Question 1

An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

Accepted Answer

A)  increase; decrease; increase; have an ambiguous effect on 
B)  increase; decrease; decrease; decrease 
C)  increase; decrease; have no effect on; have an ambiguous effect on 
D)  increase; decrease; have no effect on; decrease 
E)  increase; increase; decrease; have an ambiguous effect on 
A)  increase; decrease; increase; have an ambiguous effect on 
B)  increase; decrease; decrease; decrease 
C)  increase; decrease; have no effect on; have an ambiguous effect on 
D)  increase; decrease; have no effect on; decrease 
E)  increase; increase; decrease; have an ambiguous effect on

Question 2

An export subsidy is

Accepted Answer

A)  a payment to a firm or individual that ships a good abroad. 
B)  a fee that is charged to a country that ships goods to the U.S. 
C)  a payment made to a foreign government in return for preferential trade treatment. 
D)  illegal in the U.S. but is fairly common in the rest of the world. 
E)  a limit on the quantity of a good or service that can be sold abroad. 
A)  a payment to a firm or individual that ships a good abroad. 
B)  a fee that is charged to a country that ships goods to the U.S. 
C)  a payment made to a foreign government in return for preferential trade treatment. 
D)  illegal in the U.S. but is fairly common in the rest of the world. 
E)  a limit on the quantity of a good or service that can be sold abroad.

Question 3

If a good is imported into (small) country H from country F, then the imposition of a tariff In country H

Accepted Answer

A)  raises the price of the good in both countries (the "Law of One Price"). 
B)  raises the price in country H and does not affect its price in country F. 
C)  lowers the price of the good in both countries. 
D)  lowers the price of the good in H and could raise it in F. 
E)  raises the price of the good in H and lowers it in F. 
A)  raises the price of the good in both countries (the "Law of One Price"). 
B)  raises the price in country H and does not affect its price in country F. 
C)  lowers the price of the good in both countries. 
D)  lowers the price of the good in H and could raise it in F. 
E)  raises the price of the good in H and lowers it in F.

Question 4

Suppose an import-competing firm is imperfectly competitive. Replacement of an export tariff with an import quota that yields the same level of imports will ________ market price, ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

Accepted Answer

A)  have no effect on; have no effect on; have no effect on; decrease; decrease 
B)  increase; increase; increase; decrease; have an ambiguous effect on 
C)  decrease; decrease; increase; decrease; increase 
D)  increase; increase; decrease; decrease; decrease 
E)  increase; have no effect on; decrease; decrease; increase 
A)  have no effect on; have no effect on; have no effect on; decrease; decrease 
B)  increase; increase; increase; decrease; have an ambiguous effect on 
C)  decrease; decrease; increase; decrease; increase 
D)  increase; increase; decrease; decrease; decrease 
E)  increase; have no effect on; decrease; decrease; increase

Question 5

Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ball bearing prices in the United States would be expected to

Accepted Answer

A)  increase, and the foreign demand for U.S. exports would increase. 
B)  decrease, and the foreign demand for U.S. exports would increase. 
C)  increase, and the foreign demand for U.S. exports would decrease. 
D)  decrease, and the foreign demand for U.S. exports would decrease. 
E)  decrease, and the foreign demand would be unchanged. 
A)  increase, and the foreign demand for U.S. exports would increase. 
B)  decrease, and the foreign demand for U.S. exports would increase. 
C)  increase, and the foreign demand for U.S. exports would decrease. 
D)  decrease, and the foreign demand for U.S. exports would decrease. 
E)  decrease, and the foreign demand would be unchanged.

Question 6

The principle benefit of tariff protection goes to

Accepted Answer

A)  domestic consumers of the good produced. 
B)  foreign consumers of the good produced. 
C)  domestic producers of the good produced. 
D)  foreign producers of the good produced. 
E)  the domestic government. 
A)  domestic consumers of the good produced. 
B)  foreign consumers of the good produced. 
C)  domestic producers of the good produced. 
D)  foreign producers of the good produced. 
E)  the domestic government.

Question 7

-Refer to above figure. In the absence of trade, what is the country's consumer surplus?

Accepted Answer

The answer of  
-Refer to above figure. In the...

Question 8

Should the home country be "large" relative to its trade partners, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the

Accepted Answer

A)  revenue effect plus redistribution effect. 
B)  protective effect plus revenue effect. 
C)  consumption effect plus redistribution effect. 
D)  production distortion effect plus consumption distortion effect. 
E)  terms of trade gain. 
A)  revenue effect plus redistribution effect. 
B)  protective effect plus revenue effect. 
C)  consumption effect plus redistribution effect. 
D)  production distortion effect plus consumption distortion effect. 
E)  terms of trade gain.

Question 9

-Refer to above figure. The loss of Consumer Surplus due to the tariff equals ________.

Accepted Answer

The answer of  
-Refer to above figure. The loss...

Question 10

The main redistribution effect of a tariff is the transfer of income from

Accepted Answer

A)  domestic producers to domestic buyers. 
B)  domestic buyers to domestic producers. 
C)  domestic producers to domestic government. 
D)  domestic government to domestic consumers. 
E)  foreign producers to domestic consumers. 
A)  domestic producers to domestic buyers. 
B)  domestic buyers to domestic producers. 
C)  domestic producers to domestic government. 
D)  domestic government to domestic consumers. 
E)  foreign producers to domestic consumers.

Question 11

The deadweight loss of a tariff

Accepted Answer

A)  is a social loss because it promotes inefficient use of national resources. 
B)  is a social loss because it reduces the revenue of the government. 
C)  is not a social loss because it merely redistributes revenue from one sector to another. 
D)  is not a social loss because it is paid for by rich corporations. 
E)  is not a social loss because it aids domestic consumers. 
A)  is a social loss because it promotes inefficient use of national resources. 
B)  is a social loss because it reduces the revenue of the government. 
C)  is not a social loss because it merely redistributes revenue from one sector to another. 
D)  is not a social loss because it is paid for by rich corporations. 
E)  is not a social loss because it aids domestic consumers.

Question 12

Which of the following are examples of goods that have been subject to voluntary export restraints?

Accepted Answer

A)  Japanese cars and Chinese solar panels 
B)  Belgian chocolates and French wines 
C)  French wines and cheeses 
D)  Japanese sushi and German cars 
E)  Taiwanese electronics and Canadian barley 
A)  Japanese cars and Chinese solar panels 
B)  Belgian chocolates and French wines 
C)  French wines and cheeses 
D)  Japanese sushi and German cars 
E)  Taiwanese electronics and Canadian barley

Question 13

-Refer to above figure. The lowest specific tariff which would be considered prohibitive is ________.

Accepted Answer

The answer of  
-Refer to above figure. The lowest...

Question 14

In an inflationary environment, then over time

Accepted Answer

A)  a specific tariff will tend to raise more revenue than an ad valorem tariff. 
B)  an ad valorem tariff will tend to raise more revenue than a specific tariff. 
C)  an optimum tariff will tend to raise more revenue than an escalating tariff. 
D)  a tariff quota will tend to raise more revenue than a specific tariff. 
E)  an import quota would raise more revenue than a specific tariff. 
A)  a specific tariff will tend to raise more revenue than an ad valorem tariff. 
B)  an ad valorem tariff will tend to raise more revenue than a specific tariff. 
C)  an optimum tariff will tend to raise more revenue than an escalating tariff. 
D)  a tariff quota will tend to raise more revenue than a specific tariff. 
E)  an import quota would raise more revenue than a specific tariff.

Question 15

Ad valorem tariffs are

Accepted Answer

A)  import taxes stated in ads in industry publications. 
B)  import taxes calculated as a fixed charge for each unit of imported goods. 
C)  import taxes calculated as a fraction of the value of the imported goods. 
D)  the same as import quotas. 
E)  import taxes calculated solely on the origin country. 
A)  import taxes stated in ads in industry publications. 
B)  import taxes calculated as a fixed charge for each unit of imported goods. 
C)  import taxes calculated as a fraction of the value of the imported goods. 
D)  the same as import quotas. 
E)  import taxes calculated solely on the origin country.

Question 16

In the exporting country, an export subsidy will

Accepted Answer

A)  help consumers and raise the overall economic welfare of the exporting country. 
B)  hurt consumers but raise the overall economic welfare of the exporting country. 
C)  hurt consumers and lower the overall economic welfare of the exporting country. 
D)  help consumers but lower economic welfare of the exporting country. 
E)  help consumers and have no effect on the economic welfare of the exporting country. 
A)  help consumers and raise the overall economic welfare of the exporting country. 
B)  hurt consumers but raise the overall economic welfare of the exporting country. 
C)  hurt consumers and lower the overall economic welfare of the exporting country. 
D)  help consumers but lower economic welfare of the exporting country. 
E)  help consumers and have no effect on the economic welfare of the exporting country.

Question 17

The U.S. sugar quota

Accepted Answer

A)  generates government revenue. 
B)  results in net welfare benefits to the U.S. economy. 
C)  results in benefits to sugar producers that exceed the cost to consumers. 
D)  results in costs to consumers that exceed the benefits to sugar producers. 
E)  does not result in an efficiency loss. 
A)  generates government revenue. 
B)  results in net welfare benefits to the U.S. economy. 
C)  results in benefits to sugar producers that exceed the cost to consumers. 
D)  results in costs to consumers that exceed the benefits to sugar producers. 
E)  does not result in an efficiency loss.

Question 18

-Refer to above figure. What is the amount of efficiency loss resulting from imposition of the tariff?

Accepted Answer

The answer of  
-Refer to above figure. What is...

Question 19

An important difference between tariffs and quotas is that tariffs

Accepted Answer

A)  raise the price of the good. 
B)  generate tax revenue for the government. 
C)  stimulate international trade. 
D)  help domestic producers. 
E)  are paid by foreign producers. 
A)  raise the price of the good. 
B)  generate tax revenue for the government. 
C)  stimulate international trade. 
D)  help domestic producers. 
E)  are paid by foreign producers.

Question 20

-Refer to above figure. With a specific tariff of $3 per unit, what is the quantity of Widgets imported?

Accepted Answer

The answer of  
-Refer to above figure. With a...

Exam 9: The Instruments of Trade Policy

An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

An export subsidy is

If a good is imported into (small) country H from country F, then the imposition of a tariff In country H

Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ball bearing prices in the United States would be expected to

The principle benefit of tariff protection goes to

-Refer to above figure. In the absence of trade, what is the country's consumer surplus?

Should the home country be "large" relative to its trade partners, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms of the trade rectangle exceed the sum of the

-Refer to above figure. The loss of Consumer Surplus due to the tariff equals ________.

The main redistribution effect of a tariff is the transfer of income from

The deadweight loss of a tariff

Which of the following are examples of goods that have been subject to voluntary export restraints?

-Refer to above figure. The lowest specific tariff which would be considered prohibitive is ________.

In an inflationary environment, then over time

Ad valorem tariffs are

In the exporting country, an export subsidy will

The U.S. sugar quota

-Refer to above figure. What is the amount of efficiency loss resulting from imposition of the tariff?

An important difference between tariffs and quotas is that tariffs

-Refer to above figure. With a specific tariff of $3 per unit, what is the quantity of Widgets imported?

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

An export subsidy will producer surplus, consumer surplus, government revenue, and overall domestic national welfare.