Question 1

Karla Corp.exports large quantities of goods outside the United States and does not import much.Karla Corp.thus directly contributes to the U.S.trade surplus.

Accepted Answer

Karla Corp. exports more than it imports, which contributes to a trade surplus.

Question 2

Which of the following statements is true of trade?

Accepted Answer

Trade involves the exchange of both goods and services between countries or regions.

Question 3

When discussing the question "Why do nations trade?" we are really asking "Why do governmentsfrom different nations trade?"

Accepted Answer

Nations trade primarily due to the economic benefits for businesses and consumers, not just because of government actions.

Question 4

Nations go through the trouble of trading internationally as there must be economic gains from trade.

Accepted Answer

International trade allows countries to specialize in the production of goods and services they can produce most efficiently, leading to increased economic welfare and gains from trade through comparative advantage.

Question 5

According to the resource-based view,there are economic gains from international trade because some firms in one nation generate exports that are valuable,unique,and hard to imitate that firms from other nations find it beneficial to import.

Accepted Answer

The resource-based view suggests that firms possess resources that are valuable, rare, and difficult to imitate, which can lead to competitive advantages and economic gains through international trade.

Question 6

Resource mobility is not perfect in reality,and there are many resources that cannot easily be moved from one industry to another.

Accepted Answer

In reality, factors such as specialized skills, equipment, and regulations can limit the ease with which resources can be transferred between industries.

Question 7

A nation that is more efficient than anyone else in the production of any good or service is said to have a comparative advantage in the production of that good or service.

Accepted Answer

A nation that is more efficient in producing a good or service has an absolute advantage, not a comparative advantage. Comparative advantage refers to the ability to produce a good or service at a lower opportunity cost than others.

Question 8

Tariff barriers include subsidies,import quotas,export restraints,local content requirements,administrative policies,and antidumping duties.

Accepted Answer

Tariff barriers specifically refer to taxes or duties imposed on imported goods, while the listed items include both tariff and non-tariff barriers.

Question 9

The strategic trade theory is criticized because many scholars and policy makers are uncomfortable with government intervention.

Accepted Answer

Strategic trade theory involves government intervention to support domestic industries, which can be controversial as it may lead to market distortions and favoritism, making some scholars and policymakers uncomfortable.

Question 10

The value of imported items to Australia equals $1 trillion,but the value of exported items from Australia equals $750 billion.Australia has a $250 billion _____.

Accepted Answer

A trade deficit occurs when a country's imports exceed its exports, resulting in a negative balance of trade. In this case, Australia's imports ($1 trillion) exceed its exports ($750 billion) by $250 billion, indicating a trade deficit.

Question 11

Trade embargoes are politically motivated trade sanctions against foreign countries to signal displeasure.

Accepted Answer

Trade embargoes are often used as a tool to express political disapproval or to pressure a country to change its policies.

Question 12

Roc&All Inc.imports large quantities of goods into the United States and does not export much.Roc&All thus directly contributes to the U.S.trade surplus.

Accepted Answer

A trade surplus occurs when a country exports more than it imports. Since Roc&All Inc. imports more than it exports, it contributes to a trade deficit, not a surplus.

Question 13

Which of the following is a difference between merchandise trade and service trade?

Accepted Answer

Merchandise trade involves tangible goods, while service trade involves intangible services.

Question 14

Calls for protection are only limited to commodity producers.

Accepted Answer

Calls for protection can come from various sectors, not just commodity producers, as different industries may seek protection from foreign competition or other economic challenges.

Question 15

Monitoring and nurturing the absolute advantage of certain locations can determine the success and failure of a firm's exports around the globe.

Accepted Answer

The answer of Monitoring and nurturing the absolute advantage of...

Question 16

The value of exported items to the United Kingdom equals $1 trillion last year,but the value of items imported by the United Kingdom equals $750 billion.The United Kingdom has a $250 billion _____.

Accepted Answer

A trade surplus occurs when the value of a country's exports exceeds the value of its imports. In this case, the United Kingdom exported $1 trillion and imported $750 billion, resulting in a $250 billion trade surplus.

Question 17

The Wealth of Nationsby Adam Smith,published in 1776,is usually considered the foundation of modern economics.

Accepted Answer

"The Wealth of Nations" by Adam Smith, published in 1776, is widely regarded as the foundational text for modern economics, introducing key concepts such as the division of labor and the invisible hand.

Question 18

In order for free trade to continue,it requires constant efforts to demonstrate and advance the gains from such trade.

Accepted Answer

Free trade often faces political and social challenges, requiring ongoing advocacy and evidence of its benefits to maintain support and address concerns.

Question 19

An exporting country will never voluntarily agree to restrict its exports.

Accepted Answer

Countries may voluntarily agree to restrict exports to avoid trade conflicts, tariffs, or to maintain good diplomatic relations.

Question 20

Which of the following statements is true of trade surplus?

Accepted Answer

A trade surplus occurs when a nation exports more goods and services than it imports, resulting in a positive balance of trade.

Quiz 5: Trading Internationally