ECON231 Chapter Notes - Chapter 1: General Agreement On Tariffs And Trade, Protectionism

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lemonbeetle804

27 Dec 2019

School

University of Waterloo

Department

Economics

Course

ECON231

Professor

Barbara Bloemhoff

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Document Summary

Compliance with the world trade organization: the international capital market : the linkage of the capital markets of individual countries. Conflict and trade policy: conflicts of interest within nations are usually more important in determining trad e policy than conflicts of interest between nations. International trade: focuses on the real transactions in the international economy, that is, transactions involving a physical movement of goods or a tangible commitment of economic resources. International money: focuses on the monetary side of the international economy, that is, on financial transactions such as foreign purchases of u. s. dollars.

Related Questions

Which of the following is TRUE regarding international trade?

Select one:

a. Typically, it is belived that when countries trade with one another, ther eare gains in production efficiency.

b. All of these are correct

c. Freedom to trade internationally adds to the consumers' choices available for purhcase

d. Countries often hope that international trade will help raise the standard of living for their citizens

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Which of the following is TRUE regarding why countries trade with one another?

Select one:

a. Countries trade so that they can get products and services that they are not as efficient in making as other countries.

b. Countries often hope that international trade will help their economy grow

c. All of these are correct

d. Countries trade because not all nations have the same resources.

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Revenue tariffs are levied to

Select one:

a. lower exports.

b. protect domestic producers.

c. increase imports.

d. raise money.

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Tariffs and quotas can have all of the following effects EXCEPT

Select one:

a. protecting domestic industry.

b. reducing trade deficits.

c. increasing prices consumers pay for goods.

d. promoting third-world development.

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The United States trade deficit causes

Select one:

a. the value of the dollar to fall in foreign exchange markets.

b. immediate worldwide recessions.

c. increased employment opportunities for all Americans.

d. the value of the dollar to strengthen in foreign exchange markets.

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Which of the following is true regarding the relationship of international trade and competition?

Select one:

a. International competition, like competition in general, can have effects on the price levels of goods.

b. When countries trade with one another, there is often increased competition among firms offering the same good or service.

c. All of these are correct.

d. When tariffs increase, domestic producers usually have fewer international competitors.

apricotlizard520

Today, in the Unitedâ States, exports are about

28 percent of GDP.

90 percent of GDP.

14 percent of GDP.

4 percent of GDP.

Which of the following statements isâ FALSE?

Sophisticated financial systems have given U.S. productive efficiency a boost.

When it comes to overall productiveâ efficiency, compared toâ Japan, Germany and the rest of the Europeanâ Union, the United States lags far behind.

Economic restructuring and investments in information technology have added to productive efficiency in the United States.

The Unitedâ States' international competitive position has been helped by its long history of widespread entrepreneurship.

One problem with the infant industry argument is that

it fails to protect domestic industries from foreign competition.

it must be approved by the Federal Reserve Board.

it must be approved by the IMF and the World Bank.

the protection is typically neverâ removed, creating a domestic monopoly.

When a tariff isâ imposed, the supply curve for the imported good

shifts upward and to the left.

shifts downward and to the right.

becomes perfectly inelastic.

does not change.

The WTO replaced the GATT in

1900.

1995.

1960.

1945.

The World Trade Organization

increases world trade by providing interest rate subsidies to foreign borrowers who buy U.S. exports on credit.

was established to settle trade disputes within the European Union.

was established to resolve disputes arising under world trade rules.

is another name for the IMF.

Trade deflection is an act that

has no impact on the amount of international trade in the world.

is illegal among all countries in the world.

decreases the amount of international trade in the world.

increases the amount of international trade in the world.

The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources
Product	United States â (WorkerminusââDays)	Switzerland â (WorkerminusââDays)
Cuckoo Clocks	8	6
Movies	12	4

Refer to the above table. Assuming constant opportunityâ costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.

U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange.

U.S. residents would be willing to export cuckooâ clocks, but Swiss residents would not gain from exporting movies at this rate of exchange.

Swiss residents would be willing to exportâ movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange.

U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange.

The balance of payments is

a summary record of aâ country's purchases and sales of goods and services in the world market.

a summary record of aâ country's economic transactions with foreign residents and governments.

the value of goods and services bought and sold in the world market.

the value of merchandise goods bought and sold in the world market.

indigowildebeest431

For which of the following nations does international trade account for the largest percentage of GDP?
A) Japan
B) The Netherlands
C) Germany
D) Great Britain
E) the United States

2. Suppose that workers in Transylvania can produce only two goods-- yo-yos or sweat socks. The Transylvanian currency is the dealer. In what unit is the opportunity cost of yo-yos measured?
A) dealers
B) dealers per yo-yo
C) dealers per sweat sock
D) yo-yos
E) sweat socks

3. For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?
A) The opportunity cost of producing watches is lower in Denmark.
B) The opportunity cost of producing cheese is lower in Denmark.
C) The opportunity cost of producing watches is identical in both countries.
D) It is impossible to compare opportunity costs because the two countries use different currencies.
E) In Germany the opportunity cost of producing one pound of cheese is one watch.

4. For each bow the Romans are producing, they give up the opportunity to make 10 arrows. The Dacians are giving up producing2 bows for every 40 arrows they are producing. Which of the following is true regarding comparative advantage?
A) The Romans have a comparative advantage in producing arrows
B) The Romans have a comparative advantage in producing bows
C) The Romans have a comparative advantage in producing arrows and bows
D) The Dacians have a comparative advantage in producing arrows and bows
E) The Dacians have a comparative advantage in producing bows

5. Which of the following is not a basis for trade between two nations?
A) different skill levels of the labor forces
B) one nation's absolute advantage
C) a difference in tastes between countries
D) economies of scale
E) different capital stocks

6. The opportunity cost of producing one car in Germany is 2,000bushels of wheat, and the opportunity cost of producing one car in Canada is 1,200 bushels of wheat. The two countries can realize mutual gains from trade if they agree on terms of trade that are
A) greater than 2,000 bushels of wheat per car
B) less than 1,200 bushels of wheat per car
C) greater than 1,200 bushels of wheat per car and less than 2,000bushels of wheat per car, and Germany produces wheat
D) greater than 1,200 bushels of wheat per car and less than 2,000bushels of wheat per car, and Germany produces cars
E) greater than 1,200 bushels of wheat per car and less than 2,000bushels of wheat per car, and each country produces both goods

7. The rate at which two countries trade one good for another
A) is known as the foreign exchange rate
B) is known as the terms of trade
C) is known as the export line
D) equals the slope of the import line
E) equals the common slope of the countries' production possibilities frontiers

8. Which of the following is true?
A) International trade makes it possible for a country's consumption possibilities to exceed its production possibilities.
B) International trade requires that a country's production possibilities exceed its consumption possibilities.
C) A country's production possibilities always equal its consumption possibilities.
D) A country's consumption possibilities can never equal its production possibilities because of leakages in the system.
E) As long as there is full employment of resources, a country's production possibilities will exceed its consumption possibilities even with trade.

9. Which of the following is not a reason for international specialization?
A) some countries have educated, trained workers, while other countries have unskilled workers
B) tastes and preferences tend to be different in different countries
C) economies of scale can allow larger, specialized producers to operate at a lower average cost
D) mineral resources are often concentrated in particular countries
E) the world price of a good is determined by the world supply and demand for it

10. Ad valorem tariffs on imports are based on a percentage of an import's value; specific tariffs are based on a lump sum per physical unit imported.
A) True
B) False

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ECON231 Chapter Notes - Chapter 1: General Agreement On Tariffs And Trade, Protectionism

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