ECO Exam 4 (Ch. 20, 21 & 16)

12. The membership of the WTO includes about __________ nations.

150

14. _______ could be claimed if a regulation existed where every imported product must be opened and inspected carefully by hand with only a single inspector available at any given time.

A non-tariff barrier

18. What would we call the action of China selling tires in the U.S. below their cost of production.

Dumping

9. Suppose that Alaska can produce 90,000 peppermint sticks or 10,000 gallons of maple syrup in a typical workweek, while France can produce 100,000 peppermint sticks or 10,000 gallons of maple syrup in a typical workweek. From these numbers, we can conclude:

France has a comparative advantage in the production of peppermint sticks.

3. If Iceland can produce 32 tons of fish per year or 16 tons of crabs per year, but Greenland can produce 16 tons of fish per year or 8 tons of crabs. Which of the following is true?

Greenland has a comparative advantage, but not an absolute advantage, in producing crabs.

13. Which of the following best describes the quantitative limits on goods and services imported into a country?

Import quotas

5. Which of the following is true? A: A nation cannot have an absolute advantage in the production of every good. B:A nation can have a comparative advantage in the production of every good, but not an absolute advantage. C: It is impossible to have a comparative advantage in the production of all goods for a nation. D: A nation can have a comparative advantage in the production of a good only if it also has an absolute advantage.

It is impossible to have a comparative advantage in the production of all goods for a nation.

GOOOOOOD

LUCKKKK

16. It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________.

National Interest Argument

20. Why would foreign firms export a product at less than its cost of production—which presumably means making a loss?

This strategy is to drive out domestic competition to monopolize an industry and then control prices

24. If the U.S. dollar weakens, which of the following parties will benefit?

U.S firms exporting to Europe

21. A nations currency will be subject to___________________ , if government policy allows a country's currency to be determined in the exchange rate market.

a floating exchange rate

15. Which of the following best defines how a tariff differs from a quota?

a tariff is a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

27. As exchange rates vary incentives arise that provides fuel to the export and import markets which follows with an increase in ________________ for the economy as a whole.

aggregate demand

25. Which of the following business activities do not rely on the foreign exchange markets for its transactions?

an American international investor buying part-ownership of a condo in Orlando

7. The gains from international trade do not just result from the absolute advantage of producing at a lower cost, but also from pursuing comparative advantage and producing ________________.

at a lower opportunity cost

19. Why would a tariff on a good result in a decrease in consumer surplus?

because the quantity consumed of the good decreases and the price of the protected good increases.

29. Increases in ____________ adds to aggregate demand as increases in ___________ subtracts from aggregate demand, which is a macroeconomic perspective.

exports; imports

According to international trade theory, a country should:

import goods in which it has a higher opportunity cost to produce.

17. If the USA introduced a tariff in the market for shoe strings, the price of shoe strings in the USA will:

increase.

30. A country that has pegged its exchange rate would no longer be able to combat a recession with an expansionary monetary policy. Why?

it would depreciate the country's exchange rate and break its hard peg

1. Intra-industry trade between similar trading partners allows the gains from ______________________ that arise when firms and workers specialize in the production of a certain product.

learning and innovation

6. The idea behind comparative advantage reflects the possibility that one country:

may be able to produce something at a lower opportunity cost than another country.

28. Governments using soft pegs or hard pegs to intervene in exchange rate markets:

may cause even greater fluctuations in foreign exchange markets.

10. One of the reasons that countries participate in international trade is that:

no single country can produce all of the goods that consumers of the country want.

8. Which of the following best describes why trade benefits both sides of a trading arrangement?

opportunity cost

11. Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because:

protectionism forces them to pay higher prices for basic necessities like clothing and food.

2. Some countries that try producing all of their own goods and services face the problem that:

some industries are too small to be efficient if restricted to their domestic markets alone.

26. If 112 Japanese yen purchased $1.00 U.S. in 2009 and 83 Japanese yen purchased $1.00 U.S. in 2008, then:

the dollar appreciated against the yen

23. When Rinaldo buys U.S. dollars through _________________________, he will use Pesos to pay for them.

the foreign exchange market

22. In _________________ a soft peg policy typically allows the exchange rate to move up and down by relatively small amounts.

the short run