Chapter 27 Self-test questions

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When a country trades with other countries, it is __________ but where the country is in autarchy, then it is __________ to the rest of the world.

Protectionist; open correct incorrect

Open; closed correct incorrect

Closed; open correct incorrect

Open; protectionist correct incorrect

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The gains from trade that accrue to a country are the __________.

The benefits the country derives from trade correct incorrect

Resources the country derives from trade correct incorrect

Imports that come into the country correct incorrect

Receipts it gets from trading. correct incorrect

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The following are all sources of gains from trade except;

The natural resources that countries possess vary correct incorrect

Cost advantages that emerge from specialisation in production correct incorrect

Enacting trade barriers to protect domestic producers correct incorrect

International competition drives economic growth due to increased pace of technological change correct incorrect

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Country A has an absolute advantage over country B in the production of pineapples if __________

Country A has more productive workers than country B correct incorrect

Country A can produce more pineapples than country B with the same amount of resources as country B. correct incorrect

Country A uses better technology than country B in producing pineapples correct incorrect

Country A has a larger share of the pineapple market than country B correct incorrect

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If the opportunity cost of producing a commodity is the same for country A and B, then none of the countries has __________ over the other

power correct incorrect

Advantage correct incorrect

Absolute advantage correct incorrect

Comparative advantage correct incorrect

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When the terms of trade for a country fall, it means __________

The country's exports have lost value correct incorrect

Prices of the country's exports are falling correct incorrect

The country will require more exports to purchase the amount of imports as before correct incorrect

The country's exports are reducing in quantity correct incorrect

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The argument that a country should export more and restrict imports in order to improve the quality of life of its people is weak because ___________

People's lives are improved by what they consume but exports are consumed by foreigners correct incorrect

Exports receipts are often lower than import payments correct incorrect

Exports are susceptible to trade wars correct incorrect

None of the above correct incorrect

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The import quota is an example of a _______

Non-tariff barrier correct incorrect

Tariff correct incorrect

VAT correct incorrect

Terms of trade correct incorrect

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The main risk associated with one country levying trade barriers against another is _________.

It increases xenophobia correct incorrect

It is always a catalyst for military conflict correct incorrect

It can trigger a series of retaliatory measures in the form of higher trade barriers against each other correct incorrect

It automatically causes a global recession correct incorrect

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When a free trade agreement between countries A and B causes country B to substitute country C's exports for country A, _________has occurred.

Trade diversion correct incorrect

Trade creation correct incorrect

Trade surplus correct incorrect

Comparative advantage correct incorrect