1. The terms of trade a. Is the negotiated price between international trading p
ID: 1120899 • Letter: 1
Question
1. The terms of trade a. Is the negotiated price between international trading partners. b. Are equal to the opportunity cost of the strongest trading partner. c. Are equivalent to absolute advantage. d. Are the amount of good A given up for good B. 2. A country will trade if The terms of trade are superior to its domestic opportunities. a. b. Its domestic opportunities are superior to the terms of trade. c. Domestic producers refuse to make a good or service. d. Its production possibilities are limited. 3. The unemployment effects of trade are felt most strongly in a. Export-sensitive industries. b. The most highly taxed states. c. Industries that compete with imported goods. d. The service sector 4. Which of the following is not an argument for protectionist measures? Other countries that dump products in the United States below cost deserve retaliation Some industries are just getting started and need protection. Some products necessary for national defense should not be traded. Trade promotes specialization and increases total world output. a. b. c. d.Explanation / Answer
Question number one has the correct choice of option A. Terms of trade is actually the ratio of export price and import price. It is therefore a negotiated price between trade partners
Correct correct option for question number 2 is option A. See that countries will trade only when their terms of trade and superior to the domestic opportunities. This implies that the terms of trade should we hire enough so that what they receive as a result of trade should be greater than what they receive without trade
Correct choice for question number 3 option C. A particular industry may suffer from.lower income levels when it is importing a good and so it's factors are not earning enough.
Question number 4 has correct choice of option d. It is actually an advantage of trade so it is not an argument against protection measures.
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