Chapter 32 - International Trade

1		Statement I. The basis for international trade is specialization. Statement II. Adam Smith said that we should import goods from a country that could make them more cheaply than we could.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
2		The last year we ran a trade surplus was
			A)	1960.
			B)	1965.
			C)	1970.
			D)	1975.
			E)	1980.
3		Our trade surplus rose
			A)	during World War I, but not World War II.
			B)	during World War II, but not World War I.
			C)	during both World War I and World War II.
			D)	during neither World War I nor World War II.
4		We are running trade surpluses in ______ and trade deficits in _______.
			A)	services, goods
			B)	goods, services
5		Our tariffs have been relatively low since
			A)	the 1820s.
			B)	the 1860s.
			C)	the 1920s.
			D)	the 1940s.
6		Statement I. The ability of a country to produce a good or service at a lower cost than its trading partners is called comparative advantage. Statement II. There are no arguments made against free trade except that it throws millions of Americans out of work.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
7		In general, economists
			A)	approve of both tariffs and quotas.
			B)	disapprove of both tariffs and quotas, but consider quotas the lesser of two evils.
			C)	disapprove of both tariffs and quotas, but consider tariffs the lesser of two evils.
8		A tariff
			A)	lowers supply.
			B)	raises supply.
			C)	has no effect on supply.
9		We are running large trade deficits with
			A)	China, but not Japan.
			B)	Japan, but not China.
			C)	both Japan and China.
			D)	neither Japan nor China.
10		Frederic Bastiat's "Petition of the Candlemakers to Shut out the Sun,"
			A)	took the side of the candlemakers that foreign competition was unfair.
			B)	was basically an argument for free trade.
			C)	made the case for government protection for that industry.
			D)	had no economic significance.
11		Statement I. One important reason for our trade deficit is our huge oil import bill. Statement II. Our elementary and secondary educational systems are the best in the world.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
12		Which would be the most accurate statement?
			A)	Japanese markets have been largely closed to many imports.
			B)	The Japanese consumer always buys the lowest-priced possible good, whether it is made in Japan or abroad.
			C)	Because of Japanese trade practices, we have banned many Japanese goods from the United States.
			D)	Japanese manufacturers compete almost entirely on the basis of price, rather than on the basis of product quality.
13		Statement I. Our main exports to Japan are agricultural. Statement II. Our TV manufacturers were driven out of business by the Japanese.
			A)	Statement I is true and statement II is false.
			B)	Statement II is true and statement I is false.
			C)	Both statements are true.
			D)	Both statements are false.
14		Which is the most accurate statement?
			A)	Our trade deficit was gotten extremely large over the last few years.
			B)	We can easily keep running even larger trade deficits well into the future.
			C)	Our trade deficits today are no higher than they were 10 years ago.
			D)	If the price of oil drops to about $15 a barrel, our trade deficit will virtually disappear.