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Final

Economics 1021A/B Study Guide - Final Guide: Trade Restriction, Absolute Advantage, Deadweight Loss


Department
Economics
Course Code
ECON 1021A/B
Professor
Jeannie Gillmore
Study Guide
Final

This preview shows pages 1-3. to view the full 49 pages of the document.
Parkin/Bade, Economics: Canada in the Global Environment, 8e
Chapter 7 Global Markets in Action
7.1 How Global Markets Work
1) Goods and services that we buy from other countries are our
A) balance of payments.
B) exports.
C) imports.
D) terms of trade.
E) comparative goods and services.
Answer: C
Type: MC
Topic: How Global Markets Work
Skill: Recognition
AACSB: Reflective Thinking
2) The goods and services we sell to people in other countries are our
A) tariffs.
B) quotas.
C) exports.
D) imports.
E) investment goods and services.
Answer: C
Type: MC
Topic: How Global Markets Work
Skill: Recognition
AACSB: Reflective Thinking
3) The fundamental force that drives international trade is
A) absolute advantage.
B) importation duties.
C) the advantage of execution.
D) export advantage.
E) comparative advantage.
Answer: E
Type: MC
Topic: How Global Markets Work
Skill: Recognition
AACSB: Reflective Thinking
Copyright © 2013 Pearson Canada Inc. 49
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
4) The fundamental force that drives international trade is
A) comparative advantage.
B) absolute advantage.
C) a countries' desire to increase their trade surplus.
D) cheap labour in countries like China and India.
E) unemployment of factors of production.
Answer: A
Diff: 2 Type: MC
Topic: How Global Markets Work
Skill: Recognition
AACSB: Reflective Thinking
5) A country
A) imports those goods in which it has a comparative advantage.
B) exports those goods in which it has a comparative advantage.
C) imports goods produced in countries with lower wage rates.
D) exports goods produced by domestic industries with low wages relative to its trading partners.
E) B and D are correct.
Answer: B
Type: MC
Topic: How Global Markets Work
Skill: Conceptual
AACSB: Reflective Thinking
6) Canada has a comparative advantage in producing airplanes if
A) it can produce them at a lower dollar cost than another country.
B) it can produce a larger quantity than another country.
C) it has a larger quantity of skilled workers than another country.
D) it can produce them at a higher opportunity cost than another country.
E) it can produce them at a lower opportunity cost than another country.
Answer: E
Type: MC
Topic: How Global Markets Work
Skill: Conceptual
AACSB: Reflective Thinking
7) Prior to international trade, if the price of good X is lower in country A than in country B,
A) country B has an absolute advantage in the production of good X.
B) country B has a comparative advantage in the production of good X.
C) country A has an absolute advantage in the production of good X.
D) country A has a comparative advantage in the production of good X.
E) country B should stop producing good X.
Answer: D
Type: MC
Topic: How Global Markets Work
Skill: Conceptual
AACSB: Reflective Thinking
Copyright © 2013 Pearson Canada Inc. 50
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
8) Which of the following statements about Canada's international trade in 2010 is correct?
A) The value of Canada's imports exceeded the value of Canada's exports.
B) The value of Canada's exports was about 45 percent of the value of total expenditure in
Canada.
C) Canada imported only goods.
D) Canada was the world's second largest trader.
E) Canada exported only goods.
Answer: A
Type: MC
Topic: How Global Markets Work
Skill: Recognition
AACSB: Reflective Thinking
9) Canada has a comparative advantage in producing hardwood if the Canadian price of
hardwood before international trade is ________ the world price.
A) equal to
B) greater than
C) not comparable to
D) at least double
E) less than
Answer: E
Type: MC
Topic: How Global Markets Work
Skill: Conceptual
AACSB: Reflective Thinking
10) Compared to the situation before international trade, after Canada exports a good, production
in Canada ________ and consumption in Canada ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change
Answer: B
Type: MC
Topic: How Global Markets Work
Skill: Conceptual
AACSB: Analytical Skills
Copyright © 2013 Pearson Canada Inc. 51
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