Ch.20

The United States’ most important trading partner quantitatively is:

Canada.

In recent years, the United States has:

exported more services abroad than it has imported.

In terms of absolute dollar volume, the top 3 leaders in world exports are:

China, Germany, and the United States.

Which of the following is an example of a land-intensive commodity? (beef, wool, meat)

wool

Which of the following is an example of a labor-intensive commodity? (textiles, electronics, apparel, toys, and sporting goods)

Digital cameras.

Which of the following is an example of a capital-intensive commodity? (airplanes, automobiles, agricultural equipment, machinery, chemicals)

chemicals

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

different endowments of fertile soil, different amounts of skilled labor, different levels of technological knowledge.

Countries engaged in international trade specialize in production based on:

comparative advantage.

In order for mutually beneficial trade to occur between two otherwise isolated nations:

each nation must be able to produce at least one good relatively cheaper than the other.

If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B:

mutually advantageous specialization and trade between A and B may still be possible.

The terms of trade reflect the:

ratio at which nations will exchange two goods.

In the theory of comparative advantage, a good should be produced in that nation where:

its cost is least in terms of alternative goods that might otherwise be produced.

Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The opportunity cost of producing a:

beer in West Lothian is ½ pizza

Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The trading possibilities curves suggest that the terms of trade are:

1 beer for 1.5 pizzas

The fact that international specialization and trade based on comparative advantage can increase world output is demonstrated by the reality that:

a nation’s trading possibilities line lies to the right of its production possibilities line.

the cost ratios for two products—fish (F) and chicken (C)—in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world.

Singsong: 1F = 2C
Harmony: 1F = 4C

Refer to the given information. In Singsong the domestic real cost of each chicken:

is ½ fish

The primary gain from international trade is:

more goods than would be attainable through domestic production alone.

If a nation has a comparative advantage in the production of X, this means the nation:

must give up less of other goods than other nations in producing a unit of X.

Refer to the graphs. Stanville has a comparative advantage in producing:

product B

Refer to the graphs. These production possibilities curves:

demonstrate that there can be gains from specialization and trade between the two nations.

Answer the question on the basis of the following production possibilities data for two countries, Alpha and Beta, which have populations of equal size.
The given data show that:

Beta is more efficient than Alpha both in catching fish and in producing chips.

Refer to the given diagram in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. We can conclude that the United States:

has chosen to specialize in the production of cheese.

Refer to the given diagram in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade):

is the absolute value of the slope of line AC.

A nation’s import demand curve for a specific product:

shows the amount of the product it will import at prices below its domestic price.

A nation will neither export nor import a specific product when its:

domestic price equals the world price.

Export supply curves are __________________; import demand curves are ___________________.

upsloping; downsloping

In a two-nation model, the equilibrium world price will occur where:

one nation’s export supply curve intersects the other nation’s import demand curve.

Tariffs:

may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).

An excise tax on an imported good that is not produced domestically is called a:

revenue tariff.

Excise taxes on imported goods that help shield domestic producers of the good are called:

protective tariffs.

Country A limits other nation’s exports to Country A to 1,000 tons of coal annually. This is an example of a(n):

import quota.

Which is an example of a nontariff barrier (NTB)?

Box-by-box inspection requirements for imported fruit.

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n):

voluntary export restriction

In comparing a tariff and an import quota, we find that:

the tariff generates revenue for the U.S. Treasury, but the quota does not.

Other things equal, economists would prefer:

free trade to tariffs and tariffs to import quotas.

Studies show that:

costs of trade barriers exceed their benefits, creating an efficiency loss for society.

Research studies indicate that:

U.S. consumers lose more from tariffs than U.S. producers gain.

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves and survive?

The infant industry argument.

Which of the following arguments contends that certain industries need to be protected in the interest of national security?

The military self-sufficiency argument.

The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the:

World Trade Organization (WTO).

The "eurozone":

is the subset of the EU that uses a common currency.

How many European nations belong to the European Union (EU)?

28

Which of the following statements about the European Union (EU) is true?

The EU has abolished most trade barriers among participating countries, and has common tariffs applied to non-EU goods.

NAFTA:

has reduced most trade barriers between Canada, Mexico, and the United States.

"Offshoring" refers to:

shifting work overseas that was previously done domestically.