ECON
According to economist Milton Friedman, a major reason for macroeconomic instability is
tax changes by the Federal government.
spending reductions by the Federal government.
C. the discretionary monetary policy of the Federal Reserve.
D. the issuance of bonds by the U.S. Treasury.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 19-04 Summarize the fundamental ideas and policy implications of mainstream macroeconomics, monetarism, and rational expectations theory.
Test Bank: II Topic: Summary of Alternative Views
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
60.
Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $1.60, this nation will experience a domestic
shortage of 160 units, which it will meet with 160 units of imports.
shortage of 160 units, which will increase the domestic price to $1.60.
C. surplus of 160 units, which it will export.
D. surplus of 160 units, which will reduce the world price to $1.00.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
61.
Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price for this product is $0.50, this nation will experience a domestic
A. shortage of 160 units, which it will meet with 160 units of imports.
shortage of 160 units, which will increase the domestic price to $1.60.
surplus of 160 units, which it will export.
surplus of 160 units, which will reduce the world price to $1.00.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
62.
Refer to the diagram, which shows the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will
export all of the product.
import all of the product.
import some of the product and produce some of the product domestically.
D. neither export nor import the product.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
In a two-nation model, the equilibrium world price will occur where
one nation's export supply curve intersects the other nation's import demand curve.
exports are exactly twice the level of imports.
both nations' export supply curves are horizontal.
both nations' import demand curves are vertical.
AACSB: Knowledge Application Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
64.
Refer to the diagram pertaining to two nations and a specific product. Lines FA and GB are
domestic supply curves for two countries.
domestic demand curves for two countries.
import demand curves for two countries.
D. export supply curves for two countries.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
65.
Refer to the diagram, which pertains to two nations and a specific product. Lines FC and GD are
domestic supply curves for two countries.
domestic demand curves for two countries.
C. import demand curves for two countries.
D. export supply curves for two countries.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
66.
Refer to the diagram, which pertains to two nations and a specific product. Point G is the
domestic price for the nation represented by lines FA and FC.
world equilibrium price.
C. domestic price for the nation represented by lines GB and GD.
D. price above the world equilibrium price.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
67.
Refer to the diagram, which pertains to two nations and a specific product. In equilibrium, the nation represented by lines FA and FC will
A. export H to the country represented by lines GB and GD.
B. import H from the country represented by lines GB and GD.
pay price F for its imports.
receive price G for its exports.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
68.
Refer to the diagram, which pertains to two nations and a specific product. The equilibrium world price occurs at
A. F.
B. I.
G.
J.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
69.
Refer to the diagram, which pertains to two nations and a specific product. The equilibrium level of exports and imports occurs at
A. H, where GB and FC intersect.
J, where the vertical distance between A and B equals the vertical distance between C and D.
world price level F.
world price level G.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Graph
70.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. The domestic equilibrium prices of steel in Alpha and Beta are
$5 and $4, respectively.
$2 and $4, respectively.
C. $3 and $2, respectively.
D. $1 and $2, respectively.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
71.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. At a world price of $5,
Alpha will want to import 50 units of steel.
Beta will want to import 60 units of steel.
C. Alpha will want to export 50 units of steel.
D. neither country will want to export steel.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
72.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. At a world price of $2,
A. Alpha will want to import 20 units of steel.
Beta will want to export 20 units of steel.
Alpha will want to export 20 units of steel.
neither country will want to import steel.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
73.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. Alpha's export supply is represented by
A.
B.
C.
D.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
74.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be lower than $4 because, at $4,
A. both nations want to import steel.
B. both nations want to export steel.
Beta wants to export more than Alpha.
Alpha wants to import more than Beta.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
75.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price must be higher than $1 because, at $1,
Beta wants to import more than Alpha.
Alpha wants to export more than Beta.
both nations want to export steel.
D. both nations want to import steel.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
76.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, the equilibrium world price of steel must be between
$5 and $4.
$4 and $3.
C. $3 and $2.
D. $2 and $1.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
77.
Domestic Market For Steel, Beta
Qs P Qd
80 $5 20
70 4 30
60 3 40
50 2 50
40 1 60
The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied, and Qd is domestic quantity demanded. Assuming that Alpha and Beta are the only two nations in the world, at the equilibrium world price,
both nations will export steel.
both nations will import steel.
Alpha will export steel and Beta will import steel.
D. Beta will export steel and Alpha will import steel.
AACSB: Knowledge Application
Blooms: Understand Difficulty: 02 Medium
Learning Objective: 20-03 Describe how differences between world prices and domestic prices prompt exports and imports.
Test Bank: I Topic: Supply and Demand Analysis of Exports and Imports
Type: Table
Tariffs
may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).
are also called import quotas.
are excise taxes on goods exported abroad.
are per-unit subsidies designed to promote exports.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
An excise tax on an imported good that is not produced domestically is called a
protective tariff.
import quota.
C. revenue tariff.
D. voluntary export restriction.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Excise taxes on imported goods that help shield domestic producers of the good are called
protective tariffs.
import quotas.
revenue tariffs.
voluntary export restrictions.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n)
protective tariff.
export subsidy.
C. import quota.
D. voluntary export restriction.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Which is an example of a nontariff barrier (NTB)?
an export subsidy
an excise tax on the physical volume of imported goods
C. box-by-box inspection requirements for imported fruit
D. an excise tax on the dollar value of imported goods
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
A tariff can best be described as
an excise tax on an imported good.
a government payment to domestic producers to enable them to sell competitively in world markets.
an excise tax on an exported good.
a law that sets a limit on the amount of a good that can be imported.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n)
import quota.
export subsidy.
C. voluntary export restriction.
D. protective tariff.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Suppose the United States sets a limit on the number of tons of sugar that can be imported each year. This is an example of a(n)
protective tariff.
revenue tariff.
voluntary export restriction.
D. import quota.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
86.
Refer to the given diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If this economy were entirely closed to international trade, equilibrium price and quantity would be
A. Pa and z.
B. Pa and x.
Pc and z.
Pc and v.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
87.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. If the economy is opened to free trade, the price and quantity sold of this product would be
Pc and v.
Pa and z.
Pt and y.
D. Pc and z.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
88.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers, respectively, would be
A. v and vz.
w and wy.
w and wz.
vx and xz.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
89.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff in the amount PcPt, price and total quantity sold will be
Pt and x.
Pc and z.
C. Pt and y.
D. Pa and x.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
90.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per-unit tariff, the quantities sold by foreign and domestic producers, respectively, will be
xz and x.
xv and xz.
x and xz.
D. wy and w.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
91.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a PcPt per-unit tariff, per-unit revenue received by domestic and foreign producers, respectively, will be
Pc and Pa.
Pa and Pc.
Pa and Pt.
D. Pt and Pc.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
92.
Refer to the diagram, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product. With a per-unit tariff of PcPt, the total amount of tariff revenue collected on this product will be
PaPt ×wy.
PcPa ×x.
C. PcPt ×wy.
D. PcPt ×z.
AACSB: Analytical Thinking
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
Type: Graph
Suppose the United States eliminates high tariffs on German bicycles. As a result, we would expect
the price of German bicycles to increase in the United States.
employment to decrease in the German bicycle industry.
C. employment to decrease in the U.S. bicycle industry.
D. profits to rise in the U.S. bicycle industry.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard
Learning Objective: 20-04 Analyze the economic effects of tariffs and quotas.
Test Bank: I Topic: Trade Barriers and Export Subsidies
In effect, tariffs on imports are
special taxes on domestic producers.
subsidies to domestic consumers.
subsidies to foreign producers.
D. subsidies for domestic producers.
The accompanying table gives domestic supply and demand schedules for a product. Suppose that the world price of the product is $1.
AACSB: Analytical Thinking Accessibility: Keyboard Navigation
Blooms: Analyze Difficulty: 03 Hard