1 Which of the following describes the extent of internation

1. Which of the following describes the extent of international trade in the U.S. economy?
A. Since 1950, U.S. imports have increased from less than 5 percent of GDP to about 30 percent in 2008.
B. Since 1950, U.S. exports have decreased from about 11 percent of GDP to about 4 percent in 2008.
C. Each year, the U.S. exports less than 10 percent of many agricultural crops such as rice.
D. About 66 percent of U.S. manufacturing industries depend on exports for at least 10 percent of jobs.
E. Since 1950, U.S. exports have increased and U.S. imports have decreased.

2. While running for president, Barack Obama made the following statement:
\"Well, look, people don\'t want a cheaper T-shirt if they\'re losing a job in the process.\"
What did Obama mean by the phrase \"losing a job in the process\"?
Source: James Pethokoukis, \"Democratic Debate Spawns Weird Economics,\" U.S. News & World
Report,
August 8, 2007.
Obama was suggesting that a job would be lost if the T-shirt were cheaper because
A. the firm producing the shirt would go out of business.
B. there would be no international trade.
C. firms making dress shirts would go out of business.
D. it would be produced in another country.
E. it would require the U.S. government to impose tariffs.

3. Alzuria and Narnia are two open economies that produce goods A and B. The productivity of workers in industry B in Narnia is higher than the productivity of the Alzurian workers producing B. This led industry experts to claim that Narnia should specialize in the production of B and export it to Alzuria in exchange for good A.
Which of the following, if true, would strengthen the argument that Narnia should specialize in the production of B and export it?
A. Industry A in Narnia employs more people than it really needs.
B. The demand for B in Narnia is very high.
C. The size of the labor force in Narnia is increasing and a majority of the new workers are better-suited to the production of good A.
D. The income elasticity of demand for B is very low in both countries.
E. The opportunity cost of producing B in Alzuria is very low.

Solution

1) Solution: D. About 66 percent of U.S. manufacturing industries depend on exports for at least 10 percent of jobs

Explanation: Nearly 10% of U.S. manufacturing jobs depend directly or indirectly on exports

2) Solution: It would be produced in another country

Explanation: Obama meant it to be produced in another country; however the US should produce all of the t shirts purchased in the US when it has lower opportunity cost compared to other countries

3) Solution: Industry A in Narnia employs more people than it really needs.

Explanation: When Narnia employs more people than it really needs in Industry A then will strengthen the argument that Narnia need to specialize in the production of B and export