Question 1

According to the tariff escalation effect, industrial countries apply low tariffs to imports of finished goods and high tariffs to imports of raw materials.

Accepted Answer

A) True 
 B)False

Question 2

Although tariffs on imported steel may lead to job gains for domestic steel workers, they can lead to job losses for domestic auto workers.

Accepted Answer

A) True 
 B)False

Question 3

A country gains from international trade when its post-trade consumption point

Accepted Answer

A)  lies outside its production possibilities frontier. 
B)  lies along its production possibilities frontier. 
C)  lies inside its production possibilities frontier. 
D)  is the same as the pre-trade consumption point. 
A)  lies outside its production possibilities frontier. 
B)  lies along its production possibilities frontier. 
C)  lies inside its production possibilities frontier. 
D)  is the same as the pre-trade consumption point.

Question 4

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   ?
-Suppose that the production of $500,000 worth of steel in the United States requires $100,000 worth of iron ore.The U.S.nominal tariff rates are 15 percent for steel and 5 percent for iron ore.Given this information, the effective rate of protection for the U.S.steel industry is approximately

Accepted Answer

A)  6 percent. 
B)  12.5 percent. 
C)  18 percent. 
D)  17.5 percent. 
A)  6 percent. 
B)  12.5 percent. 
C)  18 percent. 
D)  17.5 percent.

Question 5

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.
-Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in consumer surplus would be

Accepted Answer

A)  $15. 
B)  $12.50. 
C)  $27.50. 
D)  $57.50. 
A)  $15. 
B)  $12.50. 
C)  $27.50. 
D)  $57.50.

Question 6

If a tariff reduces the quantity of Japanese autos imported by the United States, over time it reduces the ability of Japan to import goods from the United States.

Accepted Answer

A) True 
 B)False

Question 7

Graphically, consumer surplus is the area above the demand curve and below the product's market price.

Accepted Answer

A) True 
 B)False

Question 8

If Ecuador is considered a "small" country, a tariff will ______ increase its national welfare.

Accepted Answer

A)  never 
B)  always 
C)  sometimes 
D)  only slightly 
A)  never 
B)  always 
C)  sometimes 
D)  only slightly

Question 9

The deadweight losses of a tariff consist of the sum of the protective effect plus the consumption effect.

Accepted Answer

A) True 
 B)False

Question 10

With a compound tariff, the "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials, and the "ad valorem" portion grants protection to the finished-goods industry.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that Germany levies a tariff on oranges, but none are grown in Germany.This tariff has

Accepted Answer

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

Question 12

An optimum tariff benefits

Accepted Answer

A)  the importing nation. 
B)  exporting nations. 
C)  the world economy. 
D)  smaller nations. 
A)  the importing nation. 
B)  exporting nations. 
C)  the world economy. 
D)  smaller nations.

Question 13

For a "small" country, a tariff raises the domestic price of an imported product by the full amount of the tariff.

Accepted Answer

A) True 
 B)False

Question 14

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

Accepted Answer

A) True 
 B)False

Question 15

A tariff can increase the welfare of a "large" country if the favorable terms-of-trade effect is greater than the unfavorable protective effect and consumption effect.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that Japan levies a 40 percent tariff on pickup trucks and a 20 percent tariff on engines.The effective rate of protection on pickup trucks

Accepted Answer

A)  is higher with the tariff on engines. 
B)  is lower with the tariff on engines. 
C)  is the same with or without the tariff on engines. 
D)  is equal to the tariff on engines. 
A)  is higher with the tariff on engines. 
B)  is lower with the tariff on engines. 
C)  is the same with or without the tariff on engines. 
D)  is equal to the tariff on engines.

Question 17

If Japan is a large country it cannot influence the terms of trade when it imposes a tariff on imports.

Accepted Answer

A) True 
 B)False

Question 18

A tariff on steel imports tends to improve the competitiveness of domestic automobile companies.

Accepted Answer

A) True 
 B)False

Question 19

During a recession, when consumers tend to purchase cheaper products, a specific tariff provides domestic producers a greater amount of protection against import-competing goods than other types of tariffs.

Accepted Answer

A) True 
 B)False

Question 20

Concerning U.S.tariff policy, the offshore assembly provision (OAP) provides unfavorable treatment to products assembled abroad from U.S.made components.

Accepted Answer

A) True 
 B)False

According to the tariff escalation effect, industrial countries apply low tariffs to imports of finished goods and high tariffs to imports of raw materials.

Although tariffs on imported steel may lead to job gains for domestic steel workers, they can lead to job losses for domestic auto workers.

A country gains from international trade when its post-trade consumption point

If a tariff reduces the quantity of Japanese autos imported by the United States, over time it reduces the ability of Japan to import goods from the United States.

Graphically, consumer surplus is the area above the demand curve and below the product's market price.

If Ecuador is considered a "small" country, a tariff will ______ increase its national welfare.

The deadweight losses of a tariff consist of the sum of the protective effect plus the consumption effect.

With a compound tariff, the "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials, and the "ad valorem" portion grants protection to the finished-goods industry.

Suppose that Germany levies a tariff on oranges, but none are grown in Germany.This tariff has

An optimum tariff benefits

For a "small" country, a tariff raises the domestic price of an imported product by the full amount of the tariff.

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

A tariff can increase the welfare of a "large" country if the favorable terms-of-trade effect is greater than the unfavorable protective effect and consumption effect.

Suppose that Japan levies a 40 percent tariff on pickup trucks and a 20 percent tariff on engines.The effective rate of protection on pickup trucks

If Japan is a large country it cannot influence the terms of trade when it imposes a tariff on imports.

A tariff on steel imports tends to improve the competitiveness of domestic automobile companies.

During a recession, when consumers tend to purchase cheaper products, a specific tariff provides domestic producers a greater amount of protection against import-competing goods than other types of tariffs.

Concerning U.S.tariff policy, the offshore assembly provision (OAP) provides unfavorable treatment to products assembled abroad from U.S.made components.

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

According to the tariff escalation effect, industrial countries apply low tariffs to imports of finished goods and high tariffs to imports of raw materials.

Although tariffs on imported steel may lead to job gains for domestic steel workers, they can lead to job losses for domestic auto workers.

A country gains from international trade when its post-trade consumption point

If a tariff reduces the quantity of Japanese autos imported by the United States, over time it reduces the ability of Japan to import goods from the United States.

Graphically, consumer surplus is the area above the demand curve and below the product's market price.

If Ecuador is considered a "small" country, a tariff will ______ increase its national welfare.

The deadweight losses of a tariff consist of the sum of the protective effect plus the consumption effect.

With a compound tariff, the "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials, and the "ad valorem" portion grants protection to the finished-goods industry.

Suppose that Germany levies a tariff on oranges, but none are grown in Germany.This tariff has

An optimum tariff benefits

For a "small" country, a tariff raises the domestic price of an imported product by the full amount of the tariff.

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

A tariff can increase the welfare of a "large" country if the favorable terms-of-trade effect is greater than the unfavorable protective effect and consumption effect.

Suppose that Japan levies a 40 percent tariff on pickup trucks and a 20 percent tariff on engines.The effective rate of protection on pickup trucks

If Japan is a large country it cannot influence the terms of trade when it imposes a tariff on imports.

A tariff on steel imports tends to improve the competitiveness of domestic automobile companies.

During a recession, when consumers tend to purchase cheaper products, a specific tariff provides domestic producers a greater amount of protection against import-competing goods than other types of tariffs.

Concerning U.S.tariff policy, the offshore assembly provision (OAP) provides unfavorable treatment to products assembled abroad from U.S.made components.

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