1) The term tariff, as used in international trade refers to ? a. The price of goods when they leave the producing country b. a limit on the quantity of a good that can be imported into a country c. a tax on imports d. a government payment to encourage exports
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2) Term of trade for a country are the ratio of _______________ to _____________? a. its opportunity costs; world opportunity costs b. export prices; import prices c. Value of exports; value of imports d. its currency; other currencies
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3) David Ricardo’s theory in favor of free trade uses the ideal of ? a. absolute advantage b. mutual advantage c. multilateral advantage d. comparative advantage
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4) The theory that states that a country has a comparative advantage in the production of a product if that country is relatively well endowed with inputs used intensively in the production of that product is the? a. Ricardo Malthus theorem b. Heckscher Ohlin theorem c. Lucas-Laffer theorem d. Friedman Samuelson theorem
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5) A reduced share of the world export market for the United States would be attributed to? a. Decreased productivity in U.S manufacturing b. High incomes of American households c. Relatively low interest rates in the United States d. High levels of investment by American corporations
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6) Technological improvements are similar to international trade since they both ? a. Provide benefits for all producers and consumers b. Increase the nation’s aggregate income c. Reduce unemployment for all domestic workers d. Ensure that industries can operate at less than full capacity
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7) The real income of domestic producers and consumers can be increased by ? a. Technological progress, but not international trade b. International trade but not technological progress c. Technological Progress and international trade d. Neither technological progress nor international trade
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8) For the United States automobiles are ? a. Imported, but not exported b. Exported, but not imported c. Exported and imported d. Neither imported not exported
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9) Recent pressures for protectionism in the United States have been motivated by all of the following except ? a. U.S firms shipping component production overseas b. High profit levels for American corporations c. Sluggish rates of productivity growth in the United States d. High unemployment rates among America workers
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10) Major trading partners of the United States including all of the following countries except ? a. Canada b. Mexico c. China d. North Korea
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11) Increased foreign competition tend to ? a. Intensify inflationary pressure at home b. Induce falling output per worker-hour for domestic workers c. Place constraints on the wages of domestic workers d. Increase profits of domestic import competing industries
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12) Which American industry has least been affected by import competition in recent years ? a. Automobiles b. Steel c. Radios and TVs d. Computer software
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13) International trade is based on the idea that ? a. Exports should exceed imports b. imports should exceed exports c. Resources are more mobile internationally than are goods d. Resources are less mobile internationally than are goods
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14) International trade forces domestic firms to become more competitive in terms of ? a. The introduction of new products b. Product design and quality c. Product price d. All of the above
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15) International trade in goods and services is sometimes used as a substitute for all of the following except ? a. International movements of capital b. International movements of labor c. International movements of technology d. Domestic production of different goods and services
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16) A primary reason why nations conduct international trade is because ? a. Some nations prefer to produce one thing while others produce another b. Resources are not equally distributed to all trading nations c. Trade enhances opportunities to accumulate profits d. interest rates are not identical in all trading nations
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