For which of the following nations does international trade account for the larg

Question

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 sweatsocks. The Transylvanian currency is the daler. In what unit is the opportunity cost of yo-yos measured?
A) dalers
B) dalers per yo-yo
C) dalers per sweatsock
D) yo-yos
E) sweatsocks
3. For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 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 producing 2 bows for every 40 arrows they are producing. Which of the following is true regarding comparative advantage?
A) The Romans have comparative advantage in producing arrows
B) The Romans have comparative advantage in producing bows
C) The Romans have comparative advantage in producing arrows and bows
D) The Dacians have comparative advantage in producing arrows and bows
E) The Dacians have 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 2,000 bushels 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 2,000 bushels of wheat per car, and Germany produces wheat
D) greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces cars
E) greater than 1,200 bushels of wheat per car and less than 2,000 bushels 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 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

Explanation / Answer

For which of the following nations does international trade account for the largest percentage of GDP? E) the United States, (the US has one of the largest international trades in the world) 2. Suppose that workers in Transylvania can produce only two goods -- yo-yos or sweatsocks. The Transylvanian currency is the daler. In what unit is the opportunity cost of yo-yos measured? E) sweatsocks (opportunity cost is what you give up) 3. For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 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. (50 lbs is less than 100 lbs) 4. For each bow the Romans are producing, they give up the opportunity to make 10 arrows. The Dacians are giving up producing 2 bows for every 40 arrows they are producing. Which of the following is true regarding comparative advantage? C) The Romans have comparative advantage in producing arrows and bows (the ratio of bows to arrows is 1:10 for the romans, whereas the ratio for the dacians is 1:20, so they romans have a comparative advantage in both) 5. Which of the following is not a basis for trade between two nations? B) one nation's absolute advantage (if a nation had absolute advantage it would not trade) 6. The opportunity cost of producing one car in Germany is 2,000 bushels 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 D) greater than 1,200 bushels of wheat per car and less than 2,000 bushels of wheat per car, and Germany produces cars (germany’s opportunity cost is greater for wheat.) 7. The rate at which two countries trade one good for another B) is known as the terms of trade (quantity of imports that can be purchased through the sale of a fixed quantity of exports) 8. Which of the following is true? A) International trade makes it possible for a country's consumption possibilities to exceed its production possibilities. (both countries can be made better off through trade) 9. Which of the following is not a reason for international specialization? E) the world price of a good is determined by the world supply and demand for it (this is not a reason, merely a fact) 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

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