Test Bank For Global Economics International Edition 13th Edition By Robert J. Carbaugh

Test Bank For Global Economics International Edition 13th Edition By Robert J. Carbaugh

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Edition: 13th Edition

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Test Bank For Global Economics International Edition 13th Edition By Robert J. Carbaugh

CHAPTER 2—FOUNDATIONS OF MODERN TRADE THEORY:

COMPARATIVE ADVANTAGE

 

MULTIPLE CHOICE

 

  1. The mercantilists would have objected to:
a. Export promotion policies initiated by the government
b. The use of tariffs or quotas to restrict imports
c. Trade policies designed to accumulate gold and other precious metals
d. International trade based on open markets

 

 

ANS:  D                    PTS:   1

 

  1. Unlike the mercantilists, Adam Smith maintained that:
a. Trade benefits one nation only at the expense of another nation
b. Government control of trade leads to maximum economic welfare
c. All nations can gain from free international trade
d. The world’s output of goods must remain constant over time

 

 

ANS:  C                    PTS:   1

 

  1. The trading principle formulated by Adam Smith maintained that:
a. International prices are determined from the demand side of the market
b. Differences in resource endowments determine comparative advantage
c. Differences in income levels govern world trade patterns
d. Absolute cost differences determine the immediate basis for trade

 

 

ANS:  D                    PTS:   1

 

  1. Unlike Adam Smith, David Ricardo’s trading principle emphasizes the:
a. Demand side of the market
b. Supply side of the market
c. Role of comparative costs
d. Role of absolute costs

 

 

ANS:  C                    PTS:   1

 

  1. When a nation requires fewer resources than another nation to produce a product, the nation is said to have a:
a. Absolute advantage in the production of the product
b. Comparative advantage in the production of the product
c. Lower marginal rate of transformation for the product
d. Lower opportunity cost of producing the product

 

 

ANS:  A                    PTS:   1

 

 

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