Question 1

Which of the following is a possible reason for a country to impose a tariff?

Accepted Answer

A)  A tariff discourages domestic production. 
B)  A tariff reduces the benefits for domestic producers. 
C)  A tariff is a source of revenue for the government. 
D)  A tariff will encourage domestic consumers to buy foreign goods. 
A)  A tariff discourages domestic production. 
B)  A tariff reduces the benefits for domestic producers. 
C)  A tariff is a source of revenue for the government. 
D)  A tariff will encourage domestic consumers to buy foreign goods.

Question 2

The 35% tariff on imported Chinese tires initiated a small trade war between the United States and China. Describe what happened following the imposition of these tariffs.

Accepted Answer

Following the imposition of the 35% tari

Question 3

What is the major difference between a tariff and a quota that has equivalent effects upon domestic production?

Accepted Answer

A)  A quota does not lead to an increase in domestic prices, while a tariff does. 
B)  The government collects tariff revenue with a tariff; other domestic groups (e.g., domestic producers, importers) may collect the equivalent of this tariff revenue with a quota. 
C)  The government collects area c with a tariff; exporters collect area c with a quota, thus leading to further deadweight losses for the quota-imposing country. 
D)  The government collects area c with a tariff; importers collect area c with a quota, offsetting consumption deadweight losses and leading to lower deadweight losses for the quota-imposing country. 
A)  A quota does not lead to an increase in domestic prices, while a tariff does. 
B)  The government collects tariff revenue with a tariff; other domestic groups (e.g., domestic producers, importers) may collect the equivalent of this tariff revenue with a quota. 
C)  The government collects area c with a tariff; exporters collect area c with a quota, thus leading to further deadweight losses for the quota-imposing country. 
D)  The government collects area c with a tariff; importers collect area c with a quota, offsetting consumption deadweight losses and leading to lower deadweight losses for the quota-imposing country.

Question 4

Which organization acts as a forum for countries to come to agreement on trade policies and to resolve trade policy disputes?

Accepted Answer

A)  the International Trade Organization 
B)  the United Nations 
C)  the World Trade Organization 
D)  the United Nations Conference on Trade and Development 
A)  the International Trade Organization 
B)  the United Nations 
C)  the World Trade Organization 
D)  the United Nations Conference on Trade and Development

Question 5

(Figure: Home Market I) What is the deadweight loss because of the tariff?

Accepted Answer

A)  $24 
B)  $12 
C)  $48 
D)  $44 
A)  $24 
B)  $12 
C)  $48 
D)  $44

Question 6

(Figure: The Import-Competing Industry) Suppose that, with free trade, the world price of the product is $15. What is the value of consumer surplus?

Accepted Answer

A)  $1,395. 
B)  $697.50. 
C)  $22.50. 
D)  $2,250. 
A)  $1,395. 
B)  $697.50. 
C)  $22.50. 
D)  $2,250.

Question 7

When the United States imposed tariffs of 30% on many steel imports in March 2002, the estimated total cost to the United States over the period of March 2002 to December 2003 was:

Accepted Answer

A)  $1 million. 
B)  $3.32 for each job saved-certainly worth it. 
C)  $185 million. 
D)  too small to measure. 
A)  $1 million. 
B)  $3.32 for each job saved-certainly worth it. 
C)  $185 million. 
D)  too small to measure.

Question 8

Who collects quota rents when the government auctions quota licenses?

Accepted Answer

A)  domestic consumers 
B)  foreign suppliers 
C)  domestic producers 
D)  the government 
A)  domestic consumers 
B)  foreign suppliers 
C)  domestic producers 
D)  the government

Question 9

In addition to deadweight losses, the 2009 tariff on Chinese tire imports shifted U.S. tire demand to other higher-cost import sources not subject to the tariff. What was the approximate value of the higher payments to these other higher-cost import sources?

Accepted Answer

A)  $512 million per year 
B)  $817 million per year 
C)  $1,112 million per year 
D)  $5 billion per year 
A)  $512 million per year 
B)  $817 million per year 
C)  $1,112 million per year 
D)  $5 billion per year

Question 10

Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 19 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. How much total tariff revenue will the Finnish government collect as a result of the €60-per-ton tariff?

Accepted Answer

A)  €6 million 
B)  €12 million 
C)  €18 million 
D)  €30 million 
A)  €6 million 
B)  €12 million 
C)  €18 million 
D)  €30 million

Question 11

GATT is the acronym (or abbreviation) for:

Accepted Answer

A)  the General Agreement on Taxes and Tariffs. 
B)  the General Agreement on Tariffs and Trade. 
C)  the General Agreement on Trade and Taxes. 
D)  the General Agreement on Trade. 
A)  the General Agreement on Taxes and Tariffs. 
B)  the General Agreement on Tariffs and Trade. 
C)  the General Agreement on Trade and Taxes. 
D)  the General Agreement on Trade.

Question 12

Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves. Which of the following is the equilibrium price in autarky?

Accepted Answer

A)  $2 
B)  $4 
C)  $6 
D)  $8 
A)  $2 
B)  $4 
C)  $6 
D)  $8

Question 13

One difference between the tariffs on steel imports levied in 2002 and the tariffs on Chinese tire imports levied in 2009 was that:

Accepted Answer

A)  U.S. steel producers supported the steel tariff, while U.S. tire producers did not support the tire tariff. 
B)  U.S. tire producers supported the tire tariff, while U.S. steel producers did not support the steel tariff. 
C)  U.S. steel workers supported the steel tariff, while U.S. tire workers did not support the tire tariff. 
D)  U.S. tire workers supported the tire tariff, while U.S. steel workers producers did not support the steel tariff. 
A)  U.S. steel producers supported the steel tariff, while U.S. tire producers did not support the tire tariff. 
B)  U.S. tire producers supported the tire tariff, while U.S. steel producers did not support the steel tariff. 
C)  U.S. steel workers supported the steel tariff, while U.S. tire workers did not support the tire tariff. 
D)  U.S. tire workers supported the tire tariff, while U.S. steel workers producers did not support the steel tariff.

Question 14

(Figure: Home's Import-Competing Industry) What is this nation's "welfare" after trade?

Accepted Answer

A)  triangle AFB 
B)  triangle AEC + triangle EFG 
C)  quadrangle DEB 
D)  triangle EFG 
A)  triangle AFB 
B)  triangle AEC + triangle EFG 
C)  quadrangle DEB 
D)  triangle EFG

Question 15

The following table gives the hypothetical supply and demand of television sets in Guatemala. Guatemala is a small country that is unable to affect world prices. The world price (free-trade price) is $300 per TV set.   In the absence of trade, how many TV sets will Guatemala produce?

Accepted Answer

A)  1,400 
B)  1,200 
C)  1,000 
D)  800 
A)  1,400 
B)  1,200 
C)  1,000 
D)  800

Question 16

What is an "export subsidy"?

Accepted Answer

A)  a payment by one government to another for exports 
B)  a payment (or other benefit) to domestic firms by their government to help them sell exports more cheaply 
C)  the rule that says all exports must be taxed before they leave the port 
D)  a provision that exporters must get their payments indirectly through a third party 
A)  a payment by one government to another for exports 
B)  a payment (or other benefit) to domestic firms by their government to help them sell exports more cheaply 
C)  the rule that says all exports must be taxed before they leave the port 
D)  a provision that exporters must get their payments indirectly through a third party

Question 17

Suppose that the free-trade price of a ton of steel is €500. (Note: € is the symbol for the euro, a common currency used in 19 European countries, including Finland.) Finland, a small country, imposes a €60 per-ton specific tariff on imported steel. With the tariff, Finland produces 300,000 tons of steel and consumes 600,000 tons of steel. What will happen to the Finnish price of steel if Finnish demand increases and the tariff remains at €60-per-ton?

Accepted Answer

A)  It will not change. 
B)  It will increase. 
C)  It will decrease. 
D)  It will first increase, then decrease. 
A)  It will not change. 
B)  It will increase. 
C)  It will decrease. 
D)  It will first increase, then decrease.

Question 18

What is the name of the MOST recent round of WTO negotiations?

Accepted Answer

A)  the Doha round 
B)  the Kyoto round 
C)  the Geneva accord 
D)  the Paris round 
A)  the Doha round 
B)  the Kyoto round 
C)  the Geneva accord 
D)  the Paris round

Question 19

A country that becomes a member of the World Trade Organization agrees to bind its tariffs. "Binding" means that the country agrees not to increase existing tariffs and that it will not introduce new tariffs. However, GATT allows three exceptions to binding. Which of the following is NOT an exception to binding?

Accepted Answer

A)  antidumping duties against dumped imports 
B)  countervailing duties against subsidized imports 
C)  safeguard or escape clause tariffs 
D)  tariff reductions negotiated in free-trade areas 
A)  antidumping duties against dumped imports 
B)  countervailing duties against subsidized imports 
C)  safeguard or escape clause tariffs 
D)  tariff reductions negotiated in free-trade areas

Question 20

Suppose that the world price of resins is $100 per ton. Now suppose that the United States imposes a 10% tariff on imported resins. What is the U.S. domestic price of resins after the 10% tariff is imposed (rounded to the nearest dollar) if exporters bear half of the tariff?

Accepted Answer

A)  $90 
B)  $100 
C)  $105 
D)  $95 
A)  $90 
B)  $100 
C)  $105 
D)  $95

Which of the following is a possible reason for a country to impose a tariff?

The 35% tariff on imported Chinese tires initiated a small trade war between the United States and China. Describe what happened following the imposition of these tariffs.

What is the major difference between a tariff and a quota that has equivalent effects upon domestic production?

Which organization acts as a forum for countries to come to agreement on trade policies and to resolve trade policy disputes?

(Figure: Home Market I) What is the deadweight loss because of the tariff?

(Figure: The Import-Competing Industry) Suppose that, with free trade, the world price of the product is $15. What is the value of consumer surplus?

When the United States imposed tariffs of 30% on many steel imports in March 2002, the estimated total cost to the United States over the period of March 2002 to December 2003 was:

Who collects quota rents when the government auctions quota licenses?

In addition to deadweight losses, the 2009 tariff on Chinese tire imports shifted U.S. tire demand to other higher-cost import sources not subject to the tariff. What was the approximate value of the higher payments to these other higher-cost import sources?

GATT is the acronym (or abbreviation) for:

Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves. Which of the following is the equilibrium price in autarky?

One difference between the tariffs on steel imports levied in 2002 and the tariffs on Chinese tire imports levied in 2009 was that:

(Figure: Home's Import-Competing Industry) What is this nation's "welfare" after trade?

The following table gives the hypothetical supply and demand of television sets in Guatemala. Guatemala is a small country that is unable to affect world prices. The world price (free-trade price) is $300 per TV set. In the absence of trade, how many TV sets will Guatemala produce?

What is an "export subsidy"?

What is the name of the MOST recent round of WTO negotiations?

Suppose that the world price of resins is $100 per ton. Now suppose that the United States imposes a 10% tariff on imported resins. What is the U.S. domestic price of resins after the 10% tariff is imposed (rounded to the nearest dollar) if exporters bear half of the tariff?

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Offshoring of Goods and Services

Import Tariffs and Quotas Under Imperfect Competition

Export Subsidies in Agriculture and High-Technology Industries

International Agreements: Trade, Labor, and the Environment

The Global Macroeconomy

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Exchange Rates II: the Asset Approach in the Short Run

National and International Accounts: Income, Wealth, and the Balance of Payments

Balance of Payments I: the Gains From Financial Globalization

Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

Fixed Versus Floating: International Monetary Experience

Exchange Rate Crises: How Pegs Work and How They Break

The Euro

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Exam 8: Import Tariffs and Quotas Under Perfect Competition

Which of the following is a possible reason for a country to impose a tariff?

The 35% tariff on imported Chinese tires initiated a small trade war between the United States and China. Describe what happened following the imposition of these tariffs.

What is the major difference between a tariff and a quota that has equivalent effects upon domestic production?

Which organization acts as a forum for countries to come to agreement on trade policies and to resolve trade policy disputes?

(Figure: Home Market I) What is the deadweight loss because of the tariff?

(Figure: The Import-Competing Industry) Suppose that, with free trade, the world price of the product is $15. What is the value of consumer surplus?

When the United States imposed tariffs of 30% on many steel imports in March 2002, the estimated total cost to the United States over the period of March 2002 to December 2003 was:

Who collects quota rents when the government auctions quota licenses?

In addition to deadweight losses, the 2009 tariff on Chinese tire imports shifted U.S. tire demand to other higher-cost import sources not subject to the tariff. What was the approximate value of the higher payments to these other higher-cost import sources?

GATT is the acronym (or abbreviation) for:

Suppose that the equations S = 2P and D = 6 - P represent a small country's home supply and home demand curves. Which of the following is the equilibrium price in autarky?

One difference between the tariffs on steel imports levied in 2002 and the tariffs on Chinese tire imports levied in 2009 was that:

(Figure: Home's Import-Competing Industry) What is this nation's "welfare" after trade?

The following table gives the hypothetical supply and demand of television sets in Guatemala. Guatemala is a small country that is unable to affect world prices. The world price (free-trade price) is $300 per TV set. In the absence of trade, how many TV sets will Guatemala produce?

What is an "export subsidy"?

What is the name of the MOST recent round of WTO negotiations?

Suppose that the world price of resins is $100 per ton. Now suppose that the United States imposes a 10% tariff on imported resins. What is the U.S. domestic price of resins after the 10% tariff is imposed (rounded to the nearest dollar) if exporters bear half of the tariff?

Trade in the Global Economy

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Offshoring of Goods and Services

Import Tariffs and Quotas Under Imperfect Competition

Export Subsidies in Agriculture and High-Technology Industries

International Agreements: Trade, Labor, and the Environment

The Global Macroeconomy

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Exchange Rates II: the Asset Approach in the Short Run

National and International Accounts: Income, Wealth, and the Balance of Payments

Balance of Payments I: the Gains From Financial Globalization

Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

Fixed Versus Floating: International Monetary Experience

Exchange Rate Crises: How Pegs Work and How They Break

The Euro

Topics in International Macroeconomics

Filters