# University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 31

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4 18) Who benefits from imports? A) domestic consumers B) domestic producers C) foreign consumers D) domestic workers in the industry E) everyone benefits 19) A country opens up to trade. In an import industry, A) domestic producers lose and domestic consumers gain. B) domestic consumers lose and domestic producers gain. C) the government loses and domestic consumers gain. D) domestic producers lose and the government gains. E) none of the above. Refer to the table below to answer the following questions. Table Price (dollars) Quantity demanded (units) Quantity supplied (units) ) Refer to Table The table shows a country's demand and supply schedules. At what world price would the country import? A) at exactly \$8 a unit B) any price above \$8 a unit C) a price of \$10 a unit D) a price of \$20 a unit E) a price below \$8 a unit 21) Refer to Table The table shows a country's demand and supply schedules. Suppose the world price is \$4 a unit. The country A) imports 20 units. B) exports 20 units. C) imports 10 units. D) exports 10 units. E) imports 30 units. 22) A market is open to international trade. At the world price, the quantity demanded is 150 units and the quantity supplied is 200 units. This country will A) import 50 units. B) export 200 units. C) import 150 units. D) import 200 units. E) export 50 units. 4

5 23) A country opens up to trade. In an export industry, A) domestic consumers lose and domestic producers win. B) domestic producers lose and domestic consumers win. C) domestic producers lose and the government wins. D) the government loses and domestic consumers win. E) none of the above. Refer to the table below to answer the following question. Table Price (dollars) Quantity demanded (units) Quantity supplied (units) ) Refer to Table The table shows a country's demand and supply schedules. At what world price would the country export? A) at only \$8 a unit B) any price below \$8 C) a price of \$6 a unit D) a price of \$4 a unit E) any price above \$8 a unit 5

6 Refer to the figure below to answer the following questions. The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is \$20 per shirt. Figure ) In Figure , with international trade Canadians buy million shirts per year. A) 48 B) 32 C) 16 D) 24 E) 56 26) In Figure , with international trade million shirts per year are produced in Canada. A) 48 B) 32 C) 20 D) 56 E) 16 27) In Figure , with international trade Canada million shirts per year. A) imports 32 B) imports 48 C) exports 16 D) exports 32 E) imports 16 6

7 Refer to the figure below to answer the following questions. The figure shows the market for helicopters in Canada, where D is the domestic demand curve and S is the domestic supply curve. Canada trades helicopters with the rest of the world at a price of \$36 million per helicopter. Figure ) In Figure , with international trade Canadian firms buy helicopters per year. A) 240 B) 480 C) 720 D) 360 E) ) In Figure , with international trade helicopters per year are produced in Canada. A) 360 B) 480 C) 720 D) 240 E) ) In Figure , Canada helicopters per year. A) exports 480 B) exports 720 C) imports 480 D) imports 240 E) exports ) Consider a market that sells some of its goods as exports. Who does not benefit? A) domestic consumers B) domestic producers C) workers in the industry D) foreign consumers E) all of the above benefit 7

11 53) The winners from a tariff on imports are A) producers and government. B) producers only. C) consumers only. D) consumers, producers, and government. E) government only. 54) A tariff is imposed on a good. This the quantity supplied, the quantity demanded, and the price in the home country. A) increases; decreases; raises B) increases; does not change; does not change C) increases; increases; raises D) increases; decreases; lowers E) decreases; increases; lowers Refer to the figure below to answer the following questions. The figure shows the market for shirts in Canada, where D is the domestic demand curve and S is the domestic supply curve. The world price is \$20 per shirt. Canada imposes a tariff on imported shirts of \$4 per shirt. Figure ) Refer to Figure , with the tariff Canadians buy million shirts per year. A) 48 B) 32 C) 16 D) 24 E) 40 56) Refer to Figure , with the tariff Canada imports million shirts per year. A) 24 B) 8 C) 32 D) 16 E) 40 11

12 57) Refer to Figure , the tariff Canada's imports of shirts by million shirts per year. A) decreases; 16 B) decreases; 8 C) increases; 8 D) increases; 4 E) increases; 16 58) Refer to Figure , the tariff the domestic production of shirts in Canada by per year. A) increases; 8 million B) decreases; 16 million C) increases; 4 million D) decreases; 8 million E) increases; 24 million 59) Refer to Figure , the Canadian government's revenue from the tariff is. A) \$64 million B) \$32 million C) \$128 million D) \$48 million E) \$480 million 60) Of the following, in which decade were Canada's tariffs at their lowest level? A) 1990s B) 1970s C) 1950s D) 1930s E) 1890s 61) An import quota is A) a tariff that is a fixed percentage of the price of a good. B) a tariff that is a fixed dollar amount per unit of a good. C) an agreed upon price for a good to be imported at a specified future date. D) a restriction that specifies the maximum amount of a good that may be imported. E) the same as an export subsidy. 62) specifies the maximum amount of a good that may be imported in a given period of time. A) An import restriction B) A legislative restriction C) A trade restriction D) An import quota E) An import subsidy 63) Import quotas A) are the same as tariffs. B) are not used by Canada. C) set the minimum percentage of the value of a product that must consist of imported components. D) benefit society. E) set the maximum number of units of a good that can be imported in a given time period. 64) An import quota is a A) tariff imposed on goods that are dumped in the country. B) law that prevents ecologically damaging goods from being imported into a country. C) market-imposed balancing factor that keeps prices of imports and exports in equilibrium. D) government-imposed restriction on the quantity of a specific good that can be imported. E) tax in an international market. 12

13 65) An import quota directly restricts and is designed to protect domestic. A) exports; consumers only B) exports; producers only C) imports; consumers only D) imports; producers only E) imports; producers and consumers 66) Import quotas the price of imported goods and the quantity consumed in the country imposing the quota. A) raise; increase B) raise; decrease C) lower; increase D) lower; decrease E) raise; do not change 67) If a government imposes a quota on imports of a popular doll, the price of the doll in the country and the quantity purchased in the country. A) rises; increases B) rises; decreases C) falls; increases D) falls; decreases E) rises; does not change 68) A key difference between tariffs and import quotas is that A) consumers are hurt with import quotas but not with tariffs. B) consumers are hurt with tariffs but not with import quotas. C) the government receives revenue with a tariff, but the importer makes a profit with an import quota. D) the government receives revenue with an import quota, but the importer makes a profit with a tariff. E) domestic producers gain with a tariff and lose with an import quota. 69) A difference between a quota and a tariff is that A) a tariff generates a higher price than does an import quota. B) a tariff generates a greater reduction in exports than does an import quota. C) an import quota increases profits of domestic producers more than a tariff. D) the government collects revenue from a tariff but does not collect revenue from an import quota. E) an import quota creates a social loss and a tariff does not. 70) A tariff the domestic price of the good and an import quota the domestic price of the good. A) lowers; lowers B) lowers; raises C) raises; lowers D) raises; raises E) does not change; does not change 13

16 83) Which of the following are reasons economists consider valid for trade protection? I. Protection penalizes countries that have weak environmental standards. II. Protection limits dumping of low-wage jobs into the domestic economy. III. Protection prevents low-wage jobs in foreign countries from lowering wages in Canada. A) I and II. B) II and III. C) I, II, and III. D) I and III. E) None of the above. 84) The idea of dynamic comparative advantage is the basis for which of the following arguments for protection from foreign competition? A) the cheap foreign labor argument B) the infant-industry argument C) the dumping argument D) the saves jobs argument E) the prevents rich countries from exploiting developing countries argument 85) The most efficient way to encourage the growth of an infant-industry is through A) a voluntary export restraint. B) a tariff. C) a subsidy. D) an import quota. E) none of the above. 86) The proposition that protection is necessary to allow an infant industry to grow into a mature industry so that it can compete in world markets is the. A) infant-maturity argument B) infant-industry argument C) new industry proposition D) growth proposition E) dynamic comparative advantage argument 87) Dumping occurs when a foreign firm. A) pollutes international waters B) disposes of waste material internationally C) sells inferior output to foreigners D) sells its exports at a lower price than its cost of production E) sells its output at a lower price in a foreign country than in the country where it produces the good 88) occurs when a foreign firm sells its exports at a lower price than its cost of production. A) Comparative advantage B) Learning-by-doing C) A tariff D) An infant industry E) Dumping 89) Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of A) avoiding import quotas. B) increasing its gains from trade. C) dumping. D) engaging in learning-by-doing. E) exploiting a comparative advantage. 16

20 Answer Key Testname: LAB - CH 31 - ADDITIONAL HELP 1) C 2) C 3) E 4) A 5) B 6) E 7) D 8) A 9) E 10) B 11) C 12) B 13) E 14) A 15) A 16) A 17) A 18) A 19) A 20) E 21) A 22) E 23) A 24) E 25) A 26) E 27) A 28) A 29) C 30) A 31) A 32) A 33) D 34) A 35) A 36) C 37) D 38) D 39) B 40) C 41) E 42) D 43) E 44) B 45) E 46) A 47) C 48) C 49) C 50) B 51) C 52) C 53) A 54) A 55) E 56) D 57) A 58) A 59) A 60) A 61) D 62) D 63) E 64) D 65) D 66) B 67) B 68) C 69) D 70) D 71) E 72) C 73) D 74) B 75) E 76) C 77) E 78) A 79) B 80) C 81) E 82) E 83) E 84) B 85) C 86) B 87) D 88) E 89) C 90) B 91) D 92) A 93) D 94) D 95) E 96) A 97) A 98) E 99) A 100) A 101) C 102) B 103) B 104) A 105) A 106) B 107) D 20

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