Which of the following is NOT an argument in favor of protectionism?

Protectionism makes domestic firms more competitive in the long run

Protectionism promotes industries that are essential to national security

Protectionism safeguards workers' jobs

Protectionism shields infant industries from competition

Which relationship BEST illustrates a comparison of absolute advantage and comparative advantage?

A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods.

A country with an absolute advantage will always have a comparative advantage in producing products.

A country with a comparative advantage can produce a greater output of a product than a country with an absolute advantage.

A country with an absolute advantage can produce a product at a lower opportunity cost than a country with a comparative advantage in producing all products.

A country would have a comparative advantage if it could produce a product

at a lower opportunity cost than another country

with less labor than another country

in great quantities than another country

with higher quality than other country

The United States can produce 2 planes or 8 cars per week. China can produce 3 planes or 9 cars per week. According to comparative advantage, how should each country specialize?

China should produce planes, and the US should produce cars.

The United States should produce planes and China should produce cars.

The United States has comparative advantage in both items.

China has comparative advantage in both items.

Herbert needs 8 days to paint a house, and 10 days to paint an office. Stacie needs 15 days to paint a house and 12 days to paint an office. According to comparative advantage, how should each person specialize?

Herbert should paint houses and Stacie should paint offices.

Herbert should paint offices and Stacie should paint houses.

Countries around the world specialize production, and trade with other countries based upon

the comparative advantage in production.

the overall size of the economy.

the rate of inflation in the economy.

the amount of capital available to produce products with.

As nations learn to specialize in production, they will trade with other nations when what happens?

They have comparative advantage in trade.

They have absolute advantage in trade.

They will not trade with another country.

When they lose their advantage in that area of trade.

The United States trade deficit causes

the value of the dollar to fall in foreign exchange markets.

the value of the dollar to strengthen in foreign exchange markets.

increased employment opportunities for Americans in import industries.

The balance of trade is defined as the difference between the value of a country's exports and imports. A trade deficit occurs when a country imports more than it exports, while a trade surplus occurs when a country exports more than it imports. How does this relate to Gross Domestic Product?

Trade balance affects the net exports component of GDP.

A trade deficit always increases GDP.

A trade surplus always decreases GDP.

Both trade deficit and surplus have no impact on GDP.

A tariff placed on foreign steel imports represents

a subsidy to domestic producers

an increase in domestic production

A tariff is one type of trade barrier. Which of the following best defines this trade barrier and explains its benefits as well as its negative impacts?

A tariff is a tax imposed on imported goods, which can protect domestic industries but may lead to higher prices for consumers.

A tariff is a restriction on the quantity of goods that can be imported, which can lead to shortages and increased prices.

A tariff is a subsidy given to domestic producers to encourage exports, which can lead to trade imbalances.

A tariff is a complete ban on certain imports, which can lead to diplomatic tensions.

A standard is a type of trade barrier. Which of the following best defines this trade barrier and explains its benefits as well as its negative impacts?

A standard is a regulation that sets specific criteria for products, ensuring quality and safety, but it can limit market access for foreign producers.

A standard is a tax imposed on imported goods, raising their prices and protecting domestic industries.

A standard is a subsidy given to local producers to make their products more competitive in the international market.

A standard is a quota that limits the quantity of goods that can be imported, protecting domestic industries from foreign competition.

Which result below would you expect from a US import quota on steel?

higher steel prices for US customers

lower steel prices for US customers

fewer domestic jobs in the steel industry

more foreign steel flowing into the US

A tariff on imported Japanese cars would result in

increased sales of American cars

increased sales of Japanese cars

Tariffs and quotas can have all of the following effects EXCEPT

promoting third-world development.

increasing prices consumers pay for goods.

The purpose of the founding of the European Union (E.U.) in 1993 was to

guarantee the freedom of movement of people, goods, services and capital.

prevent the poor from causing a revolution.

fight the growing global network of terrorism.

become an economic power to compete with the United States.

What was the primary purpose of the North American Free Trade Agreement (NAFTA)?

to reduce trade barriers among the U.S., Canada and Mexico

to decrease quotas but increase tariffs among the member countries

to establish trade policy between member countries and the rest of the world

to counter the establishment of the European Union

Which of the following is an example of a trading bloc and an advantage for a country to join one?

NAFTA; it allows for tariff-free trade between member countries.

ASEAN; it restricts trade with non-member countries.

EU; it increases political tensions among member countries.

MERCOSUR; it decreases economic cooperation among member countries.

Which of the following would free traders likely support?

tariff to protect US auto industry

Which of the following is an argument for free trade?

trade encourages growth of young domestic industries

trade safeguards national security

Those in favor of protectionist trade policies would most likely

cite the need to preserve domestic industries

call for fewer import restrictions

believe that restrictions harm consumers

Economic Concepts Quiz Quiz

55 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Exports minus imports or how many goods a country exports versus imports

Balance of Trade

Quotas

Subsidy

Exports

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Limit of the amount of a good that can be imported

Exports

Quota

Subsidy

Appreciation

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

An increase in the value of a currency

Appreciation

Subsidy

Depreciation

Quota

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Government payments to a local supplier to reduce the supplier costs. This helps local businesses survive because it is getting direct aid from the government

Protectionism

Balance of trade

Exchange rate

Subsidy

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Measure the price of one nation’s currency in terms of another nation’s currency

balance of trade

exchange rate

appreciation

depreciation

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When a nation imports more than it exports, economists say it has which of the following?

A trade deficit

A balance of trade

A trade surplus

A national difference

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What happens when a nation’s currency depreciates?

Nothing happens to the trade balance

It halts all trade

Its products become cheaper to other nations and exports may increases

Its products become more expensive to other nations

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Economic Concepts Quiz

Exports minus imports or how many goods a country exports versus imports

Limit of the amount of a good that can be imported

An increase in the value of a currency

Government payments to a local supplier to reduce the supplier costs. This helps local businesses survive because it is getting direct aid from the government

Measure the price of one nation’s currency in terms of another nation’s currency

When a nation imports more than it exports, economists say it has which of the following?

What happens when a nation’s currency depreciates?

The US bans beef imports from Canada after a Mad Cow Disease outbreak there. This is an example of which type of barrier to trade?

What is an official ban on trade or other commercial activity with a particular country?

Which of the following is NOT an argument in favor of protectionism?

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