Question 1

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
 
- The domestic opportunity cost of:

Accepted Answer

A)   producing a ton of chips in Alpha is 1/5 of a ton of fish.
B)   producing a ton of chips in Beta is 6 tons of fish.
C)   catching a ton of fish in Alpha is 5 tons of chips.
D)   catching a ton of fish in Beta is 6 tons of chips.E) B) and C)
F) A) and C) B

Question 2

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
 
- Beta…

Accepted Answer

A)   should specialize in catching fish and trade with Alpha for chips.
B)   should specialize in producing chips and trade with Alpha for fish.
C)   will not realize gains from specialization and trade.
D)   will export both fish and chips to Alpha.E) B) and D)
F) A) and B)

Question 3

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
  
-Suppose that before specialization and trade Alpha chose production alternative C and Beta chose production alternative B. After specialization and trade the gains will be:

Accepted Answer

A)   20 tons of fish.
B)   20 tons of chips.
C)   20 tons of fish and 20 tons of chips.
D)   240 tons of fish and 20 tons of chips.E) A) and B)
F) A) and C) A

Question 4

Critics of trade adjustment assistance:

Accepted Answer

A)   claim that it increases the prices of goods, unfairly burdening consumers.
B)   ask why jobs lost to trade should be privileged over jobs lost due to other factors.
C)   argue that it props up domestic firms that should be allowed to fail so that those resources can be moved to move highly valued uses.
D)   ask why companies struggling due to foreign competition deserve assistance over companies struggling for other reasons.E) A) and D)
F) None of the above B

Question 5

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
 
- Assume the production possibilities in Beta double at alternatives A through E while remaining as shown in the table for Alpha. As a result, Beta should:

Accepted Answer

A)   continue to specialize in producing chips.
B)   continue to specialize in fishing.
C)   no longer specialize and trade.
D)   specialize both in fishing and in producing chips and sell the surplus to Alpha.E) All of the above
F) A) and D)

Question 6

The Trade Adjustment Assistance Act of 2002:

Accepted Answer

A)   imposes tariffs on any foreign good that causes U.S. workers to lose their jobs.
B)   provides financial help to workers displaced by imports or plant relocations abroad.
C)   subsidizes domestic companies so they can better compete with foreign imports.
D)   imposes tariffs on nations whose firms are engaged predatory dumping.E) A) and B)
F) B) and D)

Question 7

Autos and chemicals are in units of one million
  
-Refer to the above tables. Assume that prior to specialization and trade Germany and the United States both choose production possibility C. Now if each specializes according to its comparative advantage, the resulting total gains from specialization and trade will be:

Accepted Answer

A)   8 units of autos.
B)   6 units of autos.
C)   6 units of autos and 8 units of chemicals.
D)   8 units of autos and 6 units of chemicals.E) B) and C)
F) A) and C)

Question 8

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization:

Accepted Answer

A)   India should export rice to Canada and import Canadian wheat.
B)   India should export wheat to Canada and import Canadian rice.
C)   Canada should produce both wheat and rice and not trade with India.
D)   India should produce both wheat and rice and not trade with Canada.E) All of the above
F) A) and D)

Question 9

Which of the following was not implemented in an effort to liberalize trade?

Accepted Answer

A)   The European Union (EU) 
B)   The North American Free Trade Agreement (NAFT
A)  
C)   The General Agreement on Tariffs and Trade (GATT) 
D)   The Smoot-Hawley Tariff ActE) A) and B)
F) All of the above

Question 10

The table below shows points from straight-line production possibilities schedules for two countries and indicates that:

Accepted Answer

A)   Country B can produce more meat than Country A.
B)   Country A has a comparative advantage in producing meat.
C)   Country B can produce more houses than Country A.
D)   Country A has a comparative advantage in producing houses and meat.E) All of the above
F) A) and B)

Question 11

Which is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Accepted Answer

A)   They are needed to protect U.S. workers from the dumping of foreign products.
B)   Strategic trade policy calls for equal treatment of all trading nations so that they will have the same competitive conditions.
C)   U.S. firms and workers must be protected from the ruinous competition of nations where wages for workers are low.
D)   Imports may eliminate some U.S. jobs, but they create others, so they may have little or no effect on employment.E) A) and B)
F) A) and C)

Question 12

The Smoot-Hawley Tariff Act:

Accepted Answer

A)   restricts the importation of goods critical to a strong national defense, when those goods can be produced domestically.
B)   imposes anti-dumping duties as needed.
C)   helped maintain domestic employment in the 1930s, causing the Great Depression to be less severe.
D)   prompted retaliation from other nations and helped cause the Great Depression.E) All of the above
F) None of the above

Question 13

Countries A and B produce only rubber bands and paper clips under the production possibilities schedules shown below:

- Which of the following statements is true?

Accepted Answer

A)   Country A has a comparative advantage in both rubber bands and paper clips.
B)   Country A has a comparative advantage in paper clips.
C)   Country A has a comparative advantage in rubber bands.
D)   Since Country A can produce more of both goods, there is no potentially for mutually beneficial specialization and trade.E) B) and C)
F) A) and B)

Question 14

Which of the following is an implication of large U.S. trade deficits?

Accepted Answer

A)   Consumers enjoy greater consumption in the present.
B)   U.S. indebtedness increases.
C)   Downward pressure is placed on the U.S. dollar.
D)   All of these.E) C) and D)
F) A) and B)

Question 15

Trade Adjustment Assistance provides payments to domestic firms struggling to compete with foreign producers.

Accepted Answer

A) True 
 B)False

Question 16

If an American can purchase 40,000 British pounds for $90,000, the dollar rate of exchange for the pound is:

Accepted Answer

A)   $1.40.
B)   $2.00.
C)   $2.25.
D)   $6.00.E) All of the above
F) A) and B)

Question 17

Autos and chemicals are in units of one million
 
- The data in the above tables show that production in:

Accepted Answer

A)   Germany is subject to increasing domestic opportunity costs and the United States to constant domestic opportunity costs.
B)   the United States is subject to increasing domestic opportunity costs and Germany to constant domestic opportunity costs.
C)   both Germany and the United States are subject to constant domestic opportunity costs.
D)   both Germany and the United States are subject to increasing domestic opportunity costs.E) A) and C)
F) B) and D)

Question 18

The production possibilities for Country X are either 6000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for Country Y are 2000 bushels of soybeans and 4000 bushels of wheat. Which of the following is true?

Accepted Answer

A)   Country Y should specialize in the growing of soybeans according to the principle of comparative advantage.
B)   Country X is the least-cost producer of wheat.
C)   The domestic opportunity cost of wheat production is lower in Country Y.
D)   The high cost producer of soybeans is Country X.E) A) and D)
F) B) and C)

Question 19

Autos and chemicals are in units of one million
 
- Refer to the above tables. If Germany and the United States engage in trade, the terms of trade will be between:

Accepted Answer

A)   3 and 4 units of autos for 1 unit of chemicals.
B)   2 and 4 units of autos for 1 unit of chemicals.
C)   2 and 4 units of chemicals for 1 unit of autos.
D)   .33 and .5 unit of autos for 1 unit of chemicals.E) B) and C)
F) A) and D)

Question 20

- Refer to the above diagrams. Assume that prior to specialization and trade Italy and Greece preferred points I and G on their production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in output will be:

Accepted Answer

A)   5X and 15Y.
B)   10Y.
C)   15X and 5Y.
D)   25X.E) A) and B)
F) A) and C)

Exam 16: International Trade and Exchange Rates

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size. - The domestic opportunity cost of:

Correct Answer
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B

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size. - Beta…

Correct Answer
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A

Critics of trade adjustment assistance:

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B

Correct Answer
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The Trade Adjustment Assistance Act of 2002:

Correct Answer
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The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization:

Correct Answer
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Which of the following was not implemented in an effort to liberalize trade?

Correct Answer
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The table below shows points from straight-line production possibilities schedules for two countries and indicates that:

Correct Answer
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Which is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Correct Answer
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The Smoot-Hawley Tariff Act:

Correct Answer
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Countries A and B produce only rubber bands and paper clips under the production possibilities schedules shown below: - Which of the following statements is true?

Correct Answer
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Which of the following is an implication of large U.S. trade deficits?

Correct Answer
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Trade Adjustment Assistance provides payments to domestic firms struggling to compete with foreign producers.

Correct Answer
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If an American can purchase 40,000 British pounds for $90,000, the dollar rate of exchange for the pound is:

Correct Answer
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Autos and chemicals are in units of one million - The data in the above tables show that production in:

Correct Answer
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The production possibilities for Country X are either 6000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for Country Y are 2000 bushels of soybeans and 4000 bushels of wheat. Which of the following is true?

Correct Answer
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Autos and chemicals are in units of one million - Refer to the above tables. If Germany and the United States engage in trade, the terms of trade will be between:

Correct Answer
verified

- Refer to the above diagrams. Assume that prior to specialization and trade Italy and Greece preferred points I and G on their production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in output will be:

Correct Answer
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Exam 16: International Trade and Exchange Rates

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size. - The domestic opportunity cost of:

Correct AnswerverifiedB

Answer the next question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size. - Beta…

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

Critics of trade adjustment assistance:

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

The Trade Adjustment Assistance Act of 2002:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The production possibilities table given below shows how many bushels of either wheat or rice can be produced in India and Canada with 1 unit of input. To achieve gains from specialization:

Correct AnswerverifiedShow Answer

Which of the following was not implemented in an effort to liberalize trade?

Correct AnswerverifiedShow Answer

The table below shows points from straight-line production possibilities schedules for two countries and indicates that:

Correct AnswerverifiedShow Answer

Which is a valid counterargument to the call for higher tariffs to save U.S. jobs?

Correct AnswerverifiedShow Answer

The Smoot-Hawley Tariff Act:

Correct AnswerverifiedShow Answer

Countries A and B produce only rubber bands and paper clips under the production possibilities schedules shown below: - Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following is an implication of large U.S. trade deficits?

Correct AnswerverifiedShow Answer

Trade Adjustment Assistance provides payments to domestic firms struggling to compete with foreign producers.

Correct AnswerverifiedShow Answer

If an American can purchase 40,000 British pounds for $90,000, the dollar rate of exchange for the pound is:

Correct AnswerverifiedShow Answer

Autos and chemicals are in units of one million - The data in the above tables show that production in:

Correct AnswerverifiedShow Answer

The production possibilities for Country X are either 6000 bushels of soybeans or 10,000 bushels of wheat. The production possibilities for Country Y are 2000 bushels of soybeans and 4000 bushels of wheat. Which of the following is true?

Correct AnswerverifiedShow Answer

Autos and chemicals are in units of one million - Refer to the above tables. If Germany and the United States engage in trade, the terms of trade will be between:

Correct AnswerverifiedShow Answer

- Refer to the above diagrams. Assume that prior to specialization and trade Italy and Greece preferred points I and G on their production possibilities curves. As a result of complete specialization according to comparative advantage, the resulting gains in output will be:

Correct AnswerverifiedShow Answer

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B

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A

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B

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