Multiple Choice Questions

© 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.Chapter 01 International Economics Is Different Multiple Choice Questions 1.Suppose imports of automobiles from Japan to country X has increased by 10 percent this year, while total sales of automobiles in country X were the same as last year. Which of the following is an impact of increased imports on country X?

• The market share of the domestic automobile manufacturing firms declines.
• The price of automobiles, in general, increases in country X's market.
• The demand for inputs into producing automobile in country X is unchanged from last year.
• Employment in country X's automobile industry increases.

2.Between 2004 and 2008, the U.S. tire production declined and imports increased. Which of the following is likely to be an immediate effect of this situation?

• The demand for tires declined substantially in the U.S. market.
• The U.S. workers in the existing tire manufacturing units demanded wage hikes.
• The trade surplus of the United States increased.
• Some workers in the U.S. tire industry lost their jobs.

International Economics 15e Thomas Pugel (Test Bank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

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3.When China joined the World Trade Organization (WTO) in 2001, one of the conditions it accepted was that other countries could impose temporary barriers against surges of imports from China, if the surge causes material harm to their domestic industries. These temporary

barriers were known as:

• safeguards.
• subsidies.
• direct taxes.
• value added taxes.

4.In April 2009, the U.S. International Trade Commission (ITC) investigated and concluded that a surge in tire imports from China was harming the U.S. tire industry. Which of the following was recommended by the ITC to President Obama to help the domestic tire industry?

• Personal income tax rates should be reduced immediately.
• Large additional tariffs should be imposed on imports of tires from China.
• Imports of tires from countries other than China should be reduced.
• The dollar should be devalued vis-à-vis the Chinese yuan.

5.When a country raises its import barriers in retaliation for the barriers created by its trading partner, the countries are said to engage in _____.

• a trade war
• currency speculation
• cost arbitrage
• partial specialization 2 / 4

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• Imposition of a tariff on imports of a product may result in an efficiency loss because:

• there arises an excess demand situation in the market.

• domestic consumers of the product benefit at the expense of foreign producers.

• domestic producers of the product receive a lower price.

• some consumers will no longer be able to purchase the commodity.

• Which of the following is most likely to be an impact of increasing tariff barriers on good Y in

country A?

• The government's tariff revenue will decline.

• The wholesale prices of good Y will increase in country A.

• The demand for good Y will increase in the country.

• The supply of good Y by domestic producers will decline.

• Which of the following policies is taken by the government of a country to protect domestic

industries from foreign competition?

• Revaluing domestic currency vis-à-vis foreign currencies

• Raising taxes on exports

• Raising taxes on imports

• Joining the WTO

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• A country is better off if the domestic consumers can consume better quality imported

products at lower prices. In international economics this captures the essence of:

• tariff policy.

• comparative advantage.

• factor mobility.

• national sovereignty.

• "Job-seeking immigration brings net economic benefits not only to the immigrants, but also to

the receiving country overall." But there are winners and losers within the receiving country.Who among the following can be considered as a winner within the receiving country?

• The workers who compete with the immigrants for jobs

• The government of the receiving country

• The consumers who buy the products that the immigrants help to produce

• None of the above

• Which of the following is an impact of increased illegal immigration on an economy?

• The rate of inflation in the receiving country increases.

• The demand for labor in the receiving country declines.

• The demand for public goods like education and health care increases.

• The real wage rate of workers increases.

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