ECO 201 exam 2 Questions and Answers Already Passed
A tax on an imported good is called a
a. quota.
b. tariff.
c. supply tax.
d. trade tax. - Answers Tariff
The problem with the protection-as-a-bargaining-chip argument for trade restrictions is
a. if it fails the country faces a choice between two bad options.
b. if it fails total surplus will increase.
c. if it works consumer surplus will decline.
d. if it works producer surplus falls. - Answers a. if it fails the country faces a choice between two bad
options.
A tariff is a
a. tax on an exported good.
b. limit on how much of a good can be exported.
c. limit on how much of a good can be imported.
d. tax on an imported good. - Answers d. tax on an imported good.
Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine as
a. confirmation that specialization in absolute advantage works.
b. confirmation of the virtues of free trade.
c. confirmation that free trade agreements are not necessary.
d. confirmation of the infant-industry argument. - Answers b. confirmation of the virtues of free trade.
The price of a good that prevails in a world market is called the - Answers world price.
When a country takes a multilateral approach to free trade, it - Answers reduces its trade restrictions
while other countries do the same.
A quota is - Answers a limit on the quantity of imports.
, The North American Free Trade Agreement - Answers reduced trade restrictions among Canada, Mexico
and the United States.
Which of the following is not a commonly-advanced argument for trade restrictions? - Answers the
efficiency argument
Some goods can be produced at low cost only if they are produced in large quantities. This phenomenon
is called - Answers economies of scale.
When a country takes a unilateral approach to free trade, it - Answers removes trade restrictions on its
own.
Which of the following statements about GDP is correct? - Answers Nominal GDP values production at
current prices, whereas real GDP values production at constant prices.
National income is defined as - Answers a. the total income earned by a nation's permanent residents in
the production of goods and services.
Much of macroeconomics attempts to explain - Answers a. long-run growth and short-run fluctuations in
real GDP.
Expenditures on a nation's domestic production - Answers b. are equal to its domestic production.
Which of the following is included in the investment component of GDP? - Answers spending on new
business equipment such as power tools but not spending on stocks and bonds
The term economists use to describe a situation in which the economy's overall price level is rising is -
Answers inflation
According to the circular-flow diagram GDP - Answers can be computed as either the revenue firms
receive from the sales of goods and services or the payments they make to factors of production.
Which government entity computes U.S. GDP every three months? - Answers the Department of
Commerce
Which of the following is included in the investment component of GDP? - Answers All of the above are
included in the investment component of GDP.
When economists talk about growth in the economy, they measure that growth as the - Answers
percentage change in real GDP from one period to another.
For purposes of calculating the CPI, the housing category of consumer spending includes the cost of -
Answers All of the above are correct.
The consumer price index is used to - Answers monitor changes in the cost of living over time.
A tax on an imported good is called a
a. quota.
b. tariff.
c. supply tax.
d. trade tax. - Answers Tariff
The problem with the protection-as-a-bargaining-chip argument for trade restrictions is
a. if it fails the country faces a choice between two bad options.
b. if it fails total surplus will increase.
c. if it works consumer surplus will decline.
d. if it works producer surplus falls. - Answers a. if it fails the country faces a choice between two bad
options.
A tariff is a
a. tax on an exported good.
b. limit on how much of a good can be exported.
c. limit on how much of a good can be imported.
d. tax on an imported good. - Answers d. tax on an imported good.
Economists view the fact that Florida grows oranges, Texas pumps oil, and California makes wine as
a. confirmation that specialization in absolute advantage works.
b. confirmation of the virtues of free trade.
c. confirmation that free trade agreements are not necessary.
d. confirmation of the infant-industry argument. - Answers b. confirmation of the virtues of free trade.
The price of a good that prevails in a world market is called the - Answers world price.
When a country takes a multilateral approach to free trade, it - Answers reduces its trade restrictions
while other countries do the same.
A quota is - Answers a limit on the quantity of imports.
, The North American Free Trade Agreement - Answers reduced trade restrictions among Canada, Mexico
and the United States.
Which of the following is not a commonly-advanced argument for trade restrictions? - Answers the
efficiency argument
Some goods can be produced at low cost only if they are produced in large quantities. This phenomenon
is called - Answers economies of scale.
When a country takes a unilateral approach to free trade, it - Answers removes trade restrictions on its
own.
Which of the following statements about GDP is correct? - Answers Nominal GDP values production at
current prices, whereas real GDP values production at constant prices.
National income is defined as - Answers a. the total income earned by a nation's permanent residents in
the production of goods and services.
Much of macroeconomics attempts to explain - Answers a. long-run growth and short-run fluctuations in
real GDP.
Expenditures on a nation's domestic production - Answers b. are equal to its domestic production.
Which of the following is included in the investment component of GDP? - Answers spending on new
business equipment such as power tools but not spending on stocks and bonds
The term economists use to describe a situation in which the economy's overall price level is rising is -
Answers inflation
According to the circular-flow diagram GDP - Answers can be computed as either the revenue firms
receive from the sales of goods and services or the payments they make to factors of production.
Which government entity computes U.S. GDP every three months? - Answers the Department of
Commerce
Which of the following is included in the investment component of GDP? - Answers All of the above are
included in the investment component of GDP.
When economists talk about growth in the economy, they measure that growth as the - Answers
percentage change in real GDP from one period to another.
For purposes of calculating the CPI, the housing category of consumer spending includes the cost of -
Answers All of the above are correct.
The consumer price index is used to - Answers monitor changes in the cost of living over time.
