econ midterm 3

Question 1

A tariff is a tax that is imposed by the ________ country when an __________ good crosses its international boundary

Answer 1

Importing, imported

Question 2

In industrial countries there is more reliance on __________ as opposed to ______ for government revenue

Answer 2

tax collection, tariffs

Question 3

an import quota is

Answer 3

a restriction that specifies the maximum amount of a good that may be imported

Question 4

the fundamental force that drives international trade is

Answer 4

comparative advantage

Question 5

prior to international trade, if the price of good x is lower in country a than in country b

Answer 5

country a has a comparative advantage in the production of good x

Question 6

the gains from free trade are enjoyed by a _______ number of people and the costs of free trade are imposed on a ______ number of people

Answer 6

large; small

Question 7

______ occurs when a foreign firm sells its exports at a lower price than its cost of production

Answer 7

dumping

Question 8

if a nations central bank increased domestic interest rates, the nations exchange rate would change if the countries exchange rate was

Answer 8

a flexible exchange rate

Question 9

which one of the following would result in the dollar depreciating against the japenese yen

Answer 9

a fall in the Canadian interest rate

Question 10

Canada has a comparitive advantage in producing airplanes if

Answer 10

it can produce them at a lower oppurtunity cost than another country

Question 11

consider a market that sells some of its goods as exports, who does not benefit

Answer 11

Domestic consumers

Question 12

if canada imposes a tariff on imported cars

Answer 12

the price in canada rises but neither canadas demand curves nor canadas supply curve shifts

Question 13

suppose the country of mooland imposes tariffs on imported beef from the country of aqualand. as a result of the tariffs the

Answer 13

quantity of beef imported by mooland decreases

Question 14

the exchange rate is the

Answer 14

price at which one currency exchanges for another currency

Question 15

tariffs and import quotas differ in that

Answer 15

one is a tax while the other is a limit

Question 16

economists usually agree with which of the following arguments that

Question 17

which one of the following transactions would be recorded as a positive entry in the Canadian balance of payment accounts

Answer 17

a french tourist spends $3000 while visiting banff

Question 18

if the Canadian dollar depreciates it means that

Answer 18

a and c are correct (one Canadian dollar buys less foreign currency, and Canadas nominal exchange rate falls

Question 19

a tariff on watches which are imported by Atlantis _______ the price of watches in Atlantis and ________

Answer 19

Raises; watch production in Atlantis increase

Question 20

who benefits from imports

Answer 20

domestic consumers

Question 21

goods and services that we buy from other countries are our

Answer 21

imports

Question 22

if a government imposes a quota on imports of a popular doll, the price of the doll in the country ______ and the quantity purchased in the country _______

Answer 22

rises; decreases

Question 23

the lower the exchange rate the

Answer 23

B, and C (larger is the quantity of Canadian dollars demanded in the foreign exchange market, and smaller is the quantity of Canadian dollars supplied in the foreign exchange market

Question 24

Canada has a comparitive advantage in producing hardwood if the canadian price of lumber before international trade is ________ the world price

Answer 24

less than