Question 1

A tax of 20 cents per unit of imported cheese would be an example of a(n)

Accepted Answer

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

Question 2

The primary benefit of tariff protection goes to

Accepted Answer

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

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.The tariff leads to an increase in Canadian consumer surplus totaling $11,000.

Accepted Answer

A) True 
 B)False

Question 4

Which argument in favor of tariffs states that developing industries should be initially shielded from competition?

Accepted Answer

A)  infant-industry argument 
B)  cheap foreign labor argument 
C)  fair trade argument 
D)  national security argument 
A)  infant-industry argument 
B)  cheap foreign labor argument 
C)  fair trade argument 
D)  national security argument

Question 5

Suppose that Mexico is a small country and it imposes a tariff on imports.This results in

Accepted Answer

A)  an improving terms of trade for Mexico. 
B)  a worsening terms of trade for Mexico. 
C)  no change in the terms of trade for Mexico. 
D)  better protection from competition for Mexico. 
A)  an improving terms of trade for Mexico. 
B)  a worsening terms of trade for Mexico. 
C)  no change in the terms of trade for Mexico. 
D)  better protection from competition for Mexico.

Question 6

If the world price is $40, a specific tariff of $10 is equivalent to an ad valorem tariff of

Accepted Answer

A)  $10. 
B)  $20. 
C)  20 percent. 
D)  25 percent. 
A)  $10. 
B)  $20. 
C)  20 percent. 
D)  25 percent.

Question 7

The most vocal political pressure for tariffs is generally made by

Accepted Answer

A)  consumers lobbying for export tariffs. 
B)  consumers lobbying for import tariffs. 
C)  producers lobbying for export tariffs. 
D)  producers lobbying for import tariffs. 
A)  consumers lobbying for export tariffs. 
B)  consumers lobbying for import tariffs. 
C)  producers lobbying for export tariffs. 
D)  producers lobbying for import tariffs.

Question 8

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 loss in Mexican consumer surplus due to the tariff equals

Accepted Answer

A)  $225. 
B)  $265. 
C)  $285. 
D)  $325. 
A)  $225. 
B)  $265. 
C)  $285. 
D)  $325.

Question 9

Regressive tariffs benefit the poor because they are levied only on luxury items.

Accepted Answer

A) True 
 B)False

Question 10

For many industrial countries, import tariffs tend to increase with stages of processing and manufacturing.

Accepted Answer

A) True 
 B)False

Question 11

For a large nation, the levying of an import tariff on steel

Accepted Answer

A)  necessarily causes the nation's welfare to decline. 
B)  causes the price of steel on the world market to decline. 
C)  causes the price of steel for domestic consumers to rise by the full amount of the tariff. 
D)  necessarily causes the nation's welfare to increase. 
A)  necessarily causes the nation's welfare to decline. 
B)  causes the price of steel on the world market to decline. 
C)  causes the price of steel for domestic consumers to rise by the full amount of the tariff. 
D)  necessarily causes the nation's welfare to increase.

Question 12

Which of the following is true concerning a specific tariff?

Accepted Answer

A)  It is exclusively used by the U.S. in its tariff schedules. 
B)  It refers to a flat percentage duty applied to a good's market value. 
C)  It is plagued by problems associated with assessing import product values. 
D)  It gives less protection to home producers during eras of rising prices. 
A)  It is exclusively used by the U.S. in its tariff schedules. 
B)  It refers to a flat percentage duty applied to a good's market value. 
C)  It is plagued by problems associated with assessing import product values. 
D)  It gives less protection to home producers during eras of rising prices.

Question 13

To protect domestic producers from foreign competition, the U.S.government levies both import tariffs and export tariffs.

Accepted Answer

A) True 
 B)False

Question 14

If Canada imposes a tariff on imports, Canada's

Accepted Answer

A)  terms of trade will improve and volume of imports will decrease. 
B)  terms of trade will worsen and volume of imports will decrease. 
C)  terms of trade will improve and volume of imports will increase. 
D)  terms of trade will worsen and volume of imports will increase. 
A)  terms of trade will improve and volume of imports will decrease. 
B)  terms of trade will worsen and volume of imports will decrease. 
C)  terms of trade will improve and volume of imports will increase. 
D)  terms of trade will worsen and volume of imports will increase.

Question 15

When a manufacturing firm uses some imported inputs in the production process, the appropriate measure of protection is the nominal tariff.

Accepted Answer

A) True 
 B)False

Question 16

President Donald Trump declared a 20 percent border tax on imports from Mexico to pay for the border wall.Which is the MOST likely effect of the border tax?

Accepted Answer

A)  It will result in Mexico paying for the wall. 
B)  It will result in American consumers paying for the wall. 
C)  Both Mexico and America will pay for the wall. 
D)  Mexico will avoid paying for the wall by raising their prices. 
A)  It will result in Mexico paying for the wall. 
B)  It will result in American consumers paying for the wall. 
C)  Both Mexico and America will pay for the wall. 
D)  Mexico will avoid paying for the wall by raising their prices.

Question 17

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   ?
-According to Figure 4.2, the tariff changes the overall welfare of the United States by

Accepted Answer

A)  rising by $250. 
B)  rising by $500. 
C)  falling by $250. 
D)  falling by $500. 
A)  rising by $250. 
B)  rising by $500. 
C)  falling by $250. 
D)  falling by $500.

A tax of 20 cents per unit of imported cheese would be an example of a(n)

The primary benefit of tariff protection goes to

Which argument in favor of tariffs states that developing industries should be initially shielded from competition?

Suppose that Mexico is a small country and it imposes a tariff on imports.This results in

If the world price is $40, a specific tariff of $10 is equivalent to an ad valorem tariff of

The most vocal political pressure for tariffs is generally made by

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 loss in Mexican consumer surplus due to the tariff equals

Regressive tariffs benefit the poor because they are levied only on luxury items.

For many industrial countries, import tariffs tend to increase with stages of processing and manufacturing.

For a large nation, the levying of an import tariff on steel

Which of the following is true concerning a specific tariff?

To protect domestic producers from foreign competition, the U.S.government levies both import tariffs and export tariffs.

If Canada imposes a tariff on imports, Canada's

When a manufacturing firm uses some imported inputs in the production process, the appropriate measure of protection is the nominal tariff.

President Donald Trump declared a 20 percent border tax on imports from Mexico to pay for the border wall.Which is the MOST likely effect of the border tax?

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

A tax of 20 cents per unit of imported cheese would be an example of a(n)

The primary benefit of tariff protection goes to

Which argument in favor of tariffs states that developing industries should be initially shielded from competition?

Suppose that Mexico is a small country and it imposes a tariff on imports.This results in

If the world price is $40, a specific tariff of $10 is equivalent to an ad valorem tariff of

The most vocal political pressure for tariffs is generally made by

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 loss in Mexican consumer surplus due to the tariff equals

Regressive tariffs benefit the poor because they are levied only on luxury items.

For many industrial countries, import tariffs tend to increase with stages of processing and manufacturing.

For a large nation, the levying of an import tariff on steel

Which of the following is true concerning a specific tariff?

To protect domestic producers from foreign competition, the U.S.government levies both import tariffs and export tariffs.

If Canada imposes a tariff on imports, Canada's

When a manufacturing firm uses some imported inputs in the production process, the appropriate measure of protection is the nominal tariff.

President Donald Trump declared a 20 percent border tax on imports from Mexico to pay for the border wall.Which is the MOST likely effect of the border tax?

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