Macro Final Chapter 20

B. increase the price and sales of domestic producers.

A protective tariff will: A. increase the sales of foreign exporters. B. increase the price and sales of domestic producers. C. increase the welfare of domestic consumers. D. create an efficiency gain in the domestic economy.

A. an excise tax on an imported good.

A tariff can best be described as: A. an excise tax on an imported good. B. a government payment to domestic producers to enable them to sell competitively in world markets. C. an excise tax on an exported good. D. a law that sets a limit on the amount of a good that can be imported.

C. is 5 tons of beans.

Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Refer to the tables. In Latalia the domestic real cost of 1 ton of pork: A. is 3 tons of beans. B. diminishes with the level of pork production. C. is 5 tons of beans. D. is 1/5 of a ton of beans.

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

NAFTA: A. has increased the standard of living in the North African member nations. B. benefits workers in the participating nations but hurts consumers by raising prices. C. allows completely unrestricted movement of goods, services, and resources between the member nations. D. has reduced most trade barriers between Canada, Mexico, and the United States.

B. North American Free Trade Agreement.

"NAFTA" stands for: A. North African Free Trade Area. B. North American Free Trade Agreement. C. North Asian Free Trade Agreement. D. New Zealand-Australia Free Trade Agreement.

B. people should only consume what they can produce themselves.

(Consider This) According to Dallas Federal Reserve economist W. Michael Cox, taken to its extreme, the logic of "buying American" implies that: A. we should buy everything from abroad. B. people should only consume what they can produce themselves. C. consumers should only buy goods from other states. D. the best quality goods are found in the United States

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

(Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that: A. there is no reason for them to trade services. B. Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services. C. Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting. D. Madison has the comparative advantage in both services.

B. the sun.

(Last Word) Frederic Bastiat's satirical argument against protectionism called for protecting domestic producers from: A. fire. B. the sun. C. other European countries. D. invention of the electric light.

C. wage rates and labor productivity are directly related.

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that: A. labor costs and product prices are not related. B. there is no discernible relationship between wage rates and labor productivity. C. wage rates and labor productivity are directly related. D. wage rates and labor productivity are inversely related.

D. Latalia will produce beans and Trombonia will produce pork.

Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Refer to the tables. If these two nations specialize on the basis of comparative advantage: A. Trombonia will produce beans and Latalia will produce pork. B. Trombonia will produce both beans and pork. C. Latalia will produce both beans and pork and Trombonia will produce neither. D. Latalia will produce beans and Trombonia will produce pork.

A. both Latalia and Trombonia is subject to constant opportunity costs.

Answer the question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: The given data indicate that production in: A. both Latalia and Trombonia is subject to constant opportunity costs. B. Trombonia is subject to decreasing costs, but production in Latalia occurs under increasing opportunity costs. C. Latalia is subject to increasing costs, but production in Trombonia occurs under constant opportunity costs. D. both Latalia and Trombonia are subject to the law of increasing opportunity costs.

B. is the practice of selling goods in a foreign market at less than cost.

As it relates to international trade, dumping: A. is a form of price discrimination illegal under U.S. antitrust laws. B. is the practice of selling goods in a foreign market at less than cost. C. constitutes a general case for permanent tariffs. D. is defined as selling more goods than allowed by an import quota.

B. comparative advantage.

Countries engaged in international trade specialize in production based on: A. relative levels of GDP. B. comparative advantage. C. relative exchange rates. D. relative inflation rates.

C. import quota.

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n): A. protective tariff. B. export subsidy. C. import quota. D. voluntary export restriction

D. all of these.

Differences in production efficiencies among nations in producing a particular good result from: A. different endowments of fertile soil. B. different amounts of skilled labor. C. different levels of technological knowledge. D. all of these.

B. may be part of a firm's price discrimination strategy.

Dumping of goods abroad: A. constitutes a general case for permanent tariffs. B. may be part of a firm's price discrimination strategy. C. may be part of a nation's strategy to rectify its trade deficit. D. drives up prices of the dumped goods.

C. they increase domestic production of the good for which imports face tariffs.

Graphical analysis of tariffs reveals that: A. they benefit domestic consumers at the expense of domestic producers. B. revenue gains outweigh the costs to domestic consumers. C. they increase domestic production of the good for which imports face tariffs. D. although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs

A. one nation's export supply curve intersects the other nation's import demand curve.

In a two-nation model, the equilibrium world price will occur where: A. one nation's export supply curve intersects the other nation's import demand curve. B. exports are exactly twice the level of imports. C. both nations' export supply curves are horizontal. D. both nations' import demand curves are vertical.

A. exported more services abroad than it has imported.

In recent years, the United States has: A. exported more services abroad than it has imported. B. had a small goods trade surplus with Japan. C. had a large goods trade surplus with the rest of the world. D. maintained an overall trade surplus (goods and services combined) with the rest of the world.

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

In the real world, specialization is rarely complete because: A. nations normally experience increasing opportunity costs in producing more of the product in which they are specializing. B. production possibilities curves are straight lines rather than curves bowed outward as viewed from the origin. C. one nation's imports are necessarily another nation's exports. D. international law prohibits monopolies.

C. superior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury.

Other things equal, a tariff is: A. superior to an import quota for Americans because a tariff increases the profits of foreign producers. B. inferior to an import quota for Americans because a tariff increases the profits of domestic producers. C. superior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury. D. inferior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury.

A. shortage of 160 units, which it will meet with 160 units of imports.

Refer to the diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $.50, this nation will experience a domestic: A. shortage of 160 units, which it will meet with 160 units of imports. B. shortage of 160 units, which will increase the domestic price to $1.60. C. surplus of 160 units, which it will export. D. surplus of 160 units, which will reduce the world price to $1.00.

D. neither export nor import the product.

Refer to the diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will: A. export all of the product. B. import all of the product. C. import some of the product and produce some of the product domestically. D. neither export nor import the product.

B. product B.

Refer to the graphs. Stanville has a comparative advantage in producing: A. product A. B. product B. C. both product A and B. D. neither product A nor B.

A. product A.

Refer to the graphs. Terryville has a comparative advantage in producing: A. product A. B. product B. C. both products A and B. D. neither product A nor B.

A. demonstrate that there can be gains from specialization and trade between the two nations.

Refer to the graphs. These production possibilities curves: A. demonstrate that there can be gains from specialization and trade between the two nations. B. reflect the law of increasing opportunity costs. C. reflect the law of diminishing marginal utility. D. imply that specialization will be incomplete.

C. employment to decrease in the U.S. bicycle industry.

Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect: A. the price of German bicycles to increase in the United States. B. employment to decrease in the German bicycle industry. C. employment to decrease in the U.S. bicycle industry. D. profits to rise in the U.S. bicycle industry

B. Canada.

The United States' most important trading partner quantitatively is: A. China. B. Canada. C. Mexico. D. Japan.

C. a nation's trading possibilities line lies to the right of its production possibilities line.

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that: A. the production possibilities curves of any two nations are identical. B. a nation's production possibilities and trading possibilities lines coincide. C. a nation's trading possibilities line lies to the right of its production possibilities line. D. a nation's production possibilities line lies to the right of its trading possibilities line.

C. cause the bases for further specialization to disappear as nations specialize according to comparative advantage

The impact of increasing, as opposed to constant, costs is to: A. intensify and prolong the comparative advantages that any nation may have initially. B. expand the limits of the terms of trade. C. cause the bases for further specialization to disappear as nations specialize according to comparative advantage D. cause nations to realize economies of scale in those products in which they specialize.

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

The law of increasing opportunity costs: A. applies to land-intensive commodities but not to labor-intensive or capital-intensive commodities. B. results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. C. refutes the principle of comparative advantage. D. may limit the extent to which a nation specializes in producing a particular product.

D. 14 percent of U.S. GDP

U.S. exports of goods and services (on a national income account basis) are about: A. 20 percent of U.S. GDP. B. 8 percent of U.S. GDP. C. 28 percent of U.S. GDP. D. 14 percent of U.S. GDP

C. Box-by-box inspection requirements for imported fruit.

Which is an example of a nontariff barrier (NTB)? A. An export subsidy. B. An excise tax on the physical volume of imported goods. C. Box-by-box inspection requirements for imported fruit. D. An excise tax on the dollar value of imported goods.

D. Chemicals.

Which of the following is an example of a capital-intensive commodity? A. Clothing. B. Wool. C. Sunflower seeds. D. Chemicals.

B. The EU has abolished most trade barriers among participating countries, and has common tariffs applied to non-EU goods

Which of the following statements about the European Union (EU) is true? A. All members of the EU use a common currency (the euro). B. The EU has abolished most trade barriers among participating countries, and has common tariffs applied to non-EU goods C. The EU has eliminated most barriers to the trade of goods and services among participating nations but largely restricts the movement of labor and capital D. Trade within the EU is liberalized, but EU nations set most of their own policies with regard to trade with non-EU nations.

A. Studies show that developing nations that have relied on import restrictions to protect domestic industries have had higher growth rates than similar nations pursuing more open economic policies.

Which of the following statements is false ? A. Studies show that developing nations that have relied on import restrictions to protect domestic industries have had higher growth rates than similar nations pursuing more open economic policies. B. The U.S. Constitution forbids individual states from levying tariffs. C. The high tariffs of the Smoot-Hawley Act of 1930 and the retaliation they caused worsened the Great Depression. D. The European Union has enhanced prosperity in Western Europe.