ECO 405 Week 8 Quiz – Strayer

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Quiz 7 Chapter 10

Chapter 10

Competition In The Global Marketplace: Should We Protect Ourselves From International Trade?

Multiple Choice Questions
 

1. Which Of The Following Statements Is Most Accurate?
A. Historically, There Has Been Conflict Between Groups Wanting To Suppress Trade And Groups Wanting To Peg Exchange Rates
B. Since The Late 1940s, Import Restrictions Have Fallen
C. Resentment Of Imports Always Increases During Economic Expansions
D. The U.S. Government Engaged In A Free Trade Campaign Up To The End Of World War Ii
E. None Of The Above

2. Which Of The Following Is Part Of The "Protectionist" Perspective On International Trade?
A. Imports Are Responsible For Crowding Out Domestic Goods From The Market And Thereby Reduce American Jobs
B. Trade Restrictions Are Needed To Protect Key Industries Vital To National Security
C. Imports Should Be Restricted To Remedy The Balance Of Trade Deficit
D. Both (A) And (C)
E. All Of The Above

3. In A Free Market, Who Benefits From Voluntary Exchange?
A. Buyers
B. Sellers
C. Both Buyers And Sellers
D. The Government Only
E. Nobody

4. Why Is International Trade Important? International Trade
A. Increases The Variety And Availability Of Consumer Goods In An Economy
B. Expands The Production Possibilities Of A Nation's Economy
C. Increases An Economy's Gdp
D. Allows Nations To Specialize In The Production Of Goods According To Comparative Advantage
E. Does All Of The Above

5. Which Of The Following Is Not Used As A Protectionist Argument?
A. Imports Crowd U.S. Goods Out Of The Market
B. Imports Reduce The Demand For Domestic Labor Leading To Higher Unemployment
C. Our Industries Cannot Compete Successfully Against Those In Other Countries That Pay Much Lower Wages
D. Imports Raise Living Standards Above What They Would Otherwise Be
E. All Of The Above Are Used As Protectionist Arguments

6. The Fundamental Reason Countries Engage In Trade Is That
A. It Enables Each Country To Improve Its Standard Of Living
B. Domestic Markets Are Continually Shrinking
C. Powerful Special Interest Groups Benefit From Exchange
D. Trade Allows Countries To Save Some Of Their Resources For The Future
E. All Of The Above

7. Omega Can Produce Either Two Microcomputers Or Ten Tv Sets. Alpha Can Produce One Microcomputer Or Five Tv Sets. Which Of The Following Statements Is Correct?
A. Alpha Has A Comparative Disadvantage In Producing Both Products
B. Both Countries Have A Comparative Advantage In Producing Microcomputers
C. The Countries Are Unlikely To Engage In Trade In These Two Items
D. Labor Costs Are Obviously Too High In Alpha
E. All Of The Above

8. Which Of The Following Will Give Rise To U.S. Demand For Foreign Exchange?
A. U.S. Sales Of Airplanes To Japanese Buyers
B. U.S. Investments Abroad
C. U.S. Purchases Of French Perfume
D. Both (B) And (C)
E. All Of The Above

9. A Country Has A Comparative Advantage In The Production Of Any Good That It Can Produce
A. At A Lower Absolute Cost Than Can Other Countries
B. With Less Labor Than Can Other Countries
C. With A Smaller Sacrifice Of Some Alternative Good Or Service Than Can Other Countries
D. For Export
E. All Of The Above

10. Which Of The Following Is Not A Reason That Countries Have Comparative Advantages In The Production Of Some Goods And Comparative Disadvantages In The Production Of Other Goods? Differences In
A. Technological "Know-How."
B. Exchange Rates
C. Literacy Rates
D. Natural Resources
E. Labor Force Quality

 Questions 11 - 15 Refer To The Graph Below.
  

11. Assuming An Initial Combination Of 75 Million Loaves Of Bread And 150 Million Gallons Of Milk, The Country Represented Would Refuse To Enter Into Any Trade Relationships In Which The Cost Of Importing
A. Bread Exceeds Two Gallons Of Milk Per Loaf
B. Milk Exceeds One Loaf Of Bread Per Gallon
C. Milk Exceeds Two Loaves Of Bread Per Gallon
D. Both (A) And (B)
E. None Of The Above

12. The Opportunity Cost Of A Million Gallons Of Milk Is How Many Millions Of Loaves Of Bread For This Country?
A. 0.5
B. 1
C. 2
D. 150
E. 300

13. The Opportunity Cost Of A Million Loaves Of Bread Is How Many Millions Of Gallons Of Milk For This Country?
A. .5
B. 1
C. 2
D. 150
E. 300

14. If This Country Has A Comparative Advantage In The Production Of Bread And Produces Only Bread While Trading With Another Country For Milk, Which Of The Following Is  Of Its Consumption Possibilities Curve?
A. It Shifts Out Parallel To The Ppc
B. Its Vertical Intercept Increases
C. Its Horizontal Intercept Increases
D. All Of The Above
E. None Of The Above

15. If This Country Has A Comparative Advantage In The Production Of Milk And Produces Only Milk While Trading With Another Country For Bread, Which Of The Following Is  Of Its Consumption Possibilities Curve?
A. It Shifts Out Parallel To The Ppc
B. Its Vertical Intercept Increases
C. Its Horizontal Intercept Increases
D. All Of The Above
E. None Of The Above

 Questions 16 - 20 Refer To The Graph Below.
  

16. Without Trade, The Republic Of Alpha's Production Possibilities Curve Is Ab. If Consumption Along The Curve A₁b Is Possible With Trade, Alpha Must Have A Comparative Advantage In The Production Of
A. Bread
B. Milk
C. Both Bread And Milk
D. Neither Bread Nor Milk
E. It Cannot Be Determined With The Information Given

17. Without Trade, The Republic Of Alpha's Production Possibilities Curve Is Ab. With No Trade, Alpha's Consumption Possibilities Curve Is
A. Ab
B. A₁b
C. Cb
D. C₁b
E. Cc₁

18. Without Trade, The Republic Of Alpha's Production Possibilities Curve Is Ab. The Cost Of Producing Bread In Alpha (In Terms Of Millions Of Gallons Of
Milk) Is
A. .5
B. 1
C. 2
D. 100
E. 200

19. Without Trade, The Republic Of Alpha's Production Possibilities Curve Is Ab. For Alpha To Be Willing To Trade Milk For Bread, A Million Loaves Of Bread Would Have To Cost Less Than
A. 0.5 Million Gallons Of Milk
B. 1 Million Gallons Of Milk
C. 2 Million Gallons Of Milk
D. 0.5 Million Loaves Of Bread
E. Alpha Would Not Trade Milk For Bread

20. If Alpha Produces 100 Million Loaves Of Bread, With Trade (And Consumption Possibilities Curve A₁b) It Can Consume How Many Gallons Of Milk?
A. 0
B. 100
C. 200
D. 300
E. 400

21. An Exchange Rate Is
A. The Price Of One Country's Currency In Terms Of The Monetary Units Of Another Country
B. The Rate At Which One Good Exchanges For Another
C. The Price Of Gold In Terms Of The U.S. Dollar
D. The Fee Charged For Exchanging One Currency For Another
E. None Of The Above

22. Which Of The Following Demands Kenyan Shillings?
A. U.S. Importers Of Kenyan Goods
B. U.S. Investors In Kenya
C. U.S. Tourists Visiting Kenya
D. All Of The Above
E. None Of The Above

23. Which Of The Following Supplies Kenyan Shillings?
A. U.S. Exporters To Kenya
B. Kenyan Tourists Returning Home
C. U.S. Importers Of Kenyan Goods
D. All Of The Above
E. None Of The Above

24. The Largest Part Of U.S. Demand For Foreign Currencies Arises From
A. Increases In Investments Abroad
B. Imports Of Merchandise
C. Gifts That Persons In The U.S. Sent Abroad
D. Foreign Aid Transfers From The U.S. To Developing Countries
E. None Of The Above

25. The Largest Part Of The U.S. Supply Of Foreign Currency Arises From
A. Investments Made By Foreigners In The U.S
B. Exports Of Merchandise
C. Net Investment Income
D. Gifts That Persons Abroad Send Persons In The U.S
E. None Of The Above

 Questions 26 - 30 Refer To The Graph Below.
  

26. In Equilibrium, The Price Of A British Pound, In Terms Of U.S. Dollars, Is
A. $1.50
B. $1.25
C. $.8
D. $.67
E. None Of The Above

27. In Equilibrium, The Price Of A U.S. Dollar, In Terms Of British Pounds, Is
A. $1.50
B. $1.25
C. $.8
D. $.67
E. None Of The Above

28. Which Of The Following Could Cause An Increase In The Equilibrium Exchange Rate?
A. An Increase In U.S. Investment In Britain
B. An Increase In U.S. Imports From Britain
C. An Increase In The Number Of U.S. Tourists Traveling To Britain
D. All Of The Above
E. None Of The Above

29. Pegging The Exchange Rate At $1.25
A. Imposes A Price Floor
B. Results In A Balance Of Payments Problem
C. Will Increase British Demand For U.S. Exports
D. Will Increase U.S. Demand For British Imports
E. Will Do Of The Above

30. Pegging The Exchange Rate At $1.25 Will Result In
A. A Shortage Of £20 Million Pounds Per Month
B. A Surplus Of £20 Million Pounds Per Month
C. A Shortage Of £40 Million Pounds Per Month
D. A Surplus Of £40 Million Pounds Per Month
E. None Of The Above

 Questions 31 - 35 Refer To The Graph Below.
  

31. If D And S Are The Relevant Supply And Demand Curves, An Increase In Nigerian Travelers To The U.S. Would Result In Which Of The Following Changes In The Graph? A Movement From
A. S To S¹
B. S¹ To S
C. R¹ To R
D. Q² To Q¹
E. Q To Q

32. Which Of The Following Could Cause A Shift In The Supply Curve From S To S¹? An Increase In
A. U.S. Exports To Nigeria
B. Nigerian Exports To The U.S
C. U.S. Travelers To Nigeria
D. All Of The Above
E. None Of The Above

33. An Increase In U.S. Investment In Nigeria Will Have Which Effect On R? It Will
A. Increase
B. Decrease
C. Remain The Same
D. Be Pegged At R¹
E. Not Be Able To Be Determined

34. If D And S Are The Relevant Demand And Supply Curves, Pegging The Exchange Rate At R¹. Will Result In
A. A Shortage Of Q²q Niara Per Month
B. A Surplus Of Q²q Niara Month
C. A Shortage Of Q²q¹ Niara Per Month
D. A Surplus Of Q²q¹niara Pounds Per Month
E. None Of The Above

35. If D And S Are The Relevant Demand And Supply Curves, Pegging The Exchange Rate At R¹
A. Imposes A Price Floor
B. Results In A Balance Of Payments Problem
C. Will Increase British Demand For U.S. Exports
D. Will Increase U.S. Demand For British Imports
E. Will Do All Of The Above

36. Import Restrictions, Like Tariffs And Quotas, Can Protect Domestic Jobs

A.  At A Low Price
B.  By Changing The Consumption Tastes Of Domestic Buyers
C. At A High Price
D. Without Any Effect On An Economy
E. By Changing The Structure Of The Economy

37. Free Trade Can Result In What Impact On An Economy?
A. A Net Increase Or Decrease In Overall Employment
B. A Reduction In The Efficiency Of An Economy
C. Free Trade Always Harms An Economy
D. Free Trade Always Increases Total Employment
E. No Impact At All

38. The Exchange Rate Ceiling On The Dollar Price Of The Pound Will Result In
A. A Surplus Of Pounds
B. A Balance Of Payments Deficit
C. A Balance Of Payments Surplus
D. An Increase In U.S. Exports To Great Britain
E. Undervaluation Of The Dollar Relative To The Pound

39. Which Of The Following Curves Represents The Maximum Combination Of Goods And Services That Can Be Consumed In An Economy When All Its Resources Are Efficiently Used?
A. Market Demand Curve
B. Production Possibilities Curve
C. Market Supply Curve
D. Consumption Possibilities Curve
E. Resource Possibilities Curve

40. With International Trade, Which Of The Following Curves For An Economy Will Shift Outward?
A. Consumption Possibilities
B. Production Possibilities
C. Demand
D. Supply
E. Marginal Revenue

41. A Nation That Enjoys A Lower Opportunity Cost In The Production Of Goods, Relative To Another Nation, Is Said To Have A(N)
A. Market Advantage
B. Absolute Advantage
C. Comparative Advantage
D. Relative Cost Advantage
E. Production Advantage

42. Suppose That On Mars, Martians Must Give Up 2 Widgets To Produce 1 Gadget. On Venus, Venusians Must Give Up ½ Widget To Produce 1 Gadget. Which Of The Following Is ?
A. Venus Has A Comparative Advantage In Gadgets
B. Mars Has A Comparative Disadvantage In Gadgets
C. Venus Should Specialize In Gadgets And Trade With Mars For Widgets
D. Mars Should Specialize In Widgets And Trade With Venus For Gadgets
E. All Of The Above

43. The Price Of One Nation's Currency In Terms Of Another Is Called
A. The Exchange Rate
B. The International Trade Rate
C. A Tariff
D. A Balance Of Trade Account
E. The Capital Account

44. Assuming Everything Else Constant, An Increase In The Demand For Russian Rubles Will
A. Reduce The Price Of Rubles
B. Increase The Exchange Rate For Rubles
C. Cause A Surplus Of Rubles
D. Reduce Exports To Russia
E. All Of The Above

45. Economists Generally Agree That International Trade Restrictions
A. Improve Economic Well-Being And The General Standard Of Living
B. Generate Significant Costs To Consumers In The Form Of Higher Prices And Reduced Quantity Of Goods
C. Increase Gross Domestic Product And Lower The Rate Of Unemployment In The Long Run
D. Are Important To The Overall Health Of The Economy
E. Reduce The Severity Of Business Cycles By Limiting Recessions