Question 1

The slope of the production possibilities curve is positive if there is free trade.

Accepted Answer

A) True 
 B)False

Question 2

Free trade is beneficial because it:

Accepted Answer

A)   reduces competition.
B)   leads to less use of the world's resources.
C)   results in a wider array of consumer products.
D)   leads to the production of free goods.

Question 3

-(Exhibit: Production Possibilities in Alphaland and Omegaland)  The slopes of the production possibilities curves (PPCs)  in the two countries are:

Accepted Answer

A)   determined by the slopes of tangents drawn to the PPCs.
B)   always positive.
C)   a reflection of the fixed costs of production.
D)   not comparable since they each have their own PPC.

Question 4

A new domestic industry with potential economies of scale is called a(n) :

Accepted Answer

A)   potential business entrant.
B)   immature industry.
C)   infant industry.
D)   highly valued entrant.

Question 5

-(Exhibit: Production Possibilities for Machinery and Petroleum.)  Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of machinery each country would have to forgo in order to produce the additional petroleum indicated. The opportunity cost in Mexico of producing 210 units of petroleum is _______ units of machinery.

Accepted Answer

A)   35
B)   70
C)   90
D)   160

Question 6

Quotas imposed on U.S. imports into Japan tend to:

Accepted Answer

A)   penalize both U.S. consumers and Japanese consumers.
B)   benefit both U.S. consumers and Japanese consumers.
C)   penalize U.S. consumers and benefit Japanese consumers.
D)   benefit U.S. consumers and penalize Japanese consumers.

Question 7

-(Exhibit: Production Possibilities Schedule for Two Commodities)  Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of units of commodity X each country would have to forgo to produce the additional units of commodity Y indicated. Further assume that the only input is labor and that it remains fully employed. The cost to Canada of producing an additional unit of Y is _______ unit(s)  of X.

Accepted Answer

A)   1
B)   2
C)   3
D)   4

Question 8

If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that several thousand workers would lose their jobs if there were a reduction in domestic silicon-chip production, they are using the:

Accepted Answer

A)   environmental standards argument.
B)   infant industry argument.
C)   job protection argument.
D)   national security argument.

Question 9

Which of the following statements is true?

Accepted Answer

A)   If a nation can produce more of a good than another nation can, it has a comparative advantage in the production of that good.
B)   Comparative advantage results from a lower opportunity cost of production.
C)   Absolute advantage results from having more resources.
D)   Absolute advantage means that an individual or country can produce more of a particular good than can any other individual or country.

Question 10

Dumping is selling in a foreign market at a price in excess of the importing country's domestic average total cost of production.

Accepted Answer

A) True 
 B)False

Question 11

-(Exhibit: The Production of Tires and Radios)  Assuming constant costs in the neighborhood of their current levels of production, the exhibit shows the number of tires each country would have to forgo in order to produce the additional radios indicated. Further assume that the only input is labor and that it remains fully employed. Assume that there is unrestricted trade and complete specialization. According to comparative advantage, country:

Accepted Answer

A)   Y would import tires.
B)   Y would export radios.
C)   X would export radios.
D)   X would export tires.

Question 12

A policy aimed at promoting the development of specific industries within a country that may increase domestic welfare through trade with the rest of the world is known as a(n) :

Accepted Answer

A)   infant-industry policy.
B)   key-industry policy.
C)   strategic trade policy.
D)   welfare-trade policy.

Question 13

A policy in which a country restricts the importation of goods and services produced in foreign countries is described by economists as:

Accepted Answer

A)   two-way trade.
B)   protectionism.
C)   efficient.
D)   one-way trade.

Question 14

-(Exhibit: Production Possibilities in Alphaland and Omegaland)  If the final terms of trade are 1 computer = 1 car, then:

Accepted Answer

A)   each country's production possibilities curve will have a slope of -1 at the combination it chooses to produce.
B)   Alphaland will produce more cars and Omegaland will produce more computers.
C)   specialization is not complete.
D)   Alphaland will benefit at the expense of Omegaland.

Question 15

Protectionist policies:

Accepted Answer

A)   restrict the importation of foreign goods and services.
B)   shift the supply curves for the protected goods and services to the right in the country imposing the restriction.
C)   generally result in increased benefits in the long run in all countries.
D)   are no longer advocated by powerful interests.

Question 16

If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that foreign producers are selling silicon chips in the United States below production costs, they are using the:

Accepted Answer

A)   environmental standards argument.
B)   retaliation against dumping argument.
C)   cheap foreign labor argument.
D)   national security argument.

Question 17

When a domestic country exports goods to and imports goods from a foreign country, in the short run domestic:

Accepted Answer

A)   producers in the exporting industry may be worse off.
B)   consumers of the imported good may be worse off.
C)   consumers of the exported good may be better off.
D)   producers in the importing industry may be worse off.

Question 18

-(Exhibit: Production Possibilities in Alphaland and Omegaland)  At point A in Alphaland, ________ additional computer(s)  cost(s)  _______ additional car(s)  and at point A? in Omegaland, _______ additional computer(s)  cost(s)  _______ car(s) .

Accepted Answer

A)   1; 5; 1; 1/2
B)   1; 1/2; 1; 5
C)   5; 1; 1/2; 1
D)   1/2; 1; 5; 1

Question 19

If the opportunity cost is 2X = 1Y for country A and 1/3X = 1Y for country B, then a possible terms of trade is:

Accepted Answer

A)   1X = 1Y.
B)   1X = 4Y.
C)   1X = 5Y.
D)   3X = 1Y.

Question 20

-(Exhibit: Production Possibilities in Alphaland and Omegaland)  Which of the following statements is true?

Accepted Answer

A)   Because of trading, all people in Omegaland will benefit in the short run.
B)   Because of trading, all people in Alphaland will benefit in the short run.
C)   The final terms of trade could be 4/5 computer for 1 car.
D)   The final terms of trade could be 3 computers per car.

Exam 17: Financial Markets

When a domestic country exports goods to and imports goods from a foreign country, in the short run domestic:

Correct Answer
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Correct Answer
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The slope of the production possibilities curve is positive if there is free trade.

Correct Answer
verified

If the opportunity cost is 2X = 1Y for country A and 1/3X = 1Y for country B, then a possible terms of trade is:

Correct Answer
verified

A policy aimed at promoting the development of specific industries within a country that may increase domestic welfare through trade with the rest of the world is known as a(n) :

Correct Answer
verified

Correct Answer
verified

-(Exhibit: Production Possibilities in Alphaland and Omegaland) If the final terms of trade are 1 computer = 1 car, then:

Correct Answer
verified

If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that foreign producers are selling silicon chips in the United States below production costs, they are using the:

Correct Answer
verified

Protectionist policies:

Correct Answer
verified

A new domestic industry with potential economies of scale is called a(n) :

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

-(Exhibit: Production Possibilities in Alphaland and Omegaland) The slopes of the production possibilities curves (PPCs) in the two countries are:

Correct Answer
verified

Quotas imposed on U.S. imports into Japan tend to:

Correct Answer
verified

A policy in which a country restricts the importation of goods and services produced in foreign countries is described by economists as:

Correct Answer
verified

If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that several thousand workers would lose their jobs if there were a reduction in domestic silicon-chip production, they are using the:

Correct Answer
verified

-(Exhibit: Production Possibilities in Alphaland and Omegaland) Which of the following statements is true?

Correct Answer
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Free trade is beneficial because it:

Correct Answer
verified

Dumping is selling in a foreign market at a price in excess of the importing country's domestic average total cost of production.

Correct Answer
verified

-(Exhibit: Production Possibilities in Alphaland and Omegaland) At point A in Alphaland, ____ additional computer(s) cost(s) _ additional car(s) and at point A? in Omegaland, _ additional computer(s) cost(s) ___ car(s) .

Correct Answer
verified

Correct Answer
verified

Exam 17: Financial Markets

When a domestic country exports goods to and imports goods from a foreign country, in the short run domestic:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The slope of the production possibilities curve is positive if there is free trade.

Correct AnswerverifiedShow Answer

If the opportunity cost is 2X = 1Y for country A and 1/3X = 1Y for country B, then a possible terms of trade is:

Correct AnswerverifiedShow Answer

A policy aimed at promoting the development of specific industries within a country that may increase domestic welfare through trade with the rest of the world is known as a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-(Exhibit: Production Possibilities in Alphaland and Omegaland) If the final terms of trade are 1 computer = 1 car, then:

Correct AnswerverifiedShow Answer

If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that foreign producers are selling silicon chips in the United States below production costs, they are using the:

Correct AnswerverifiedShow Answer

Protectionist policies:

Correct AnswerverifiedShow Answer

A new domestic industry with potential economies of scale is called a(n) :

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

-(Exhibit: Production Possibilities in Alphaland and Omegaland) The slopes of the production possibilities curves (PPCs) in the two countries are:

Correct AnswerverifiedShow Answer

Quotas imposed on U.S. imports into Japan tend to:

Correct AnswerverifiedShow Answer

A policy in which a country restricts the importation of goods and services produced in foreign countries is described by economists as:

Correct AnswerverifiedShow Answer

If the executives of the U.S. silicon-chip industry lobby Congress for protection from imports on the grounds that several thousand workers would lose their jobs if there were a reduction in domestic silicon-chip production, they are using the:

Correct AnswerverifiedShow Answer

-(Exhibit: Production Possibilities in Alphaland and Omegaland) Which of the following statements is true?

Correct AnswerverifiedShow Answer

Free trade is beneficial because it:

Correct AnswerverifiedShow Answer

Dumping is selling in a foreign market at a price in excess of the importing country's domestic average total cost of production.

Correct AnswerverifiedShow Answer

-(Exhibit: Production Possibilities in Alphaland and Omegaland) At point A in Alphaland, ________ additional computer(s) cost(s) _______ additional car(s) and at point A? in Omegaland, _______ additional computer(s) cost(s) _______ car(s) .

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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-(Exhibit: Production Possibilities in Alphaland and Omegaland) At point A in Alphaland, ____ additional computer(s) cost(s) _ additional car(s) and at point A? in Omegaland, _ additional computer(s) cost(s) ___ car(s) .

Correct Answer
verified

Correct Answer
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