Deck 5: Understanding Tariffs and Quotas in International Trade

Question 1

Under the redistribution effect of tariff, the loss of consumer's surplus is neither transferable to the produces nor to the government and is called by Kindleberger as the

A)Deadweight loss of the tariff
B)Cost of the tariff
C)Both (a) and (b)
D)All of the above

Answer 1

All of the above

Question 2

Under the effects of a tariff under partial equilibrium analysis, the revenue effect is the change in government receipts due to

A)Producer's surplus
B)Consumer's satisfaction
C)Imposition of tariff
D)Loss of consumer's surplus

Answer 2

Imposition of tariff

Question 3

The increase in the domestic production of a commodity due to imposition of a tariff is

A)Protective or production
B)Consumption effect
C)Terms of trade effect
D)Competitive effect

Answer 3

Protective or production

Question 4

Import quotas may be fixed either in terms of quantity or

A)The supply of the product
B)The value of the product
C)Consumption of the product
D)Demand of the product

Question 5

The physical limitation of quantities of different products to be imported from foreign countries within a specified period of time is called

A)Revenue tariff
B)Gains from trade
C)Import quota
D)Optimum tariff

Question 6

Import quotas include

A)Ad valorem duty
B)Tariff or custom quota
C)Specific duty
D)Compound duty

Question 7

The effects of quota under partial equilibrium include

A)Redistributive effect
B)Consumption effect
C)Price effect
D)All of the above

Question 8

When import quotas are fixed after negotiations between the importing and exporting countries, it is known as

A)Import licensing
B)Mixing quota
C)Bilateral quota
D)Unilateral quota

Question 9

The objective of import quotas include

A)To protect domestic industries from foreign competition by restricting imports
B)To stabilize and maintain the external price level by regulating exports
C)To correct adverse balance of payments restricting exports
D)None of the above

Question 10

Under the unilateral quota system, the autonomously fixed quota may either be

A)Fixed or variable
B)Positive or negative
C)Global or allocated
D)All of the above

Question 11

A tariff or custom quota may either be

A)Increasing or decreasing
B)Fixed or variable
C)Unilateral or bilateral
D)Autonomous or agreed

Question 12

The system devised to administer the types of quotas is

A)Tariff quota
B)Import licensing
C)Export duties
D)None of the above

Question 13

The quota system in which domestic producers of a quota fixing country are required to make use of both domestic raw materials and a specified proportion of imported raw materials to produce a product

A)Bilateral quota
B)Tariff or custom quota
C)Import quota
D)Mixing quota

Question 14

Tariff can be levied upon

A)Export only
B)Import only
C)Both exports and imports
D)Partly exports partly imports

Question 15

The tariffs or duties levied upon goods originating from abroad and scheduled for the home country are

A)Exim duties
B)Import duties
C)Export duties
D)None of the above

Question 16

High tariffs have the effect of restricting

A)The volume of international trade
B)The price of goods
C)The quantity of goods
D)All of the above

Question 17

A tariff or import duty which are a combination of the ad valorem and specific duty

A)Transit duty
B)Sliding scale duty
C)Revenue tariff
D)Compound duty

Question 18

On the basis of retaliation, tariffs can be of the types of

A)Revenue and protective tariffs
B)Retaliatory and countervailing tariffs
C)Non-discriminatory and discriminatory tariffs
D)Double column or multiple tariffs

Question 19

Once import quota is levied on a commodity, the domestic price of the commodity

A)Fluctuates
B)Remains constant
C)Decreases
D)Rises

Question 20

An increase in domestic production of goods due to imposition of import quota is called

A)Protective or production effect
B)Consumption effect
C)Revenue effect
D)Price effect

Question 21

Which of the following items is not included in the invisible items of balance of payments?

A)Shipping
B)Insurance
C)Export and import of goods
D)None of the above

Question 22

In balance of payments account, all goods exported and imported are recorded in

A)Capital accounts
B)Merchandise account
C)Current account
D)Savings account

Question 23

If a country has fundamental deficit in in the balance of payments, it should resort to

A)Exchange control
B)Devaluation of its currency
C)Inflation
D)Loans

Question 24

Capital account includes

A)Invisible export
B)Long-term capital transaction
C)Invisible import
D)All of the above

Question 25

Balance of trade includes

A)Visible items
B)Invisible items
C)Both visible and invisible items
D)None of the above