Question 1

The deadweight loss of a tariff is

Accepted Answer

A)  a welfare loss since it promotes inefficient production. 
B)  a welfare loss since it reduces the revenue for the government. 
C)  not a welfare loss because society as a whole doesn't pay for the loss. 
D)  not a welfare loss since only business firms suffer revenue losses. 
A)  a welfare loss since it promotes inefficient production. 
B)  a welfare loss since it reduces the revenue for the government. 
C)  not a welfare loss because society as a whole doesn't pay for the loss. 
D)  not a welfare loss since only business firms suffer revenue losses.

Question 2

A limitation of a specific tariff is that it provides a constant level of protection for domestic commodities regardless of fluctuations in their prices over time.

Accepted Answer

A) True 
 B)False

Question 3

In the absence of international trade, assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively. Assuming that Canada is a small country that is unable to affect the world price of motorcycles, suppose its market is opened to international trade. As a result, the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total, 6 units are produced in Canada while 8 units are imported. Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles. With the tariff, 8 units are produced in Canada and quantity demanded is 12 units.
-Refer to Exhibit 4.2.As a result of the tariff, the price of imported motorcycles equals $13,000 and imports total 4 cycles.

Accepted Answer

A) True 
 B)False

Question 4

A problem encountered when implementing an "infant industry" tariff is that

Accepted Answer

A)  domestic consumers will purchase the foreign good regardless of the tariff. 
B)  special interest groups may prevent the tariff's removal when the industry matures. 
C)  most industries require tariff protection when they are mature. 
D)  labor unions will capture the protective effect in higher wages. 
A)  domestic consumers will purchase the foreign good regardless of the tariff. 
B)  special interest groups may prevent the tariff's removal when the industry matures. 
C)  most industries require tariff protection when they are mature. 
D)  labor unions will capture the protective effect in higher wages.

Question 5

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price.
Figure 4.1. Import Tariff Levied by a "Small" Country  
-According to Figure 4.1, the tariff results in the Mexican government collecting

Accepted Answer

A)  $100. 
B)  $120. 
C)  $140. 
D)  $160. 
A)  $100. 
B)  $120. 
C)  $140. 
D)  $160.

Question 6

A compound tariff permits a specified amount of goods to be imported at one tariff rate while any imports above this amount are subjected to a higher tariff rate.

Accepted Answer

A) True 
 B)False

Question 7

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

Accepted Answer

A) True 
 B)False

Question 8

Bonded warehouses and foreign trade zones have the effect of allowing domestic importers to prorate their input duties over time.

Accepted Answer

A) True 
 B)False

Question 9

Democratic candidates for federal public office in the United States have always advocated for tariffs while Republican candidates uniformly favor free trade.

Accepted Answer

A) True 
 B)False

Question 10

Assume the United States is a large consumer of steel that is able to influence the world price. Its demand and supply schedules are respectively denoted by DU.S. and SU.S. in Figure 4.2. The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2. Import Tariff Levied by a "Large" Country   ?
-Referring to Figure 4.2, the tariff's deadweight welfare loss to the United States totals

Accepted Answer

A)  $450. 
B)  $550. 
C)  $650. 
D)  $750. 
A)  $450. 
B)  $550. 
C)  $650. 
D)  $750.

Question 11

Tariff evasion occurs when individuals or firms escape tariffs by illegal means such as smuggling imported goods into a country.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that Canada levies a tariff on imports that is a fixed percentage of the product's price.This refers to

Accepted Answer

A)  a compound tariff. 
B)  an ad valorem tariff. 
C)  a specific tariff. 
D)  an effective tariff. 
A)  a compound tariff. 
B)  an ad valorem tariff. 
C)  a specific tariff. 
D)  an effective tariff.

Question 13

Most countries in the world have about the same tariff levels.

Accepted Answer

A) True 
 B)False

Question 14

An import tariff reduces the welfare of a "small" country by an amount equal to the redistribution effect plus the revenue effect.

Accepted Answer

A) True 
 B)False

Question 15

Assume the United States is a large consumer of steel that is able to influence the world price. Its demand and supply schedules are respectively denoted by DU.S. and SU.S. in Figure 4.2. The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2. Import Tariff Levied by a "Large" Country   ?
-Consider Figure 4.2.Suppose the United States imposes a tariff of $100 on each ton of steel imported.With the tariff, the price of steel rises to ____ and imports fall to ____ .

Accepted Answer

A)  $550, 20 tons 
B)  $550, 30 tons 
C)  $575, 20 tons 
D)  $575, 30 tons 
A)  $550, 20 tons 
B)  $550, 30 tons 
C)  $575, 20 tons 
D)  $575, 30 tons

Question 16

In general, tariffs tend to have

Accepted Answer

A)  only protective effects. 
B)  only consumption effects. 
C)  only revenue effects. 
D)  revenue effects, protective effects, and consumption effects. 
A)  only protective effects. 
B)  only consumption effects. 
C)  only revenue effects. 
D)  revenue effects, protective effects, and consumption effects.

Question 17

If Brazil levies a tariff on oil that is so high that it effectively prohibits imports of oil, the tariff has

Accepted Answer

A)  only a protective effect. 
B)  only a revenue effect. 
C)  both a revenue effect and a protective effect. 
D)  no effect on trade. 
A)  only a protective effect. 
B)  only a revenue effect. 
C)  both a revenue effect and a protective effect. 
D)  no effect on trade.

Question 18

Assume that the United States imports laptops from South Korea at a price of $200 per unit and that these laptops are subject to an import tariff of 20 percent.Also assume that U.S.components are used in the laptops assembled by South Korea and that these components have a value of $100.Under the Offshore Assembly Provision of U.S.tariff policy, the price of an imported laptop to the U.S.consumer after the tariff has been levied is $220.

Accepted Answer

A) True 
 B)False

Question 19

The United States imposes a tariff on imported stereos.This tariff would benefit

Accepted Answer

A)  American consumers looking to purchase a stereo. 
B)  retail and shipping companies that import foreign-made stereos. 
C)  stereo producers in the United States. 
D)  the U.S. economy as a whole. 
A)  American consumers looking to purchase a stereo. 
B)  retail and shipping companies that import foreign-made stereos. 
C)  stereo producers in the United States. 
D)  the U.S. economy as a whole.

Question 20

An importer of computers is required to pay a duty to the government of $100 per computer regardless of the price of the computer.Which type of tariff is described in this example?

Accepted Answer

A)  tariff quota 
B)  compound tariff 
C)  specific tariff 
D)  ad valorem tariff 
A)  tariff quota 
B)  compound tariff 
C)  specific tariff 
D)  ad valorem tariff

The deadweight loss of a tariff is

A limitation of a specific tariff is that it provides a constant level of protection for domestic commodities regardless of fluctuations in their prices over time.

A problem encountered when implementing an "infant industry" tariff is that

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price. Figure 4.1. Import Tariff Levied by a "Small" Country -According to Figure 4.1, the tariff results in the Mexican government collecting

A compound tariff permits a specified amount of goods to be imported at one tariff rate while any imports above this amount are subjected to a higher tariff rate.

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

Bonded warehouses and foreign trade zones have the effect of allowing domestic importers to prorate their input duties over time.

Democratic candidates for federal public office in the United States have always advocated for tariffs while Republican candidates uniformly favor free trade.

Tariff evasion occurs when individuals or firms escape tariffs by illegal means such as smuggling imported goods into a country.

Suppose that Canada levies a tariff on imports that is a fixed percentage of the product's price.This refers to

Most countries in the world have about the same tariff levels.

An import tariff reduces the welfare of a "small" country by an amount equal to the redistribution effect plus the revenue effect.

In general, tariffs tend to have

If Brazil levies a tariff on oil that is so high that it effectively prohibits imports of oil, the tariff has

The United States imposes a tariff on imported stereos.This tariff would benefit

An importer of computers is required to pay a duty to the government of $100 per computer regardless of the price of the computer.Which type of tariff is described in this example?

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters

Exam 4: Tariffs

The deadweight loss of a tariff is

A limitation of a specific tariff is that it provides a constant level of protection for domestic commodities regardless of fluctuations in their prices over time.

A problem encountered when implementing an "infant industry" tariff is that

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico, a "small" nation that is unable to affect the world price. Figure 4.1. Import Tariff Levied by a "Small" Country -According to Figure 4.1, the tariff results in the Mexican government collecting

A compound tariff permits a specified amount of goods to be imported at one tariff rate while any imports above this amount are subjected to a higher tariff rate.

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

Bonded warehouses and foreign trade zones have the effect of allowing domestic importers to prorate their input duties over time.

Democratic candidates for federal public office in the United States have always advocated for tariffs while Republican candidates uniformly favor free trade.

Tariff evasion occurs when individuals or firms escape tariffs by illegal means such as smuggling imported goods into a country.

Suppose that Canada levies a tariff on imports that is a fixed percentage of the product's price.This refers to

Most countries in the world have about the same tariff levels.

An import tariff reduces the welfare of a "small" country by an amount equal to the redistribution effect plus the revenue effect.

In general, tariffs tend to have

If Brazil levies a tariff on oil that is so high that it effectively prohibits imports of oil, the tariff has

The United States imposes a tariff on imported stereos.This tariff would benefit

An importer of computers is required to pay a duty to the government of $100 per computer regardless of the price of the computer.Which type of tariff is described in this example?

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters