Economics 【Reading 20】Sample statements, 2012, following, benefits

karoliukas

Which of the following statements about the costs and benefits of international trade is most accurate?

A) The costs of trade primarily affect those in domestic industries that compete with imports.

B) The costs of trade are greater than the benefits with regard to domestic employment.

C) Increased international trade benefits all groups in the trading countries.

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The benefits of trade are greater than the costs for the overall economy, but those in domestic industries competing with imports may suffer costs in the form of reduced profits or employment.

cjjfred

The table below outlines the possible tradeoffs of producing beer and cheese for Germany and Holland ...
karoliukas 发表于 2012-3-25 11:44

  here is a question. The ratio of 1/2 is smaller than 2/3 which means that Germany has lower opportunity cost in cheese than holland. So holland should have a comparative advantage in bear. So holland should export bear and import cheese from Germany. Is that true?thx

terpsichorefan

thanks for sharing

karoliukas

The most accurate description of the relative roles played by the International Monetary Fund, World Bank, and World Trade Organization is that is that the only one explicitly focused on:

A) expanding international trade is the World Trade Organization.

B) providing funding to member nations is the International Monetary Fund.

C) reducing poverty is the World Bank.

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The World Bank has the explicit mission of fighting poverty. Both the WTO and IMF work to expand international trade. Both the World Bank and IMF provide funds to member nations, the World Bank for development and the IMF when member nations experience balance of payments difficulties.

karoliukas

Holding other factors constant, a country can reduce its trade deficit by increasing its:

A) private saving.

B) government budget deficit.

C) domestic capital investment.

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Other things equal, increasing savings would decrease a current account deficit, while increasing a government budget deficit or domestic investment would increase a current account deficit.

karoliukas

Sales and purchases of non-financial assets are included in which of a country’s trade accounts?

A) Capital account.

B) Financial account.

C) Current account.

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The capital account consists of sales and purchases of non-financial assets plus capital transfers.

karoliukas

In 20X5, Tunisia’s merchandise imports exceeded the value of its merchandise exports. In this case, Tunisia would most likely have which of the following?

A) Balance of trade surplus.

B) Capital account surplus.

C) Current account surplus.

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The capital account includes investment in real assets and financial securities. If a country is running a current account deficit, as in the case of Tunisia, a way to make up the difference in the current account is to be a net borrower creating a surplus in the capital account.

karoliukas

The form of regional trading agreement (RTA) least likely to have the unintended negative effect of reducing a member country’s low-cost imports from a non-member country is a:

A) common market.

B) customs union.

C) free trade area.

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A free trade area removes barriers to trade among its members but does not require any of its members to change their trade policies with non-members. A common market and a customs union both impose uniformity on trade rules with non-member nations, which could restrict a member’s low-cost imports from a nation that is not a member.

karoliukas

The North American Free Trade Agreement (NAFTA) is most accurately described as a:

A) customs union.

B) common market.

C) free trade area.

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NAFTA is a free trade area, in which the member nations remove barriers to imports and exports among themselves. In a customs union, all members adopt common trade policies with non-members. A common market goes further, removing all barriers to movement of labor and capital among members.

karoliukas

David Forsythe and Linda Novak are discussing the advantages and disadvantages of import restrictions. They state the following:

Forsythe: One of the groups that benefits from import restrictions is often the government that imposes them.

Novak: Import restrictions impose costs on specific groups, such as the country’s import industries, but these costs are more than offset by the benefits to other groups and to the economy as a whole.

With respect to these statements:

A) both are correct.

B) only one is correct.

C) both are incorrect.

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Forsythe is correct. A primary reason why trade restrictions remain widespread is the revenue that governments receive from tariffs. Novak is incorrect. Trade restrictions benefit specific groups, such as workers in the protected industries, but those benefits are most often less than the costs imposed on consumers and other industries as a whole.