Macro_Chapter_18_study_guide_questions_13e

Macro_Chapter_18_study_guide_questions_13e - Macro Chapter...

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Macro Chapter 18 study guide questions Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A tariff or quota that limits the entry of foreign goods to the U.S. market will a. benefit domestic producers in the protected industries and harm domestic consumers. b. increase the nation's real income by protecting domestic jobs from foreign competition. c. reduce the demand for U.S. export goods, lowering employment in export industries. d. do both a and c. ____ 2. According to the law of comparative advantage, a nation will benefit from international trade when it a. imports more than it exports. b. exports more than it imports. c. imports goods for which it is a high opportunity-cost producer, while exporting goods for which it is a low opportunity-cost producer. d. exports goods for which it is a high opportunity-cost producer, while importing those goods for which it is a low opportunity-cost producer. The table outlines the production possibilities of Italia and Slavia for food and clothing. Use it to answer the following question(s). Table 18-1 Italia Slavia Food Clothing Food Clothing 0 16 0 8 2 12 2 6 4 8 4 4 6 4 6 2 8 0 8 0 ____ 3. Refer to Table 18-1. Italia is currently producing 4 units of food and 8 units of clothing. If it increases its production of food by 2 units (up to a total of 6 units of food), its clothing production will a. fall by 2 units. b. fall by 4 units. c. increase by 2 units. d. increase by 4 units. ____ 4. Refer to Table 18-1. What is the opportunity cost of producing 1 unit of food in Italia? a. one-half of a unit of clothing b. 1 unit of clothing c. 2 units of clothing d. 5 units of clothing ____ 5. Refer to Table 18-1. Which of the following is true? a. Italia has the comparative advantage in producing food. b. Italia has the comparative advantage in producing clothing. c. Slavia has the comparative advantage in producing clothing. d. Slavia is the low opportunity-cost producer of clothing.
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____ 6. The law of comparative advantage suggests that a. neither country would gain from trade. b. only Slavia would gain from trade; Italia would be harmed. c. both countries could gain if Italia traded food for Slavia's clothing. d. both countries could gain if Slavia traded food for Italia's clothing. ____ 7. If the United States were to adopt a policy of free trade with European countries and Japan, this policy would a. help the United States and hurt the other countries because the United States has a larger population. b. help all of the countries involved because every country would have a comparative advantage in the production of some good. c. hurt the United States and help the other countries involved because job opportunities in the United States would fall while they rose in other countries. d.
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Macro_Chapter_18_study_guide_questions_13e - Macro Chapter...

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