Chapter 38 MACROECON

Which of the following would not be feasible terms of trade between Singsong and Harmony?

1 chicken for 1/5 fish

Differences in production efficiencies among nations in producing a particular good result from:

ALL OF THESE

Alpha and Beta have populations of equal size, the given data shows that

Beta is more efficient than Alpha in both catching fish and producing chips

Example of Nontariff Barrier (NTB)

Box-by-box inspection requirements for imported fruit

In order for mutually beneficial trade to occur between two otherwise isolated nations:

Each nation must be able to produce at least one good relatively cheaper than the other

Wool

Example of a land intensive commodity

Digital Cameras

Example of labor intensive commodity

Country A limits other nation's exports to 1000 tons of coal annually. This is an example of:

Import Quota

Supopse the US sets a limit on the number of tons of sugar that can be imported each year. This is an example of an:

Import Quota

Frederic Bastiat's Petition of the Candlemakers most directly refutes which of the following arguments for protectionism?

Increased domestic employment argument

Madison, the CPA is faster than Mason the house painter, at both accounting services and painting. This means that:

Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services

Which of the following best describes economists' general assessment of the impacts of offshoring?

Offshoring benefits the US economy by promoting greater specialization and exchange of goods and services based on comparative advantage

Production possibilities between Latalia and Trombonia

Production in both latalia and Trombonia is subject to constant opportunity costs

In effect, tariffs on imports are:

Subsidies for domestic producers

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self sufficient if necessary?

The diversification-for-stability argument

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves to survive?

The infant industry argument

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

The military self-sufficiency argument

More goods that would be attainable through domestic production alone

The primary gain from international trade:

If two nations have straight-line production possibilities curves

There will be a basis for mutually advantageous trade provided the slops differ

Research studies indicate that

US consumers lose more from tariffs than US producers gain

Canada agreed to set and upper limit on the total amount of softwood lumber sold to the US-- this is an example of:

Voluntary Export Restriction

The increased-domestic-employment argument for tariff production holds that:

an increase in tariffs will increase net exports and stimulate domestic employment

Greatest benefit to an economy from international trade is:

consumption beyond domestic production possibilities

Studies show that:

costs of trade barriers exceed their benefits, creating an efficiency loss for society

Chemicals

example of capital intensive commodity

Other things equal, economists would prefer:

free trade to tariffs and tariffs to import quotas

In Singsong, the domestic real cost of each chicken

is 1/2 fish (.5)

In Latalia the domestic real cost of 1 ton of pork

is 5 tons of beans

Economists who criticize trade adjustment assistance argue that

it only benefits a very small fraction of all unemployed workers

In the theory of comparative advantage, a good should be produced in that nation where

its cost is least in terms of alternative goods that might otherwise be produced

Dumping of goods abroad

may be part of a firm's price discrimination strategy

The law of increasing opportunity costs

may limit the extent to which a nation specializes in producing a particular product

If a nation has comparative advantage in the production of X, this means the nation

must give up less of other goods than other nations in producing a unit of X

If country A can produce both goods X nd Y more efficiently, that is, with smaller absolute amounts of resources, than can country B

mutually advantageous specialization and trade between A and B may still be possible

In the real world, specialization is rarely complete because:

nations normally experience increasing opportunity costs in producing more of the product in which they are specializing

According to Dallas Federal Reserve economist, taken to its extreme, the logic of buying "American" implies that

people should only consume what they can produce themselves

Alpha and Beta have populations of equal size, the domestic opportunity cost of:

producing a ton of chips in Beta is 6 tons of fish

The terms of trade reflect

ratio at which nations exchange two goods

NAFTA

reduced most trade barriers between Canada, Mexico, and the United States

A nations import demand curve for a specific product

shows the amount of the product it will import at prices below its domestic price

Other things Equal, a tariff is:

superior to an import quota for Americans because a tariff generates revenue for the US Treasury

Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from:

the sun

In comparing a tariff and an import quota, we find that

the tariff generates revenue for the Us Treasury, but the quota does not.

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages, is that:

wage rates and labor productivity are directly related