Trade Unit Self-Quiz

Pick ONE answer for each question. If you check more than one box on a question, it will be automatically marked wrong.

QuestionsAnswersMarks
1. What is the main reason that the share of manufacturing employment has been shrinking in the U.S.?
A) Other countries have cheap labor
B) We have lost our efficiency in manufacturing
C) Our manufacturing productivity is growing faster than the demand for manufactured goods
D) We've lost our comparative advantage 		A
B
C
D
2. Which would reduce Saudi Arabia's revenue from oil?
A) A boycott by U.S. consumers of gasoline stations that use a lot of Saudi oil, switching instead to other gas stations
B) Development of a new synthetic fuel that is more costly to use than Saudi oil
C) An increase in the gasoline tax of $1 a gallon
D) None of the above 		A
B
C
D
3. What makes offshore outsourcing an important issue in 2004?
A) It is an election year
B) It causes permanent unemployment, not just temporary job losses
C) It means that our wages are going to fall, because the countries to which we are outsourcing have low wages
D) It means that trade no longer depends on comparative advantage 		A
B
C
D
4. How does trade across borders differ from traded within a country?
A) Trade within a country does not require comparative advantage
B) There is not necessarily any economic difference
C) Jobs can be affected by trade across borders
D) Consumers benefit from trade across borders 		A
B
C
D
5. How does offshore outsourcing affect the American labor force?
A) American workers need to become more adaptable
B) American workers need to reduce their wage expectations
C) American workers will shift into low-skilled jobs
D) Not necessarily any of the above 		A
B
C
D
6. If there are two goods and the home country is more efficient at producing both, then
A) it will not be advantageous to trade
B) we will export both goods
C) we will import both goods
D) we will export the good for which we have a comparative advantage 		A
B
C
D
7. Suppose that the U.S. requires twice as much labor to produce an automobile as it does to produce a ton of wheat. In that case,
A) The U.S. should export wheat and import cars
B) The U.S. should export cars and import wheat
C) Which good we export depends on the world price at which cars and wheat can be exchanged
D) Which good we export depends on the comparative advantage of opportunity cost 		A
B
C
D
8. Compared with no trade, opening up trade
A) Creates only winners
B) Helps workers, but hurts consumers
C) Creats a few specific winners and many diffuse losers
D) Creates many diffuse winners and a few specific losers 		A
B
C
D

Your overall grade: correct out of 8 possible. Note, this is for your own information. It will not affect your grade in the course.