approach 2. $30 million because when Facebook pays its workers, it incurs a loss of $30 million
With the removal of U.S. tariffs, the price that U.S. consumers pay for goods imported from Mexico will _______, and the quantity of U.S. imports from Mexico will _______. The winner from the removal of U.S. tariffs on goods imported from Mexico is _______ and the loser is _______
1. fall; increase 2. U.S. consumers of goods imported from Mexico; U.S. producers of goods that are imported from Mexico
1. The United States exports LNG because _______. 2. _______ from U.S. exports of LNG. 3. The graph shows the domestic demand for and domestic supply of LNG in the United States and the world price of LNG. With international trade in LNG, U.S. producers _______ and U.S. consumers _______. 4. The graph shows the demand for LNG in India DI , the supply of LNG in India SI , and the world price of LNG. With international trade in LNG, Indian consumers _______ and Indian producers _______.
1. it has a comparative advantage in producing LNG 2. U.S. LNG producers and LNG consumers of U.S. LNG in other countries gain 3. gain area B + D; lose area B 4. gain the area B + D; lose the area B
An anti-dumping tariff _______. To encourage the U.S. government to raise the tariff on solar panel and washing machine imports, U.S. solar panel and washing machine manufactures might argue that ______.
1. raises the price of the imported good so that the domestic price reflects what the importing country believes is the true cost of production 2. foreign exporters of solar panels and washing machines are engaging in predatory pricing
U.S. tariffs imposed on Chinese-produced goods could cause companies to move production out of China because the tariff _______. _______ lose from the Trump tariffs. _______ gain from the Trump tariffs.
1. raises the price of Chinese-produced goods sold in the United States relative to the same goods produced in other countries 2. U.S. consumers; Firms in the United States and other Asian countries
Suppose that the world price of steel is $100 a ton, India does not trade internationally, and the equilibrium price of steel in India is $60 a ton. Suppose that India now begins to trade internationally. How does the price of steel in India change? How does the quantity of steel produced in India change? How does the quantity of steel bought by India change? Does India export or import steel? The price of steel in India _______. The quantity of steel produced in India _______. The quantity of steel bought by India _______. India _______ steel.
1. rises; increases 2. decreases; exports
1. China has a comparative advantage in producing _______. China _______ shoes. 2. In China, shoe _______ lose and shoe _______ gain from international trade in shoes. 3. China _______ from this trade in shoes. 4. The graph shows the domestic demand for and domestic supply of shoes in China and the world price of a pair of shoes. With international trade in shoes, China's producers _______ and China's consumers _______. 5. China's net gain from trade in shoes is _______.
1. shoes; exports 2. consumers; producers 3. gains 4. gain area B + D; lose area B 5. area D
1. China has a comparative advantage in producing _______. China _______ coal. 2. In China, coal _______ gain and coal _______ lose from international trade in coal. 3. China _______ from this trade in coal. 4. The graph shows the demand for coal in China DC , the supply of coal in China SC , and the world price of coal. With international trade in coal, Chinese consumers _______ and Chinese producers _______. 5. China's net gain from trade in coal is _______.
1. shoes; imports 2. users; producers 3. gains 4. gain the area B + D; lose the area B 5. area D
Dumping occurs ______. Who in the United States loses from foreign firms' dumping of solar panels and washing machines?
1. when a foreign firm sells its exports at a lower price than its cost of production 2. U.S. producers of solar panels and washing machines and U.S. workers in the solar panel and washing machine industries
The table shows some of the items in the U.S. National Income and Product Accounts in 2015. Use the expenditure approach to calculate GDP in 2015. Question content area bottom left Part 1 GDP in 2015 using the expenditure approach is Item Amount (trillions of dollars) Consumption expenditure 12.1 Government expenditure 3.2 Indirect taxes less subsidies 1.2 Depreciation 2.8 Net factor income from abroad 0.2 Investment 3.0 Net exports −0.5 Statistical discrepancy −0.3
17.8 trillion
Classify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. New cars bought by Hertz, the car rental firm B. Aluminum sheets bought by Boeing C. A haircut bought by a student D. A new limousine for the president
A is a final good that is investment, B is an intermediate good, C is a final service that is consumption expenditure, and D is a final good that is government expenditure.
_______ changed because retail sales increased. _______ changed because business inventories increased.
Consumption expenditure; Investment
Which of the following is an example of a final good or service?
Dan bought a Toyota Camry.
The national accounts of Parchment Paradise are kept on (you guessed it) parchment. A fire in the statistics office destroys some accounts, leaving only the data on the right. Calculate GDP (expenditure approach) and depreciation. GDP (income approach) 2,900 Consumption expenditure 2,000 Indirect taxes less subsidies 100 Interest, rent, and profit 500 Investment 800 Government expenditure 400 Wages 2,000 Net factor income from abroad 50 Net exports
GDP (expenditure approach) is $3,000. Part 2 Depreciation is $300.
The table shows some of the items in a country's National Income and Product Accounts in 2018. Calculate the country's GNP and the country's national income in 2018. Consumption expenditure 7.3 Government expenditure 1.9 Indirect taxes less subsidies 0.7 Depreciation 1.2 Net factor income from abroad 0.1 Investment 1.6 Net exports −0.4 Statistical discrepancy
GNP in 2018 is $10.5 trillion. Part 2 National income in 2018 is $9.3 trillion.
The table shows some data for an economy. If the base year is 2019, calculate the economy's nominal GDP and real GDP in 2020. In 2019 Item Quantity Price Apples 60 $0.50 Oranges 80 $0.25 In 2020 Item Quantity Price Apples 160 $1.00 Oranges 220 $2.00
Nominal GDP in 2020 is $600. Part 2 Real GDP in 2020 is $135.
Which of the following is an example of consumption expenditure?
Rachel buying a TV.
Which of the following is an example of an intermediate good or service?
Samsung buys compressors for manufacturing refrigerators.
Which of the following is an example of an export subsidy?
The U.S. government pays farmers $100 per ton of sugar sold to Canada.
Which of the following is an example of government expenditure on goods and services?
The White House buying internet services.
An economy produces only fun and food. The table shows the prices and the quantities of fun and food produced in 2020 and 2021. The base year is 2020. Calculate the percentage increase in real GDP in 2021. In 2020 Item Quantity Price (dollars) Fun 36 2 Food 62 4 In 2021 Item Quantity Price (dollars) Fun 37 3 Food 64 8
The percentage increase in real GDP in 2021 is 3.1 percent.
The figure shows the flows of expenditure and income in an economy. In 2013, U was $2.0 trillion, V was $2.5 trillion, W was $6.0 trillion, J was $1.0 trillion, and Z was $1.5 trillion. Calculate total income, net taxes, and GDP.
Total income is $10.5 trillion. Part 2 Net taxes equal $2 trillion. Part 3 GDP is $10.5 trillion.
With free trade, the United States exports soybean to China and imports clothing from China. The winners from this trade are _______ and the losers are _______.
U.S. buyers of clothing; U.S. clothing producers
The people who support restricted international trade say that _______.
U.S. firms won't be able to compete with low-wage foreign labor if trade is free
If the lobbying is successful and the U.S. government imposes an import quota, _______ gain and _______ lose.
U.S. growers of tomatoes; U.S. consumers of tomatoes
The table shows some of the items in a country's National Income and Product Accounts in 2018. What was GDP as measured by the income approach in 2018? What was net domestic product at factor cost in 2018? Consumption expenditure 7.3 Government expenditure 1.9 Indirect taxes less subsidies 0.7 Depreciation 1.2 Net factor income from abroad 0.1 Investment 1.6 Net exports −0.4 Statistical discrepancy 0
Using the income approach, GDP in 2018 was $10.4 trillion. Part 2 In 2018, net domestic product at factor cost was $8.5 trillion.
U.S. imports are _____ produced in _____ and sold in _____.
goods and services; any other country; the United States
The fundamental force driving international trade is comparative _______.
advantage: the country with the lower opportunity cost of production exports the good
The U.S. consumer surplus that is redistributed to U.S. producers and importers is _______ and the import quota creates a deadweight loss equal to _______.
area B; area D + E
Net taxes are taxes paid minus _____.
cash benefits received from governments
The statement that total sales by businesses rose by 1.5 percent means that GDP ______ because ______.
did not change by 1.5 percent; GDP measures production of all final goods and services and "total sales by businesses" includes final and intermediate goods and services
A country will export wheat if, with no international trade, _______.
its opportunity cost of producing wheat is below the world price
China's trade warriors can't hit Hollywood China imports $58.9 billion of U.S. services that include everything from Hollywood blockbusters to tourism and education. The Chinese government could easily enough cut off this flow. Source: Bloomberg, May 17, 2019 Why does China import U.S.-produced services like Hollywood movies? Part 2 China imports U.S.-produced services like Hollywood movies because _______.
the opportunity cost of producing a movie is higher in China than in the United States
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services.
exports; minus; imports
Real GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices in _____ year. Nominal GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices of _____ year.
final; a base; final; that same
Gross domestic product (GDP) is the market value of all the _____ goods and services produced _____ a country in a given time period.
final; within
The figures show the U.S. market for shoes and Brazil's market for shoes if there is no international trade. Who in the United States loses from free trade in shoes with Brazil? If the United States and Brazil engage in free trade, U.S.______ of shoes lose because ______.
producers; the price of shoes falls, the quantity of shoes they sell decreases, and producer surplus decreases
The U.S. tariff on paper _______ the U.S. price of paper, _______ U.S. production of paper and _______ the U.S. gains from trade.
raises; increases; decreases
