Deck 17: International Trade

Question 1

Over a given period of time if exports exceed imports,the result is:

A) A trade war.
B) A trade deficit.
C) An embargo.
D) A trade surplus.

Answer 1

D

Question 2

Which of the following does the United States import?

A) Video-game machines,cell phones,and steel.
B) Cell phones,but not steel.
C) Steel,but not video-game machines.
D) Video-game machines,but not cell phones.

Answer 2

A

Question 3

When comparing the ratio of imports or exports to GDP,the United States,relative to other countries,has:

A) Higher ratios for both imports and exports.
B) A higher ratio for imports but a lower ratio for exports.
C) A lower ratio for imports but a higher ratio for exports.
D) Lower ratios for both imports and exports.

Answer 3

D

Question 4

Which of the following does the United States export?

A) Soybeans,tobacco,aircraft,and chemicals.
B) Tobacco but not aircraft.
C) Soybeans,but not chemicals or tobacco.
D) Aircraft and chemicals,but not soybeans.

Question 5

Exports:

A) Are goods and services sold to foreign buyers.
B) Account for 35 percent of U.S.GDP.
C) Are greater than imports for the United States.
D) Decrease the size of GDP.

Question 6

Goods and services sold to foreign sources are known as:

A) Exports.
B) Imports.
C) Tariffs.
D) Quotas.

Question 7

Goods and services purchased from foreign sources are known as:

A) Exports.
B) Imports.
C) Net exports.
D) The trade deficit.

Question 8

Exports account for approximately ___ percent of U.S.GDP.

A) 5
B) 9
C) 11
D) 25

Question 9

Goods and services purchased by Americans from foreign sources:

A) Are classified as imports.
B) Decrease the trade deficit,ceteris paribus.
C) Increase the size of GDP.
D) Represent 35 percent of GDP.

Question 10

Which of the following countries has the lowest export ratio?

A) Myanmar.
B) Belgium.
C) Germany.
D) The United States.

Question 11

Which of the following countries has the highest export ratio?

A) The United States.
B) Japan.
C) Belgium.
D) Great Britain.

Question 12

The trade balance is found by calculating:

A) The sum of exports and imports.
B) The difference between exports and imports.
C) How much exports and imports are used.
D) The ratio of exports to imports.

Question 13

If the United States has a trade deficit:

A) Exports exceed imports.
B) The U.S.economy produces more than it consumes.
C) The trade balance is negative.
D) The export ratio is high.

Question 14

Which of the following countries has the lowest export ratio?

A) Canada.
B) Kuwait.
C) Sweden.
D) The United States.

Question 15

Which of the following does the United States export?

A) Computers,but not wheat.
B) Wheat and corn,but not automobiles.
C) Computers,corn,wheat,lumber,and automobiles.
D) Automobiles,but not lumber.

Question 16

The amount by which exports exceed imports is a:

A) Quota.
B) Trade deficit.
C) Trade surplus.
D) Comparative advantage.

Question 17

If a country has a trade deficit,it:

A) Imports more than it exports.
B) Does not export any goods.
C) Is more dependent on trade than other countries.
D) Sells more goods to foreigners than it buys from them.

Question 18

Which of the following statements is correct?

A) Export sales are not important to U.S.industries because U.S.GDP is so large.
B) Many U.S.industries are very dependent on export sales.
C) The United States is increasingly dependent on exports,but not on imports.
D) The United States would not be affected if it quit importing goods.

Question 19

The amount by which the value of imports exceeds the value of exports in a given time period is a:

A) Trade surplus.
B) Trade deficit.
C) Consumption possibility.
D) Trade embargo.

Question 20

Imports account for approximately ___ percent of U.S.GDP.

A) 2
B) 7
C) 14
D) 25

Question 21

Assume a country is initially operating on its production possibilities curve.If it specializes in the production of a good and trades,the country will:

A) Move to a level of production outside its production possibilities curve.
B) Shift its production possibilities curve outward.
C) Move to a level of consumption outside its production possibilities curve.
D) Shift its production possibilities curve inwarD.

Question 22

Which of the following explains why world output is greater as a result of trade?

A) Specialization in production.
B) Reduced terms of trade.
C) Imported technologies.
D) Protection of infant industries.

Question 23

In the absence of trade,a country's consumption possibilities are:

A) More than its domestic production possibilities.
B) Equal to its domestic production possibilities.
C) Less than its domestic production possibilities.
D) Unlimited,since the terms of trade are not a constraint.

Question 24

The alternative combinations of goods and services that can be produced in a given time period with the available resources and technology is the:

A) Production possibilities.
B) Consumption possibilities.
C) International trade balance.
D) Comparative advantage.

Question 25

Which of the following is true about trade?

A) It increases production possibilities for a country.
B) It reduces the standard of living for a country.
C) It increases the standard of living for a country.
D) It raises the price level for a country.

Question 26

A trade surplus occurs when:

A) The dollar value of exports exceeds the dollar value of imports.
B) The gains from trade are not fully realized.
C) A country does not have a comparative advantage in any goods.
D) The cost of goods is so high that imports exceed exports.

Question 27

International trade:

A) Raises the prices that consumers pay.
B) Reduces competition.
C) Makes a country weak.
D) Increases consumption possibilities.

Question 28

Which of the following statements about trade is true?

A) On a global scale,exports are greater than imports.
B) The United States has a trade deficit with all of the countries it trades with.
C) The United States typically has a modest trade surplus in services.
D) The United States has a high export ratio.

Question 29

International trade:

A) Benefits rich countries but not poor countries.
B) Allows all countries to consume beyond their production possibilities.
C) Forces poor countries to consume exactly what they produce.
D) Requires poor countries to import more than they export.

Question 30

Which of the following is not true currently?

A) The United States has an overall trade surplus.
B) The United States has a low export ratio.
C) The United States has a merchandise trade deficit.
D) The United States has a services trade surplus.

Question 31

If there are only two countries in the world and one has a trade deficit,the other country must:

A) Also have a trade deficit.
B) Have a trade surplus.
C) Have a comparative advantage in all goods.
D) Have trade restrictions in place.

Question 32

Comparative advantage refers to the:

A) Total amount of resources needed to produce a good.
B) Gains from trade that some countries are able to experience.
C) Comparison of production processes in two different countries.
D) Relative opportunity costs of producing a particular gooD.

Question 33

Which of the following is a gain from trade?

A) A higher standard of living for all trading countries.
B) A shorter workweek for all trading countries.
C) A higher price level for all trading countries.
D) A decrease in consumption possibilities for all trading countries.

Question 34

If a country specializes in production and trades,its _____ possibilities exceed it _____ possibilities.

A) Consumption;production
B) Production;consumption
C) Production;standard of living
D) Consumption;monetary

Question 35

World output of goods and services increases with specialization because:

A) The world's resources are used more efficiently.
B) The production possibilities curve shifts outward for each country.
C) The workers in each country work fewer hours per week.
D) The infant industries in each country are protecteD.

Question 36

Specialization and trade:

A) Reduce consumption possibilities.
B) Increase the prices of goods.
C) Make workers lazy.
D) Increase the standard of living.

Question 37

Which of the following is true?

A) Large countries achieve a higher standard of living if they do not trade.
B) With trade,world consumption possibilities decrease.
C) Typically,countries with a large GDP experience a trade surplus.
D) On a global scale,total imports must equal total exports.

Question 38

The most desired goods and services that are given up in order to obtain something else is the:

A) Comparative advantage.
B) Absolute advantage.
C) Opportunity cost.
D) Advantage cost.

Question 39

Consumption possibilities refers to the:

A) Maximum amount of imported goods and services that a country can consume.
B) Amount that a country can expand its production possibilities by because of trade.
C) Alternative combinations of goods and services that a country can consume.
D) Maximum amount that a country can produce if it engages in trade.

Question 40

Specialization and trade benefits:

A) Both rich countries and poor countries.
B) Rich countries but not poor countries.
C) Poor countries but not rich countries.
D) Large countries but not small countries.

Question 41

Terms of trade refer to:

A) Negotiations made by the Minister of Trade.
B) The rate at which goods are exchanged for one another.
C) The ratio of imports to exports.
D) Protectionist policies.

Question 42

Comparative advantage refers to a country's:

A) Ability to produce a specific good with fewer resources than another country.
B) Monopoly power in the world market for a specific good.
C) Ability to sell a specific good for a higher price than another country.
D) Ability to produce a specific good at a lower opportunity cost than another country.

Question 43

If a country has an absolute advantage,it has:

A) The ability to produce a specific good at a lower opportunity cost than its trading partners.
B) Total market domination in the production and sales of a specific good.
C) The ability to produce a specific good with fewer resources than its trading partners.
D) The ability to guarantee itself very favorable terms of trade at the expense of its trading partners.

Question 44

Suppose Brazil has a comparative advantage in coffee production and Mexico has a comparative advantage in tomato production.If these two countries specialize and trade,which of the following is true?

A) Brazilian tomato producers are worse off.
B) Brazilian coffee producers are worse off.
C) Mexican tomato producers are worse off.
D) Mexican coffee producers are better off.

Question 45

If a country has a lower opportunity cost in producing a good than its trading partners,then it has:

A) A comparative advantage in producing the good.
B) Favorable terms of trade in producing the good.
C) An absolute advantage in producing the good.
D) Lower labor costs in producing the gooD.

Question 46

Suppose Chile has a lower opportunity cost in producing salmon than South Korea,and South Korea has a lower opportunity cost in producing cars than Chile,then Chile has:

A) An absolute advantage in producing both salmon and cars.
B) A comparative advantage in producing both salmon and cars.
C) A comparative advantage in producing cars,while South Korea has a comparative advantage in producing salmon.
D) A comparative advantage in producing salmon,while South Korea has a comparative advantage in producing cars.

Question 47

Suppose the United States has a lower opportunity cost in producing corn than Japan,and Japan has a lower opportunity cost in producing motorcycles than the United States,then the United States has:

A) An absolute advantage in producing both corn and motorcycles.
B) A comparative advantage in producing both corn and motorcycles.
C) A comparative advantage in producing corn,while Japan has a comparative advantage in producing motorcycles.
D) A comparative advantage in producing motorcycles,while Japan has a comparative advantage in producing corn.

Question 48

If a country can produce rice with a lower opportunity cost than its trading partners,then it must have:

A) An absolute advantage in the production of all other goods except rice.
B) A comparative advantage in the production of all other goods except rice.
C) An absolute advantage in the production of rice.
D) A comparative advantage in the production of rice.

Question 49

If the United States has a comparative advantage in the production of computer software,then:

A) It can produce software with fewer absolute resources than another country.
B) It can produce software with a lower opportunity cost than another country.
C) It is relatively expensive for the United States to produce software.
D) The United States will import software.

Question 50

Suppose Nigeria has a comparative advantage in oil production and the U.S.has a comparative advantage in soybean production.If these two countries specialize and trade,which of the following is true?

A) Nigerian oil producers are worse off.
B) Nigerian soybean producers are worse off.
C) U.S.soybean producers are worse off.
D) U.

Question 51

Terms of trade refers to:

A) Credit arrangements for financing exports and imports.
B) The degree to which one country has a comparative advantage.
C) The balance of payments.
D) The rate at which goods are exchanged in international trade.

Question 52

If a country has the ability to produce a specific good with fewer resources than other countries,then it has:

A) A comparative advantage.
B) A trade surplus.
C) Favorable terms of trade.
D) An absolute advantage.

Question 53

If a country can produce cars with a lower opportunity cost than its trading partners,then it must have a:

A) Low market price for cars.
B) Comparative advantage in cars.
C) A trade deficit.
D) A trade surplus.

Question 54

If a country pursues its comparative advantage:

A) Prices will rise throughout the world.
B) Total world population will increase.
C) Market power will rise throughout the world.
D) Total world output will increase.

Question 55

The terms of trade between two goods depend on:

A) Which country has an absolute advantage in the good.
B) Negotiations by the Federal Reserve.
C) Each country's domestic opportunity costs.
D) Which country pays the transportation costs.

Question 56

When a country pursues its comparative advantage:

A) World output is minimized.
B) Potential gains from trade are minimized.
C) Potential gains from trade are maximized.
D) Imports and exports are equal.

Question 57

If a country has a comparative advantage in the production of paper:

A) Its opportunity cost of producing paper is lower than its trading partners.
B) It can produce paper with fewer resources than its trading partners.
C) Its opportunity cost of producing paper is greater than its trading partners.
D) The relative price of paper is higher in that country than its trading partners.

Question 58

The terms of trade for a specific good will lie between the respective:

A) Opportunity costs for each country.
B) Trade barriers for each country.
C) Import quotas for each country.
D) Absolute costs for each country.

Question 59

Which.of the following is used to determine the terms of trade?

A) Absolute costs.
B) Opportunity costs.
C) Export ratio.
D) Per capita GDP.

Question 60

When Country A can produce a good using fewer absolute inputs than any other country,then Country A:

A) Has an absolute advantage in producing the good.
B) Has a comparative advantage in producing the good.
C) Should specialize in producing the good.
D) Should import the gooD.

Question 61

A tax imposed on imported goods is a:

A) Tariff.
B) Nontariff barrier.
C) Quota.
D) Supply restriction.

Question 62

Which group does not benefit from trade when the U.S.imports leather?

A) Workers in the foreign leather industry.
B) U.S.consumers who purchase leather products.
C) Foreign leather producers.
D) Workers in the U.

Question 63

Tariffs on imported sugar will result in:

A) Lower prices for imported sugar.
B) Higher prices for domestic sugar.
C) Gains for foreign sugar producers.
D) Gains for domestic cookie producers.

Question 64

Which group does not benefit from trade when the United States imports cotton?

A) U.S.cotton growers.
B) U.S.cotton shirt producers.
C) U.S.consumers who buy cotton shirts.
D) Foreign cotton growers.

Question 65

When countries specialize in production and trade,all of the following are true except:

A) Total world output increases.
B) Microeconomic losses outweigh the gains.
C) The standard of living increases.
D) Resources are used more efficiently.

Question 66

Which of the following groups does not have an interest in restricting free trade?

A) People who buy the imported product.
B) Producers in import-competing markets.
C) Communities where workers in import-competing markets live.
D) Workers in import-competing markets.

Question 67

Trade restrictions provide:

A) Greater consumption possibilities through greater specialization.
B) Protection for import-competing industries.
C) Protection of comparative advantage.
D) Protection of absolute advantage.

Question 68

Which group does not benefit from trade when the United States imports baseballs?

A) U.S.spectators who attend baseball games.
B) U.S.major league baseball players.
C) U.S.baseball manufacturers.
D) Foreign baseball manufacturers.

Question 69

Tariffs on imported coffee will result in all of the following except:

A) Higher prices for imported coffee.
B) Higher prices for domestic coffee.
C) Gains for workers in the domestic coffee industry.
D) Gains for workers in the foreign coffee market.

Question 70

When the terms of trade are between the opportunity costs for two countries,then both countries benefit if they:

A) Consume inside their production possibilities curves.
B) Specialize in production but do not trade.
C) Impose trade barriers.
D) Specialize in production and trade.

Question 71

As trade restrictions are eliminated,increased imports:

A) Reduce the competition in product markets.
B) Leave the composition of GDP unchanged.
C) Redistribute income away from import-competing industries.
D) Benefit the workers in import-competing industries.

Question 72

A country will only trade if:

A) It has an absolute advantage.
B) The terms of trade are superior to domestic opportunities.
C) Its balance of trade is in a surplus position.
D) Its export ratio is low.

Question 73

Which of the following is true if a country specializes in producing the goods for which it has a comparative advantage and then trades?

A) Output increases,and everyone in the economy benefits.
B) Income is redistributed toward import-competing industries.
C) There are gainers and losers,but the country as a whole is better off.
D) Losers may outweigh the gainers,and a country may be worse off.

Question 74

Which of the following is true concerning trade?

A) It reduces consumption possibilities.
B) All groups benefit from free trade.
C) It shifts the production possibilities curve to the right.
D) It redistributes income away from import-competing industries.

Question 75

The terms of trade between two countries should always:

A) Be set to favor the country with the least comparative advantage.
B) Be set to favor the larger country.
C) Be between their respective opportunity costs in production.
D) Allow each country to develop its area of absolute advantage.

Question 76

Which of the following is the result of a tariff?

A) Lower domestic prices.
B) A more efficient allocation of resources.
C) Greater domestic production.
D) A higher standard of living.

Question 77

Which of the following is not referred to as a barrier to trade?

A) Tariffs.
B) Nontariff barriers.
C) Quotas.
D) The market mechanism.

Question 78

As the terms of trade approach the domestic opportunity costs of a product,a country will experience:

A) Smaller gains from trade.
B) Greater comparative advantage from trade.
C) Greater absolute advantage from trade.
D) Greater balance-of-trade surpluses.

Question 79

Which group is most likely to be adversely affected when foreign steel is imported?

A) Consumers of products for which steel is an input.
B) Domestic steel producers.
C) Domestic workers in industries where steel is an input.
D) Foreign steel producers.

Question 80

If the terms of trade are superior to domestic opportunities,then a country is likely to:

A) Participate in trade.
B) Impose a tariff.
C) Impose a quota.
D) Request U.