Chapter Nineteen: Module Quiz -- International Trade


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  1. A possible non-economic reason for the government to intervene in free-trade is

      national security
      to protect environmental and labor laws
      political tit for tat
      all of the above

  2. Based on the chart to the right, which country has an absolute advantage in producing watches?

      Germany
      Poland
      None of the above

  3. Based on the chart to the right, which country has a comparative advantage in producing watches?

      Germany
      Poland
      None of the above

  4. Based on the chart above, if the international price of watches in terms of boats is set at 1.75, how many watches can Poland consume if it trades all of its boats to Germany?

      0
      100
      150
      175
      200

  5. If an important goal of trade policy is to raise revenue for the government then

      quotas would be preferred to tariffs
      tariffs would be preferred to quotas
      neither policy would be preferred over the other

  6. The pattern of international trade is determined by

      absolute advantage
      population of different countries
      the capital stock of each nation
      comparative advantage
      None of the above

  7. The term comparative advantage implies that

      one country can produce everything better than another country
      a country should produce those things that have the highest opportunity cost
      one country should specialize in raw materials for another country
      one country can produce a product relatively more efficiently than other products, and should therefore specialize in that product

  8. A tariff imposed on an import will

      raise the price of the imported good
      shift the demand curve to the right for the domestic substitute
      reduce the quantity of the imported good
      all of the above

  9. NAFTA has disrupted trade patterns much more significantly than we predicted, leading to significant unemployment for U.S. workers.

      True
      False

  10. NAFTA has made everyone in both Mexico and the US better off.

      True
      False


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