Question 1

Other things equal, a tariff is:

Accepted Answer

A)   superior to an import quota for Canadians because a tariff increases the profits of foreign producers.
B)   inferior to an import quota for Canadians because a tariff increases the profits of domestic producers.
C)   superior to an import quota for Canadians because a tariff generates revenue for the federal government.
D)   inferior to an import quota for Canadians because a tariff generates revenue for the federal government.E) C) and D)
F) A) and B)

Question 2

Differences in production efficiencies among nations in producing a particular good result from:

Accepted Answer

A)   different amounts of skilled labour.
B)   different climatic conditions.
C)   different levels of technological knowledge.
D)   all of the above.E) C) and D)
F) None of the above

Question 3

Which is responsible for the major decrease in trade barriers since World War II?

Accepted Answer

A)   the North American Free Trade Agreement
B)   the General Agreement on Tariffs and Trade
C)   the granting of most-favoured nation status
D)   the World Trade OrganizationE) A) and C)
F) B) and D)

Question 4

Which is a valid counterargument to the infant industry argument for protective tariffs?

Accepted Answer

A)   It results in too many benefits for domestic firms that export goods and services.
B)   It is difficult to determine which infant industries will become mature industries with a comparative advantage.
C)   The objective would be better achieved through strategic trade policy.
D)   The objective would be better achieved by import quotas and nontariff barriers.E) C) and D)
F) B) and C)

Question 5

The following data is for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded.
 s is domestic quantity supplied and Qd is domestic quantity demanded.    -Refer to the above data. The equilibrium prices of steel in Alpha and Beta are: A)  $3 and $2, respectively. B)  $2 and $4, respectively. C)  $4 and $5, respectively. D)  $1 and $2, respectively." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above data. The equilibrium prices of steel in Alpha and Beta are:

Accepted Answer

A)   $3 and $2, respectively.
B)   $2 and $4, respectively.
C)   $4 and $5, respectively.
D)   $1 and $2, respectively.E) A) and B)
F) A) and C)

Question 6

-Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will:

Accepted Answer

A)   export all of the product.
B)   import all of the product.
C)   import some of the product and produce some of the product domestically.
D)   neither export nor import the product.E) A) and D)
F) B) and C)

Question 7

When a tariff on a product is removed, it will result in a(n) :

Accepted Answer

A)   decrease in the supply of a product and a higher price.
B)   increase in the supply of the product and a higher price.
C)   increase in the supply of the product and a lower price.
D)   decrease in the supply of the product and a lower price.E) None of the above
F) All of the above

Question 8

-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves imply that:

Accepted Answer

A)   both countries are experiencing an excess of exports over imports which results in economic growth.
B)   the domestic production possibilities curves entail unemployment and/or the domestic misallocation of resources.
C)   world resources will be allocated more efficiently if the two nations specialize and trade in accordance with comparative advantage.
D)   both nations will be worse off as a result of international specialization and trade.E) A) and C)
F) A) and B)

Question 9

-Refer to the above diagram pertaining to two nations and a specific product. Lines FC and GD are:

Accepted Answer

A)   domestic supply curves for two countries.
B)   import demand curves for two countries.
C)   domestic demand curves for two countries.
D)   export supply curves for two countries.E) B) and D)
F) A) and B)

Question 10

Dumping is the sale of a product in a foreign market:

Accepted Answer

A)   at a price below its domestic price or cost of production.
B)   that does not meet the quality standards in the domestic market.
C)   and is the principal means used to enforce nontariff barriers.
D)   and is encouraged by voluntary export restraints.E) B) and D)
F) A) and B)

Question 11

d and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per unit tariff, the quantities sold by foreign and domestic producers respectively will be: A)  xz and x. B)  xv and xz. C)  x and xz. D)  wy and w." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

Accepted Answer

A)   xz and x.
B)   xv and xz.
C)   x and xz.
D)   wy and w.E) C) and D)
F) B) and C)

Question 12

The best example of a capital-intensive good is:

Accepted Answer

A)   chemicals.
B)   radios.
C)   wheat.
D)   wool.E) All of the above
F) A) and B)

Question 13

Which country did Canada sign a free-trade agreement with in 2008?

Accepted Answer

A)   South Korea.
B)   Columbia.
C)   Brazil.
D)   Argentina.E) C) and D)
F) A) and B)

Question 14

As of 2011, 16 out of 27 members of the EU use the Euro as a common currency. The 3 countries that have opted out of the common currency are:

Accepted Answer

A)   Germany, Great Britain, and Denmark.
B)   Germany, Denmark, and Sweden.
C)   Great Britain, Denmark, and Sweden.
D)   France, Germany, and Sweden.E) C) and D)
F) A) and D)

Question 15

The 1993 General Agreement on Tariffs and Trade (GATT) :

Accepted Answer

A)   reduced tariffs and liberalized government rules restricting international trade in services.
B)   established the World Bank.
C)   expanded the European Union by four nations.
D)   established a free trade zone between Canada, the United States, and Mexico.E) None of the above
F) A) and C)

Question 16

Canadian exports of goods and services are about:

Accepted Answer

A)   20 percent of Canadian GDP.
B)   5 percent of Canadian GDP.
C)   10 percent of Canadian GDP.
D)   30 percent of Canadian GDP.E) A) and D)
F) A) and C)

Question 17

-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based on the assumption of:

Accepted Answer

A)   imperfect substitutability of resources as between beer and pizza production.
B)   constant costs.
C)   decreasing costs.
D)   increasing costs.E) B) and D)
F) B) and C)

Question 18

Since World War II, several factors have contributed to the rapid growth of international trade. These factors are:

Accepted Answer

A)   transportation technology, general increase in tariffs, and differences among nations in terms of production cost.
B)   transportation and communications technologies, and the general decline in the level of tariffs.
C)   transportation technology, reductions in the number of participants, and the general increase in the level of tariffs.
D)   communication technology, general increase in the level of tariffs, and the transportation technology.E) None of the above
F) A) and B)

Question 19

Consider two countries which trade with each other. As these countries expand their production according to their comparative advantage, most probably they will experience:

Accepted Answer

A)   constant costs.
B)   high tariffs.
C)   decreasing costs.
D)   increasing costs.E) A) and B)
F) B) and C)

Question 20

The production possibilities curves below suggest that:

Accepted Answer

A)   West Mudsville should specialize in, and export, baseball bats.
B)   West Mudsville should specialize in, and export, both baseballs and baseball bats.
C)   East Mudsville should specialize in, and export, baseball bats.
D)   workers will try to immigrate from West Mudsville to East Mudsville.E) None of the above
F) A) and B)

Exam 16: International Trade

The 1993 General Agreement on Tariffs and Trade (GATT) :

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The best example of a capital-intensive good is:

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The following data is for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. -Refer to the above data. The equilibrium prices of steel in Alpha and Beta are:

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Which country did Canada sign a free-trade agreement with in 2008?

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Consider two countries which trade with each other. As these countries expand their production according to their comparative advantage, most probably they will experience:

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-Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will:

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Since World War II, several factors have contributed to the rapid growth of international trade. These factors are:

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Differences in production efficiencies among nations in producing a particular good result from:

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Canadian exports of goods and services are about:

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The production possibilities curves below suggest that:

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-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data contained in the production possibilities curves are based on the assumption of:

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As of 2011, 16 out of 27 members of the EU use the Euro as a common currency. The 3 countries that have opted out of the common currency are:

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-Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves imply that:

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Which is a valid counterargument to the infant industry argument for protective tariffs?

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-Refer to the above diagram pertaining to two nations and a specific product. Lines FC and GD are:

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Which is responsible for the major decrease in trade barriers since World War II?

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-Refer to the above diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

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Other things equal, a tariff is:

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Dumping is the sale of a product in a foreign market:

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When a tariff on a product is removed, it will result in a(n) :

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The following data is for the hypothetical nations of Alpha and Beta. Q_s is domestic quantity supplied and Q_d is domestic quantity demanded. -Refer to the above data. The equilibrium prices of steel in Alpha and Beta are:

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-Refer to the above diagram, where S_d and D_d are the domestic supply and demand for a product and P_c is the world price of that product. With a P_cP_t per unit tariff, the quantities sold by foreign and domestic producers respectively will be:

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