Question 1

What is a true statement concerning the imposition in the U.S. of a tariff on cheese?

Accepted Answer

A)  It lowers the price of cheese domestically. 
B)  It raises the price of cheese internationally. 
C)  It raises revenue for the government. 
D)  It will always result in retaliation from abroad. 
E)  it leads to higher domestic demand for cheese. 
A)  It lowers the price of cheese domestically. 
B)  It raises the price of cheese internationally. 
C)  It raises revenue for the government. 
D)  It will always result in retaliation from abroad. 
E)  it leads to higher domestic demand for cheese.

Question 2

A tax of 20 percent per unit of imported garlic is an example of a(n)

Accepted Answer

A)  specific tariff. 
B)  ad valorem tariff. 
C)  nominal tariff. 
D)  effective protection tariff. 
E)  a disadvantageous tariff 
A)  specific tariff. 
B)  ad valorem tariff. 
C)  nominal tariff. 
D)  effective protection tariff. 
E)  a disadvantageous tariff

Question 3

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

Question 4

A tax of 20 cents per unit of imported garlic is an example of a(n)

Accepted Answer

A)  specific tariff. 
B)  ad valorem tariff. 
C)  nominal tariff. 
D)  effective protection tariff. 
E)  a disadvantageous tariff. 
A)  specific tariff. 
B)  ad valorem tariff. 
C)  nominal tariff. 
D)  effective protection tariff. 
E)  a disadvantageous tariff.

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

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

Accepted Answer

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

Question 7

Of the many arguments in favor of tariffs, the one that has enjoyed significant economic justification has been the

Accepted Answer

A)  cheap foreign labor argument. 
B)  infant industry argument. 
C)  even playing field argument. 
D)  balance of payments argument 
E)  domestic living standard argument. 
A)  cheap foreign labor argument. 
B)  infant industry argument. 
C)  even playing field argument. 
D)  balance of payments argument 
E)  domestic living standard argument.

Question 8

The fact that industrialized countries levy very low or no tariff on raw materials and semi processed goods

Accepted Answer

A)  helps developing countries export manufactured products. 
B)  has no effect on developing country exports. 
C)  hurts developing country efforts to export manufactured goods. 
D)  hurts developing country efforts to export raw materials. 
E)  does not affect industrialized countries' exports. 
A)  helps developing countries export manufactured products. 
B)  has no effect on developing country exports. 
C)  hurts developing country efforts to export manufactured goods. 
D)  hurts developing country efforts to export raw materials. 
E)  does not affect industrialized countries' exports.

Question 9

The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs. It has been noted that in most industrialized countries, the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets. Why would countries design their tariff structures in this manner? Who tends to be helped, and who is harmed by this cascading tariff structure?

Accepted Answer

The cascading tariff structure is probab

Question 10

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components,

Accepted Answer

A)  the nominal tariff automatically increases. 
B)  the rate of (effective) protection automatically decreases. 
C)  the nominal tariff automatically decreases. 
D)  the rate of (effective) protection automatically increases. 
E)  the amount of tariffs levied increases. 
A)  the nominal tariff automatically increases. 
B)  the rate of (effective) protection automatically decreases. 
C)  the nominal tariff automatically decreases. 
D)  the rate of (effective) protection automatically increases. 
E)  the amount of tariffs levied increases.

Question 11

The imposition of tariffs will help a nation attain which of the following goals?

Accepted Answer

A)  Decreased domestic consumer prices 
B)  Increased domestic employment 
C)  Increased amount and variety of goods available for consumers 
D)  Increased competition between domestic and foreign producers 
E)  Gains for domestic producers 
A)  Decreased domestic consumer prices 
B)  Increased domestic employment 
C)  Increased amount and variety of goods available for consumers 
D)  Increased competition between domestic and foreign producers 
E)  Gains for domestic producers

Question 12

The tariff levied in a "large country" (Home), lowers the world price of the imported good. This causes

Accepted Answer

A)  foreign consumers to demand less of the good on which was levied a tariff. 
B)  domestic demand for imports to decrease. 
C)  domestic demand for imports to increase. 
D)  foreign suppliers to produce less of the good on which was levied a tariff. 
E)  no change in the foreign price of the good it imports. 
A)  foreign consumers to demand less of the good on which was levied a tariff. 
B)  domestic demand for imports to decrease. 
C)  domestic demand for imports to increase. 
D)  foreign suppliers to produce less of the good on which was levied a tariff. 
E)  no change in the foreign price of the good it imports.

Question 13

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 14

In the country levying the tariff, the tariff will

Accepted Answer

A)  increase both consumer and producer surplus. 
B)  decrease both the consumer and producer surplus. 
C)  decrease consumer surplus and increase producer surplus. 
D)  increase consumer surplus and decrease producer surplus. 
E)  decrease consumer surplus but leave producers surplus unchanged. 
A)  increase both consumer and producer surplus. 
B)  decrease both the consumer and producer surplus. 
C)  decrease consumer surplus and increase producer surplus. 
D)  increase consumer surplus and decrease producer surplus. 
E)  decrease consumer surplus but leave producers surplus unchanged.

Question 15

A policy of tariff reduction in the computer industry is

Accepted Answer

A)  in the interest of the United States as a whole and in the interest of computer producing regions of the country. 
B)  in the interest of United States as a whole but not in the interest of computer producing regions of the country. 
C)  not in the interest of the United States as a whole but in the interests of computer producing regions of the country. 
D)  not in the interest of the United States as a whole and not in the interests of computer consumers. 
E)  not in the interest of the United States as a whole but in the interests of foreign computer producers. 
A)  in the interest of the United States as a whole and in the interest of computer producing regions of the country. 
B)  in the interest of United States as a whole but not in the interest of computer producing regions of the country. 
C)  not in the interest of the United States as a whole but in the interests of computer producing regions of the country. 
D)  not in the interest of the United States as a whole and not in the interests of computer consumers. 
E)  not in the interest of the United States as a whole but in the interests of foreign computer producers.

Question 16

The Metzler Paradox

Accepted Answer

A)  explains why the United States uses both specific and ad valorum tariffs. 
B)  explains why the United States uses many none-tariff barriers to imports. 
C)  refers to the fact that the United States exported labor-intensive goods. 
D)  is not considered to be of practical application in the real world. 
E)  explains why import quotas can produce unpredictable results. 
A)  explains why the United States uses both specific and ad valorum tariffs. 
B)  explains why the United States uses many none-tariff barriers to imports. 
C)  refers to the fact that the United States exported labor-intensive goods. 
D)  is not considered to be of practical application in the real world. 
E)  explains why import quotas can produce unpredictable results.

Question 17

If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will ________ domestic price, ________ producer surplus, ________ consumer surplus, and ________ overall domestic national welfare.

Accepted Answer

A)  decrease; decrease; increase; increase 
B)  increase; increase; increase; increase 
C)  decrease; decrease; decrease; decrease 
D)  increase; increase; decrease; decrease 
E)  increase; increase; decrease; increase 
A)  decrease; decrease; increase; increase 
B)  increase; increase; increase; increase 
C)  decrease; decrease; decrease; decrease 
D)  increase; increase; decrease; decrease 
E)  increase; increase; decrease; increase

Question 18

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 19

A lower tariff on imported steel would most likely benefit

Accepted Answer

A)  foreign producers at the expense of domestic consumers. 
B)  domestic manufacturers of steel. 
C)  domestic consumers of steel. 
D)  workers in the steel industry. 
E)  foreign consumers of steel. 
A)  foreign producers at the expense of domestic consumers. 
B)  domestic manufacturers of steel. 
C)  domestic consumers of steel. 
D)  workers in the steel industry. 
E)  foreign consumers of steel.

Question 20

If a small country imposes a tariff, then

Accepted Answer

A)  the producers must suffer a loss. 
B)  the consumers must suffer a loss. 
C)  the government revenue must suffer a loss. 
D)  the demand curve must shift to the left. 
E)  the world price on that item will shift. 
A)  the producers must suffer a loss. 
B)  the consumers must suffer a loss. 
C)  the government revenue must suffer a loss. 
D)  the demand curve must shift to the left. 
E)  the world price on that item will shift.

Exam 9: The Instruments of Trade Policy

What is a true statement concerning the imposition in the U.S. of a tariff on cheese?

A tax of 20 percent per unit of imported garlic is an example of a(n)

The most vocal political pressure for tariffs is generally made by

A tax of 20 cents per unit of imported garlic is an example of a(n)

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

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

Of the many arguments in favor of tariffs, the one that has enjoyed significant economic justification has been the

The fact that industrialized countries levy very low or no tariff on raw materials and semi processed goods

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components,

The imposition of tariffs will help a nation attain which of the following goals?

The tariff levied in a "large country" (Home), lowers the world price of the imported good. This causes

The deadweight loss of a tariff

In the country levying the tariff, the tariff will

A policy of tariff reduction in the computer industry is

The Metzler Paradox

If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will ________ domestic price, ________ producer surplus, ________ consumer surplus, and ________ overall domestic national welfare.

In the exporting country, an export subsidy will

A lower tariff on imported steel would most likely benefit

If a small country imposes a tariff, then

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

Filters

If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will domestic price, producer surplus, consumer surplus, and overall domestic national welfare.