Question 1

Japan has developed a comparative advantage in designing and producing automobiles.The source of its comparative advantage in these products is

Accepted Answer

A)   abundant supplies of natural resources.
B)   a favourable climate.
C)   a strong central government.
D)   technology.E) A) and D)
F) A) and C)

Question 2

Which of the following is the best example of a tariff?

Accepted Answer

A)   A subsidy from the government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers.
B)   A limit on the quantity of residential air conditioners that can be imported from a foreign country.
C)   A $150 fee imposed on all imported residential air conditioners.
D)   A tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment.E) B) and D)
F) All of the above

Question 3

Table 18-6
Production and
Consumption Production
Without Trade With Trade
  Denmark and Belize can produce both clocks and hats. Table 18-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 18-6.All of the following are terms of trade that could possibly benefit both countries except

Accepted Answer

A)   1/5 of a hat : 1 clock.
B)   1/3 of a hat : 1 clock.
C)   1/2 of a hat : 1 clock.
D)   3/4 of a hat : 1 clock.E) None of the above
F) A) and B)

Question 4

Examples of ________ show how trade between two countries can make each better off.

Accepted Answer

A)   absolute advantage
B)   comparative advantage
C)   autarky
D)   trade barriersE) C) and D)
F) A) and B)

Question 5

Protectionism

Accepted Answer

A)   is the use of cheap labour to protect firms from paying high wages.
B)   is the use of trade barriers to protect domestic firms from foreign competition.
C)   refers to reductions in tariffs and other barriers that protect consumers from paying high prices.
D)   refers to the use of copyright and trademark laws to protect inventors and artists from losing the rights to their creative efforts.E) None of the above
F) B) and D)

Question 6

Table 18-2
  Sarita and Gabriel own S&G Bakery. Table 18-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day.
-Refer to Table 18-2.Select the statement that accurately interprets the data in the table.

Accepted Answer

A)   Sarita has a comparative advantage in baking pies.
B)   Gabriel has a comparative advantage in baking cakes.
C)   Sarita has a comparative advantage in baking pies and baking cakes.
D)   Sarita has a comparative advantage in baking cakes.E) A) and B)
F) None of the above

Question 7

Measuring the impact of a quota or tariff on the economy is an example of ________.Stating that a quota or tariff should be eliminated is an example of ________.

Accepted Answer

A)   statistical analysis; economic analysis
B)   positive analysis; normative analysis
C)   econometric analysis; protectionism
D)   trade analysis; an opinionE) A) and B)
F) None of the above B

Question 8

One of the main sources of comparative advantage is internal economies.

Accepted Answer

A) True 
 B)False

Question 9

Whenever a buyer and a seller agree to trade,

Accepted Answer

A)   the agreement is made based on absolute advantage.
B)   they must have identical opportunity costs in producing their respective products.
C)   one party will always be worse off.
D)   both must believe they will be made better off.E) B) and D)
F) B) and C)

Question 10

Under autarky,domestic producer surplus is represented by the area

Accepted Answer

A)   above the supply curve and below the equilibrium price.
B)   above the supply curve and below the demand curve.
C)   below the demand curve and above the equilibrium price.
D)   above the demand curve and below the supply curve.E) A) and B)
F) A) and C)

Question 11

Table 18-6
Production and
Consumption Production
Without Trade With Trade
  Denmark and Belize can produce both clocks and hats. Table 18-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 18-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many hats will Belize gain compared to the 'without trade' numbers?

Accepted Answer

A)   -100
B)   0
C)   150
D)   250E) A) and C)
F) All of the above

Question 12

Table 18-6
Production and
Consumption Production
Without Trade With Trade
  Denmark and Belize can produce both clocks and hats. Table 18-6 shows the production and consumption quantities without trade, and the production numbers with trade.
-Refer to Table 18-6.If the actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded,how many hats will Denmark consume?

Accepted Answer

A)   150
B)   180
C)   270
D)   400E) B) and C)
F) B) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The main purpose of most tariffs and quotas is to

Accepted Answer

A)   raise revenue for the government.
B)   reduce the prices consumers pay for goods and services.
C)   reduce the foreign competition that domestic firms face.
D)   improve the quality of goods and services imported into the country.E) A) and C)
F) B) and C)

Question 15

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

Accepted Answer

A)   Absolute advantage
B)   Specialisation
C)   Autarky
D)   Comparative advantageE) C) and D)
F) B) and C) D

Question 16

Offshoring is

Accepted Answer

A)   when workers in a foreign country are hired by a domestic firm to produce something sold domestically.
B)   importing a manufactured good made by a foreign firm.
C)   exporting a good or service to buyers in other countries.
D)   when domestic workers are hired by a domestic firm to produce something sold exclusively in other countries.E) A) and D)
F) A) and B)

Question 17

What is an 'open economy'?

Accepted Answer

It is an economy that exports a large proportion of its output (GDP)and/or has few or no barriers to international trade.

Question 18

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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.E) A) and B)
F) A) and C)

Question 20

Trade between countries that is without restrictions is called

Accepted Answer

A)   unobstructed commerce.
B)   unabated trade.
C)   free trade.
D)   unencumbered trade.E) A) and B)
F) C) and D)

Exam 18: Fiscal Policy

Japan has developed a comparative advantage in designing and producing automobiles.The source of its comparative advantage in these products is

Correct Answer
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Which of the following is the best example of a tariff?

Correct Answer
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Correct Answer
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Examples of ________ show how trade between two countries can make each better off.

Correct Answer
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Protectionism

Correct Answer
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Table 18-2 Sarita and Gabriel own S&G Bakery. Table 18-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. -Refer to Table 18-2.Select the statement that accurately interprets the data in the table.

Correct Answer
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Measuring the impact of a quota or tariff on the economy is an example of .Stating that a quota or tariff should be eliminated is an example of .

Correct Answer
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B

One of the main sources of comparative advantage is internal economies.

Correct Answer
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Whenever a buyer and a seller agree to trade,

Correct Answer
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Under autarky,domestic producer surplus is represented by the area

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

Correct Answer
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The main purpose of most tariffs and quotas is to

Correct Answer
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________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

Correct Answer
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D

Offshoring is

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What is an 'open economy'?

Correct Answer
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It is an economy that exports a large proportion of its output (GDP)and/or has few or no barriers to international trade.

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

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

Correct Answer
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Trade between countries that is without restrictions is called

Correct Answer
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Exam 18: Fiscal Policy

Japan has developed a comparative advantage in designing and producing automobiles.The source of its comparative advantage in these products is

Correct AnswerverifiedShow Answer

Which of the following is the best example of a tariff?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Examples of ________ show how trade between two countries can make each better off.

Correct AnswerverifiedShow Answer

Protectionism

Correct AnswerverifiedShow Answer

Table 18-2 Sarita and Gabriel own S&G Bakery. Table 18-2 lists the number of pies and cakes Sarita and Gabriel can each bake in one day. -Refer to Table 18-2.Select the statement that accurately interprets the data in the table.

Correct AnswerverifiedShow Answer

Measuring the impact of a quota or tariff on the economy is an example of ________.Stating that a quota or tariff should be eliminated is an example of ________.

Correct AnswerverifiedB

One of the main sources of comparative advantage is internal economies.

Correct AnswerverifiedShow Answer

Whenever a buyer and a seller agree to trade,

Correct AnswerverifiedShow Answer

Under autarky,domestic producer surplus is represented by the area

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The main purpose of most tariffs and quotas is to

Correct AnswerverifiedShow Answer

________ is the ability of an individual,a firm,or a country to produce a good or service at a lower opportunity cost than competitors.

Correct AnswerverifiedD

Offshoring is

Correct AnswerverifiedShow Answer

What is an 'open economy'?

Correct AnswerverifiedIt is an economy that exports a large proportion of its output (GDP)and/or has few or no barriers to international trade.

Once a country has a comparative advantage in producing a product,it cannot lose that advantage.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Trade between countries that is without restrictions is called

Correct AnswerverifiedShow Answer

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Measuring the impact of a quota or tariff on the economy is an example of .Stating that a quota or tariff should be eliminated is an example of .

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B

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D

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It is an economy that exports a large proportion of its output (GDP)and/or has few or no barriers to international trade.

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