Econ 7

Imports are foods and services bought domestically

But produced in other coutnries

A voluntary export restraint is an agreement negotiated by two countries that places ______ that can be imported by one country from another country.

A numerical limit on the quantity of a good

Governments sometimes erect barriers to trade other than tariffs and quotas. Which of the following is not an example of trade barrier?

A requirement that the employees of domestic firms that engage in foreign trade pay income taxes

All of the following are sources of comparative advantage except

A strong froiegn currency exchange rate

Jim Owens caterpillars CEO

False

All of the following statements is used to justify protectionism. Which statement is not used?

Free trade leads to higher prices for imported goods

In the US during the Great Depression, tariffs were ________ than they were following WWII, and _______ than they are today.

Higher; higher

If the US government implements a tariff on Chinese tire imports, the price of Chinese made tires will _______, the quantity demanded will _______, and consumer surplus will _________.

Increase; decrease; decrease

Domestic producers require time to gain experience and lower their unit costs;

Infant industry

Hansen argues American producers cannot compete with foreign producers because wages are lower in other countries than in US. Hansen

Is Incorrect. Free trade raises living standards by increasing economic efficiency.

Which of the following statements is true?

The US economy would gain from the elimination of Tariffs and quotas even if other countries do not reduce their tariffs and quotas.

A consequence of increasing marginal costs of producing laptop computers in the US is

The US will import come computers from other countries

Protectionism is the use of _________ to protect domestic firms from foreign competition.

Trade barriers

Trade restrictions are often motivated by a desire to save domestic jobs threatened by competition from imports. Which of the following counter arguments is made by economists who oppose trade restrictions?

Consumers pay high cost for jobs saved through trade restrictions.

Finland absolute advantage in production of two goods compared to lativa. Finland can still benefit from trade.

True

GATT WTO

True

If norwegian workers are more productive than albanian workers, then trade between norway and albania

Will take place so long as each country has an comparative advatnge in a good or service that buyers in the other country want.

Which if he following is common to both tariffs and quotas?

Both are designed to reduce foreign competition faced by domestic firms

The first discussion of comparative advantage appears in a book written by

David Ricardo

More than half of caterpillars sales are made

Outside the US

A tax imposed by a government on imports of a good into a courtry is called a

Tariff

The term of trade refers to

The ratio at which a country can trade its exports for imports from other counrties

Coastal Rica is a leading exporter of bananas. What explains the comparative advantage of this country in banana production?

Climate and soil

Twenty-seven countries in Europe have formed the European Union (EU). After the EU was formed it

Eliminated all tariffs among its member countries.

Once an industry becomes established in a certain area firms that locate in the area gain ad argued over firms located elsewhere, leading to lower costs of production. Economists refer to the lower costs that resume from increases in the size of an industry in a certain area as

External economies