QUESTION 3 If a nation has an open economy it means that the nation:

a.encourages domestic production of the same goods and services

b.allows private ownership of capital

c.places a relativelyhigh level of importance on trade as it relates to total GDP

d.does not restrict internetusage by its citizens

4.The World Trade Organization was established during the ____________ of multilateral trade negotiations.

a.Uruguay Round

b.Tokyo Round

c.Clinton Round

d.Kennedy Round

5.A nation is said to have an absolute advantage when

a.the nation can produce more of a certain product in one labor hour than can its trading partner

b.the nation can produce a product with less opportunity cost than its trading partner

c.the nation's level of imports exceeds that of its exports

d.the nation's currency exchange rate is higher than that of its trading partner

6.Countervailing duties may be imposed to:

a.offset the pricing effects of subsidies provided by foreign governments on their exports

b.offset the effects of productdumping

c.offset the costs of the war against terrorism

d.offset the effects of artificially low rates of exchange

7.The Smoot-Hawley Tariff Act of 1930 has generally been associated with:

a.falling tariffs

b.increasing the volume of global trade

c.intensifying the worldwide depression

d.rising employment rates in the US

8.Dynamic gains from trade include all of the followingexcept:

a.greater options in the supply chain

b.increased competition, leading to lower prices for consumers

c.production gains from specialization

d.higher prices for imported products

9.Placing a tariff on imported steel results in the following for the country placing the tariff:

a.improving terms of trade and rising volume of trade

b.higher steel prices

c.lower profits for domestic steel companies

d.higher unemployment for domestic steel workers

10.A main advantage of specialization results from:

a.economies of large-scale production

b.the specializing country behaving as a monopoly

c.smaller productions capabilities which result in lower costs for producers

d.high wages paid to foreign workers

QUESTION 11 Government export subsidies:

a.are granted to producers of goods to be sold only in developing countries

b.have an economic impact identical to that of implementing a quota

c.are a voluntary export restraint agreement

d.may lead to countervailing duties as a punitive response