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Microeconomic & Global Economy
Chapter 20 Practice Set
Terms in this set (25)
The primary objective of the World Trade Organization is to
help trade flow smoothly.
The sale of goods abroad at a price below their cost and below the price charged in the domestic market is called
Countries tend to specialize in the production of goods in which they have a comparative advantage because
people want to make a profit.
"New industries need to be protected or they won't have the opportunity to grow up." This is a statement of the ____ argument for trade restrictions.
A "quota" is
a legal limit on the amount of a good that can be imported.
In 2019, the country with whom the U.S. had the largest trade deficit was
Refer to .. The opportunity cost of one unit of Y in the United States is
Refer to ... The opportunity cost of one unit of X in the United States is
The opportunity cost of one unit of Y in France is
The opportunity cost of one unit of X in France is
The United States is the lower opportunity cost producer of
France is the lower opportunity cost producer of
Considering the data, which of the following terms of trade would both countries agree to?
0.5X = 1Y
One country has a comparative advantage over another country in the production of a good if it
is a lower opportunity cost producer of the good.
The effects of tariffs and quotas are: a(n) ____ in the prices of imported goods to domestic consumers, and a(n) ____ in imports.
America's biggest trading partner (country) in 2019 when adding the value of both imports and exports was
The European Union has all of the following EXCEPT
a. The EU has all of these. (Correct)
b. a monetary union called the eurozone.
c. its own citizenship.
d. a European Central Bank.
The national-defense argument for trade restriction holds that
a country should produce those goods necessary for national defense purposes even if it doesn't have a comparative advantage in them.
The best reason why international trade exists is because countries
can make themselves better off through trade.
A tariff is a
tax imposed on imported goods.
International trade made up _________of Illinois' GDP in 2018.
A free trade oriented economist might respond to the "saving domestic jobs" argument by explaining
the constant economic change caused by creative destruction as described by Joseph Schumpeter.
A trade policy designed to insulate and protect domestic businesses from global competition is called_________.
Smith argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States. Smith is
overlooking the productivity of American workers.
Which of the following is a reason why the U.S. might run a trade deficit with another country?
a. The other country doesn't need what the U.S. produces.
b. All of the above. (Correct)
c. The other country does a lot of trade with the U.S., but the U.S. just imports a lot more than it exports.
d. The other country can produce some things more cheaply than the U.S. can.
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