Question 1

Twenty-eight countries in Europe have eliminated all tariffs with each other.This group of countries is known as the
A)European Union.
B)United Federation of Europe.
C)Gruppo Euro.
D)European Free Trade Association.

Accepted Answer

The European Union (EU) is a political and economic union of European countries that have eliminated tariffs and trade barriers among member states.

Question 2

Which of the following statements is true?
A)Exports benefit trading countries because exports create jobs. Imports do not benefit trading countries because they result in a loss of jobs.
B)Each year China exports about 50 percent of its wheat crop and 40 percent of its rice crop.
C)Most of the leading exporting countries are large, high-income countries.
D)All sectors of the U.S. economy are affected equally by international trade.

Accepted Answer

According to data from the World Trade Organization, the leading exporting countries are indeed large, high-income countries. This includes the United States, China, and Germany, among others.

Question 3

Which of the following statements is true?
A)Japan is more dependent on foreign trade than is the United States.
B)Imports and exports account for over one-half of the GDP of Belgium.
C)France is the leading exporting country, accounting for 10 percent of total world exports.
D)Because the cost of labor used on farms is so high, the United States exports very little of its wheat, rice and corn crops.

Accepted Answer

According to the CIA World Factbook, imports and exports account for approximately 85% of the GDP of Belgium in 2021. The other statements are not true - Japan is less dependent on foreign trade than the United States, France is not the leading exporting country, and the United States is actually one of the world's largest exporters of wheat, rice, and corn.

Question 4

In 2016, the largest exporter in the world was
A)Japan.
B)Germany.
C)China.
D)the United States.

Accepted Answer

According to the World Trade Organization, China was the largest exporter in the world in 2016, with a total of $2.1 trillion worth of exports. This surpassed the United States, which was the second-largest exporter with $1.5 trillion worth of exports. Japan and Germany followed with $645 billion and $1.3 trillion worth of exports, respectively.

Question 5

In the United States, imports and exports make up more than half of GDP.

Accepted Answer

In the United States, imports and exports together typically account for less than half of the GDP, as the U.S. economy is largely driven by domestic consumption.

Question 6

Today, the United States charges an average tariff rate
A)that is more than its average tariff rate in 1930.
B)which is greater than any other high-income country.
C)of less than 1.5 percent.
D)that exceeds 50 percent.

Accepted Answer

The United States charges an average tariff rate of less than 1.5 percent, according to recent data from the World Bank. This is significantly lower than the average tariff rate that the United States had in 1930, which was around 20 percent. It is also lower than the average tariff rate of many other high-income countries, such as Japan and South Korea, both of which have average tariff rates of over 5 percent.

Question 7

Goods and services bought domestically but produced in other countries are referred to as
A)exports.
B)imports.
C)transfer payments.
D)foreign consumption.

Accepted Answer

Imports are goods and services that are produced in other countries and purchased domestically.

Question 8

A tariff is a tax imposed by a government on
A)exports.
B)services.
C)imports.
D)luxury items.

Accepted Answer

Tariffs are taxes imposed by a government on imported goods. The purpose of a tariff is to make imported goods more expensive and, therefore, less competitive with domestically produced goods. This can protect domestic industries from foreign competition and increase revenue for the government.

Question 9

Each year, the United States exports about 50 percent of its wheat crop.

Accepted Answer

According to the United States Department of Agriculture, the United States exports around 50 percent of its wheat crop each year.

Question 10

Which of the following statements about the importance of trade to the U.S.economy is true?
A)Since 1950, both exports and imports have steadily decreased as a fraction of U.S. gross domestic product.
B)Overall, about 80 percent of U.S. manufacturing jobs depend directly or indirectly on exports.
C)The United States is the second largest exporter in the world.
D)The U.S. economy is highly dependent on international trade for growth in its gross domestic product.

Accepted Answer

The United States is the second largest exporter in the world, following China.

Question 11

Exports are domestically produced goods and services
A)sold to other countries.
B)sold to the government.
C)sold at home.
D)which are used to produce other goods and services.

Accepted Answer

Exports refer to goods and services that are produced within a country but sold to other countries. Option A is, therefore, the correct choice.

Question 12

Eliminating a tariff on running shoes would ________ businesses that sell running shoes and ________ consumers who purchase them.
A)benefit; benefit
B)benefit; harm
C)harm; benefit
D)harm; harm

Accepted Answer

Eliminating a tariff would benefit businesses by reducing costs and potentially increasing sales. Consumers would also benefit from lower prices, potentially leading to an increase in demand for running shoes.

Question 13

As a percentage of GDP, exports are greater than imports for which of the following countries?
A)the United Kingdom
B)France
C)the United States
D)China

Accepted Answer

According to the World Bank data from 2019, China's exports as a percentage of GDP were 19.5%, whereas imports were 18.5%, indicating that exports are greater than imports. The United Kingdom's exports were 27.7% of GDP, and imports were 30.1%, indicating that imports are greater than exports. France's exports were 31.9% of GDP, and imports were 32.6%, indicating that imports are greater than exports. The United States' exports were 12.4% of GDP, and imports were 15.4%, indicating that imports are greater than exports.

Question 14

A tariff is a tax imposed by a government on its own exports.

Accepted Answer

A tariff is a tax imposed by a government on imports of goods and services, not on its own exports.

Question 15

NAFTA refers to a 1994 agreement that eliminated most tariffs among which countries?
A)Canada, the United Kingdom, and Mexico
B)the United States, the United Kingdom, and Mexico
C)the United States, Canada, and Mexico
D)the United States, Mexico, and Cuba

Accepted Answer

NAFTA refers to the North American Free Trade Agreement signed in 1994 among the United States, Canada, and Mexico. Therefore, the correct choice is C.

Question 16

When BMW, an German company, purchases a welding machine that was made in Toronto, the purchase is
A)both a German and a Canadian import.
B)a German import and a Canadian export.
C)a German export and a Canadian import.
D)neither an export nor an import for either country.

Accepted Answer

The purchase of the welding machine by BMW is considered a German import because it is being brought into Germany from another country. It is also considered a Canadian export because it is being sold from Canada to another country.

Question 17

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because
A)they do not want to offend their employers who want them.
B)politicians lobby to convince workers the restrictions will make them better off.
C)they believe the restrictions will protect their jobs.
D)they don't understand that the restrictions will threaten their jobs.

Accepted Answer

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because they believe the restrictions will protect their jobs. They fear that if trade restrictions are removed, the industry will face stiff competition from foreign producers leading to job losses. Therefore, they support restrictions that will protect their industry and their jobs.

Question 18

In the 1930s, the United States charged an average tariff rate ________.Today, the rate is ________.
A)of 100 percent; 20 percent
B)above 50 percent; less than 1.5 percent
C)of less than 10 percent; over 40 percent
D)of 17 percent; 33 percent

Accepted Answer

In the 1930s, during the Great Depression, the U.S. had high tariff rates, often above 50%, due to the Smoot-Hawley Tariff Act. Today, the average tariff rate is much lower, typically less than 1.5%.

Question 19

When Roxanne, a U.S.citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is
A)both a U.S. and an Italian import.
B)a U.S. import and an Italian export.
C)a U.S. export and an Italian import.
D)neither an export nor an import for either the United States or Italy.

Accepted Answer

The purchase is a U.S. import because Roxanne, a U.S. citizen, bought the dress from Barneys in New York. It is also an Italian export because the dress was made in Milan and sold to a buyer in another country (the United States).

Question 20

Many economists support trade agreements, maintaining that the agreements improve economic efficiency because they result in goods being produced
A)at the highest profit margin.
B)with maximum deadweight loss.
C)with zero producer surplus.
D)at the lowest opportunity cost.

Accepted Answer

Trade agreements allow countries to specialize in the production of goods in which they have a comparative advantage, meaning they can produce those goods at a lower opportunity cost than other countries. By specializing and trading, countries are able to produce more goods overall, resulting in an increase in economic efficiency. Therefore, the correct choice is D - at the lowest opportunity cost.

Quiz 9: Comparative Advantage and the Gains From International Trade

Twenty-eight countries in Europe have eliminated all tariffs with each other.This group of countries is known as the

Which of the following statements is true?

Which of the following statements is true?

In 2016, the largest exporter in the world was

In the United States, imports and exports make up more than half of GDP.

Today, the United States charges an average tariff rate

Goods and services bought domestically but produced in other countries are referred to as

A tariff is a tax imposed by a government on

Each year, the United States exports about 50 percent of its wheat crop.

Which of the following statements about the importance of trade to the U.S.economy is true?

Exports are domestically produced goods and services

Eliminating a tariff on running shoes would businesses that sell running shoes and consumers who purchase them.

As a percentage of GDP, exports are greater than imports for which of the following countries?

A tariff is a tax imposed by a government on its own exports.

NAFTA refers to a 1994 agreement that eliminated most tariffs among which countries?

When BMW, an German company, purchases a welding machine that was made in Toronto, the purchase is

Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

In the 1930s, the United States charged an average tariff rate .Today, the rate is .

When Roxanne, a U.S.citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is

Many economists support trade agreements, maintaining that the agreements improve economic efficiency because they result in goods being produced