Question 1

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

Accepted Answer

A)  Relatively open immigration laws
B)  Religious diversity
C)  Skills of the U.S. labor force
D)  A large stock of intellectual property rightsE) All of the above
F) None of the above

Question 2

In the past, presidential candidates have argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation of why few economists agree with this position?

Accepted Answer

A)  Economists did not believe that any jobs would be lost in the United States.
B)  Economists believed that the U.S. unemployment rate would rise.
C)  Although economists agreed that in some areas the United States would lose jobs, they expected that the United States would gain jobs in other areas.
D)  Although economists predicted that unemployment would rise, the increased profits of corporations would raise stock prices enough to compensate for the lost jobs.E) All of the above
F) None of the above

Question 3

The balance of trade measures the:

Accepted Answer

A)  difference between the value of imports and that of exports.
B)  share of U.S. imports coming from various regions of the world.
C)  share of U.S. exports going to various regions of the world.
D)  exchange rate needed to make imports equal exports.E) B) and C)
F) A) and C)

Question 4

The text refers to the type of comparative advantage that can be gained or lost because of changes in skills of workers or types of capital as:

Accepted Answer

A)  unstable comparative advantage.
B)  transferable comparative advantage.
C)  non-equilibrium comparative advantage.
D)  temporary comparative advantage.E) None of the above
F) A) and D)

Question 5

A nation's comparative advantage in the production of an item is determined by:

Accepted Answer

A)  which country has already specialized in the production of the item.
B)  the total and marginal costs of producing the item.
C)  the opportunity cost of producing the item relative to a trading partner's opportunity cost.
D)  wage rates and other input costs.E) A) and B)
F) A) and C)

Question 6

Assume that in Canada the opportunity cost of producing one television set is two bushels of wheat. Assume that in the United States the opportunity cost of producing one bushel of wheat is two television sets. If these two countries specialize according to comparative advantage and then trade with each other:

Accepted Answer

A)  Canada will export both televisions and wheat.
B)  Canada will export wheat and import televisions.
C)  the United States will export wheat and import televisions.
D)  the United States will export both televisions and wheat.E) B) and C)
F) None of the above

Question 7

Countries can expect to gain from international trade as long as they:

Accepted Answer

A)  keep production diversified.
B)  specialize according to their comparative advantage.
C)  produce only those goods for which they have a relatively high opportunity cost.
D)  use trade restrictions to reduce competition for domestic producers.E) C) and D)
F) All of the above

Question 8

If the world supply curve is SW1, W1,   A) there is a trade deficit. B) there is a trade surplus. C) trade is in balance. D) there is no trade." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  there is a trade deficit.
B)  there is a trade surplus.
C)  trade is in balance.
D)  there is no trade.E) B) and C)
F) C) and D)

Question 9

If the United States' price level is below the world price level, all of the following would be successful in raising the world price (supply) level except:

Accepted Answer

A)  the dollar appreciating.
B)  the United States gaining a comparative advantage.
C)  wages in the United States falling.
D)  the value of U.S. assets falling.E) C) and D)
F) All of the above

Question 10

If the world supply curve is SW0, W0,   A) there is a trade deficit. B) there is a trade surplus. C) trade is in balance. D) there is no trade." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)  there is a trade deficit.
B)  there is a trade surplus.
C)  trade is in balance.
D)  there is no trade.E) A) and B)
F) A) and C)

Question 11

On average, globalization has:

Accepted Answer

A)  been insignificant.
B)  left Americans no better or not worse off.
C)  hurt Americans.
D)  benefited Americans.E) A) and B)
F) A) and C)

Question 12

Production Possibility Schedules for Two South Pacific Island Nations   Kiribati  Tuvalu  Mangues  Cocanuts  Mangues  Cacanuts 30001,20002004008001,2001008004002,40001,20003,600\begin{array} { c } { 	ext { Kiribati } }  \quad\quad\quad\quad\quad\quad\quad{ 	ext { Tuvalu } } \\begin{array} { | c | c | c | c | } \hline 	ext { Mangues } & 	ext { Cocanuts } & 	ext { Mangues } & 	ext { Cacanuts } \\hline 300 & 0 & 1,200 & 0 \\hline 200 & 400 & 800 & 1,200 \\hline 100 & 800 & 400 & 2,400 \\hline 0 & 1,200 & 0 & 3,600 \\hline\end{array}\end{array} Kiribati  Tuvalu  Mangues 3002001000​ Cocanuts 04008001,200​ Mangues 1,2008004000​ Cacanuts 01,2002,4003,600​​​  A comparative advantage in the production of coconuts is held by:

Accepted Answer

A)  Kiribati.
B)  Tuvalu.
C)  both countries.
D)  neither country. E) None of the above
F) A) and B)

Question 13

We can conclude from the table shown that Morocco has a comparative advantage in the production of tables.
 $$\begin{array}{l}
\quad\quad\text { Labar Input to Praduce Chairs and Tables }\
\begin{array} { | l | c | c | } 
\hline \quad\quad& \text { Marncen }\quad\quad\quad\quad & \text { Spain }\quad\quad\quad\quad \
\hline \text { Chair } & 3 & 1 \
\hline \text { Table } & 10 & 5 \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) True 
 B)False

Question 14

How are goods manufactured in other countries creating jobs in the United States?

Accepted Answer

A)  People whose jobs were outsourced are now discouraged workers.
B)  U.S. firms are specializing in managing the trade of these goods.
C)  Foreign countries are importing U.S. natural resources.
D)  People who have lost jobs have more time to shop and therefore increase demand for goods.E) A) and D)
F) A) and C)

Question 15

In considering the distribution of the gains from trade:

Accepted Answer

A)  Smaller countries usually get a larger proportion of the gains from trade.
B)  Larger countries usually get a larger proportion of the gains from trade.
C)  The gains are generally split equally between small and large countries.
D)  No statement can be made about the general nature of the split.E) A) and D)
F) C) and D)

Question 16

The fact that the United States has a trade deficit means that:

Accepted Answer

A)  the United States is producing more than it is consuming.
B)  foreign countries can have comparative advantages in all goods.
C)  foreign countries can have comparative advantages in more goods compared to the United States.
D)  the United States is lending more to foreign countries than it is borrowing from foreign countries.E) All of the above
F) C) and D)

Question 17

What economists call the law of one price depends on:

Accepted Answer

A)  government action.
B)  people seeking to exploit profit opportunities.
C)  random chance.
D)  the inertia effect.E) B) and C)
F) A) and C)

Question 18

If Americans demand goods produced in Mexico, it leads to a demand for Mexican pesos and a supply of U.S. dollars on the foreign exchange market.

Accepted Answer

A) True 
 B)False

Exam 9: Comparative Advantage, Exchange Rates, and Globalization

Correct Answer
verified

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

Correct Answer
verified

What economists call the law of one price depends on:

Correct Answer
verified

Correct Answer
verified

A nation's comparative advantage in the production of an item is determined by:

Correct Answer
verified

How are goods manufactured in other countries creating jobs in the United States?

Correct Answer
verified

Correct Answer
verified

On average, globalization has:

Correct Answer
verified

If the world supply curve is S_W1,

Correct Answer
verified

Countries can expect to gain from international trade as long as they:

Correct Answer
verified

In considering the distribution of the gains from trade:

Correct Answer
verified

The balance of trade measures the:

Correct Answer
verified

In the past, presidential candidates have argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation of why few economists agree with this position?

Correct Answer
verified

If the United States' price level is below the world price level, all of the following would be successful in raising the world price (supply) level except:

Correct Answer
verified

The text refers to the type of comparative advantage that can be gained or lost because of changes in skills of workers or types of capital as:

Correct Answer
verified

If the world supply curve is S_W0,

Correct Answer
verified

If Americans demand goods produced in Mexico, it leads to a demand for Mexican pesos and a supply of U.S. dollars on the foreign exchange market.

Correct Answer
verified

The fact that the United States has a trade deficit means that:

Correct Answer
verified

Exam 9: Comparative Advantage, Exchange Rates, and Globalization

Correct AnswerverifiedShow Answer

The text mentions 10 sources of U.S. comparative advantage. Which of the following is not one of them?

Correct AnswerverifiedShow Answer

What economists call the law of one price depends on:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A nation's comparative advantage in the production of an item is determined by:

Correct AnswerverifiedShow Answer

How are goods manufactured in other countries creating jobs in the United States?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

On average, globalization has:

Correct AnswerverifiedShow Answer

If the world supply curve is SW1,

Correct AnswerverifiedShow Answer

Countries can expect to gain from international trade as long as they:

Correct AnswerverifiedShow Answer

In considering the distribution of the gains from trade:

Correct AnswerverifiedShow Answer

The balance of trade measures the:

Correct AnswerverifiedShow Answer

In the past, presidential candidates have argued that free trade with Mexico would result in massive job losses in the United States because Mexican wages were so low. Which of the following is the best explanation of why few economists agree with this position?

Correct AnswerverifiedShow Answer

If the United States' price level is below the world price level, all of the following would be successful in raising the world price (supply) level except:

Correct AnswerverifiedShow Answer

The text refers to the type of comparative advantage that can be gained or lost because of changes in skills of workers or types of capital as:

Correct AnswerverifiedShow Answer

If the world supply curve is SW0,

Correct AnswerverifiedShow Answer

If Americans demand goods produced in Mexico, it leads to a demand for Mexican pesos and a supply of U.S. dollars on the foreign exchange market.

Correct AnswerverifiedShow Answer

The fact that the United States has a trade deficit means that:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If the world supply curve is S_W1,

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If the world supply curve is S_W0,

Correct Answer
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Correct Answer
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Correct Answer
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