Question 1

Lowering the tariff on good X will

Accepted Answer

A)  increase the domestic imports of good X. 
B)  have no effect unless the nationʹs trading partner also lowers its tariff on good X. 
C)  increase domestic employment in industry X. 
D)  increase the domestic price of good X. 
A)  increase the domestic imports of good X. 
B)  have no effect unless the nationʹs trading partner also lowers its tariff on good X. 
C)  increase domestic employment in industry X. 
D)  increase the domestic price of good X.

Question 2

Consider a market that sells some of its goods as exports. Who does NOT  benefit?

Accepted Answer

A)  foreign consumers 
B)  workers in the industry 
C)  domestic consumers 
D)  domestic producers 
A)  foreign consumers 
B)  workers in the industry 
C)  domestic consumers 
D)  domestic producers

Question 3

Agriculture Secretary Ed Schafer today announced that Chileʹs Livestock and Agricultural Service approved the U.S. inspection, control and certification systems for poultry, allowing these products to enter the Chilean market effective immediately. What is NOT an effect of this change in Chilean policy on the Chilean poultry market?

Accepted Answer

A)  Chileʹs tariff revenue will increase 
B)  The price for poultry in Chile will decrease 
C)  The quantity of poultry consumed in Chile will increase 
D)  The quantity of Chilean imports will increase 
A)  Chileʹs tariff revenue will increase 
B)  The price for poultry in Chile will decrease 
C)  The quantity of poultry consumed in Chile will increase 
D)  The quantity of Chilean imports will increase

Question 4

Quotas are less damaging to an economy than are tariffs.

Accepted Answer

A) True 
 B)False

Question 5

In 2006, the European Union EU) threatened to ban imports of long -grain rice because traces of genetically modified rice were found mixed in to commercial supplies. Instead of a ban, suppose the EU placed a tariff on the import of long-grain rice. Which of the following would be an outcome of this tariff?

Accepted Answer

A)  The social loss would decrease 
B)  European rice producers would decrease production 
C)  The EU would gain tariff revenue 
D)  The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned 
A)  The social loss would decrease 
B)  European rice producers would decrease production 
C)  The EU would gain tariff revenue 
D)  The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned

Question 6

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

Accepted Answer

A)  most jobs lost because of free trade pay less than the poverty level. 
B)  the jobs lost are concentrated in restricted geographic areas. 
C)  free trade creates jobs in export industries. 
D)  no U.S. worker has actually lost a job because of free trade. 
A)  most jobs lost because of free trade pay less than the poverty level. 
B)  the jobs lost are concentrated in restricted geographic areas. 
C)  free trade creates jobs in export industries. 
D)  no U.S. worker has actually lost a job because of free trade.

Question 7

The infant-industry argument is the only perfectly valid argument for protection.)

Accepted Answer

A) True 
 B)False

Question 8

Import quotas

Accepted Answer

A)  set the number of units of a good that can be imported. 
B)  set the minimum percentage of the value of a good that can consist of imported components. 
C)  are a tax on an imported good. 
D)  encourage freer trade. 
A)  set the number of units of a good that can be imported. 
B)  set the minimum percentage of the value of a good that can consist of imported components. 
C)  are a tax on an imported good. 
D)  encourage freer trade.

Question 9

Which of the following statements is true?

Accepted Answer

A)  Dumping occurs when a foreign firm sells its exports at a higher price than its cost of production. 
B)  Dumping is illegal under the rules of the WTO. 
C)  Both statements are true. 
D)  Neither of the statements is true. 
A)  Dumping occurs when a foreign firm sells its exports at a higher price than its cost of production. 
B)  Dumping is illegal under the rules of the WTO. 
C)  Both statements are true. 
D)  Neither of the statements is true.

Question 10

As a result of an increase in tariffs, imports decrease and government revenue increases.

Accepted Answer

A) True 
 B)False

Question 11

When considering rent seeking, which of the following is TRUE?

Accepted Answer

A)  The pro-free trade group generally will lobby more than the anti -free trade group. 
B)  Only the pro-free trade group is concerned about the governmentʹs revenue from tariffs. 
C)  Usually only the anti-free trade group is concerned about what is best for society at large. 
D)  The anti-free trade group generally will lobby more than the pro -free trade group. 
A)  The pro-free trade group generally will lobby more than the anti -free trade group. 
B)  Only the pro-free trade group is concerned about the governmentʹs revenue from tariffs. 
C)  Usually only the anti-free trade group is concerned about what is best for society at large. 
D)  The anti-free trade group generally will lobby more than the pro -free trade group.

Question 12

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

Accepted Answer

A)  Voluntary export restraints on coffee 
B)  Subsidy on imported coffee 
C)  Tariff on imported coffee 
D)  Quota on imported coffee 
A)  Voluntary export restraints on coffee 
B)  Subsidy on imported coffee 
C)  Tariff on imported coffee 
D)  Quota on imported coffee

Question 13

A key difference between tariffs and quotas is that

Accepted Answer

A)  consumers are hurt with tariffs but not with quotas. 
B)  the government receives revenue with tariffs, but the importer receives the added revenue with quotas. 
C)  the government receives revenue with quotas, but the importer receives the added revenue with tariffs. 
D)  consumers are hurt with quotas but not with tariffs. 
A)  consumers are hurt with tariffs but not with quotas. 
B)  the government receives revenue with tariffs, but the importer receives the added revenue with quotas. 
C)  the government receives revenue with quotas, but the importer receives the added revenue with tariffs. 
D)  consumers are hurt with quotas but not with tariffs.

Question 14

During 2005-2006 Europe imported more than $70 million worth of US long -grain rice. How is the gain from trade distributed?

Accepted Answer

A)  European rice consumers gain from trade 
B)  European rice producers gain from trade 
C)  American rice consumers gain from trade 
D)  There is no gain from trade 
A)  European rice consumers gain from trade 
B)  European rice producers gain from trade 
C)  American rice consumers gain from trade 
D)  There is no gain from trade

Question 15

In 2006, the European Union EU) threatened to ban imports of long -grain rice because traces of genetically modified rice were found mixed in to commercial supplies. Instead of a complete ban, suppose the EU placed a tariff on the import of long -grain rice. Which of the following would be an outcome of this tariff?

Accepted Answer

A)  The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned 
B)  The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned, but lower than with free trade 
C)  The price of long-grain rice in the EU would be lower with a tariff than if rice imports were completely banned, but higher than with free trade 
D)  The price of long-grain rice in the EU would be lower with a tariff than if rice imports were completely banned, but lower than with free trade 
A)  The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned 
B)  The price of long-grain rice in the EU would be higher with a tariff than if rice imports were completely banned, but lower than with free trade 
C)  The price of long-grain rice in the EU would be lower with a tariff than if rice imports were completely banned, but higher than with free trade 
D)  The price of long-grain rice in the EU would be lower with a tariff than if rice imports were completely banned, but lower than with free trade

Question 16

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand. As a result of the tariffs, the

Accepted Answer

A)  price of beef in Mooland falls. 
B)  quantity of beef imported by Mooland decreases. 
C)  quantity of beef exported by Mooland increases. 
D)  quantity of beef imported by Mooland increases. 
A)  price of beef in Mooland falls. 
B)  quantity of beef imported by Mooland decreases. 
C)  quantity of beef exported by Mooland increases. 
D)  quantity of beef imported by Mooland increases.

Question 17

Using calculations of the cost to Americans per job saved in protected industries, it can be concluded that

Accepted Answer

A)  each job saved is worth less than the cost imposed on consumers per job saved. 
B)  import quotas are an efficient way to redistribute income. 
C)  each job saved is worth more than the cost imposed on consumers per job saved. 
D)  tariffs are an efficient way to redistribute income to disadvantaged groups. 
A)  each job saved is worth less than the cost imposed on consumers per job saved. 
B)  import quotas are an efficient way to redistribute income. 
C)  each job saved is worth more than the cost imposed on consumers per job saved. 
D)  tariffs are an efficient way to redistribute income to disadvantaged groups.

Question 18

Based on the table below, at what world price would the country import?
$$\begin{array} { | l | l | l | } 
\hline \text { Price } & \text { QD emanded } & \text { Qsupplied } \
\hline 2 & 100 & 70 \
\hline 4 & 95 & 75 \
\hline 6 & 90 & 80 \
\hline 8 & 85 & 85 \
\hline 10 & 80 & 90 \
\hline 12 & 75 & 95 \
\hline
\end{array}$$

Accepted Answer

A)  all prices below $8 
B)  all prices above $8 
C)  at exactly $8 
D)  it is impossible to say 
A)  all prices below $8 
B)  all prices above $8 
C)  at exactly $8 
D)  it is impossible to say

Question 19

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

Accepted Answer

Governments use tariffs and nontariff ba

Question 20

International trade is restricted because

Accepted Answer

A)  free trade stifles diversity and stability. 
B)  free trade leads to higher costs. 
C)  there is an uneven distribution of benefits and costs of free trade. 
D)  free trade creates an inefficient use of resources. 
A)  free trade stifles diversity and stability. 
B)  free trade leads to higher costs. 
C)  there is an uneven distribution of benefits and costs of free trade. 
D)  free trade creates an inefficient use of resources.

Lowering the tariff on good X will

Consider a market that sells some of its goods as exports. Who does NOT benefit?

Quotas are less damaging to an economy than are tariffs.

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

The infant-industry argument is the only perfectly valid argument for protection.)

Import quotas

Which of the following statements is true?

As a result of an increase in tariffs, imports decrease and government revenue increases.

When considering rent seeking, which of the following is TRUE?

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

A key difference between tariffs and quotas is that

During 2005-2006 Europe imported more than $70 million worth of US long -grain rice. How is the gain from trade distributed?

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand. As a result of the tariffs, the

Using calculations of the cost to Americans per job saved in protected industries, it can be concluded that

Based on the table below, at what world price would the country import? Price QD emanded Qsupplied 2 100 70 4 95 75 6 90 80 8 85 85 10 80 90 12 75 95

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

International trade is restricted because

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

Review

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Exam 15: International Trade Policy

Lowering the tariff on good X will

Consider a market that sells some of its goods as exports. Who does NOT benefit?

Quotas are less damaging to an economy than are tariffs.

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

The infant-industry argument is the only perfectly valid argument for protection.)

Import quotas

Which of the following statements is true?

As a result of an increase in tariffs, imports decrease and government revenue increases.

When considering rent seeking, which of the following is TRUE?

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

A key difference between tariffs and quotas is that

During 2005-2006 Europe imported more than $70 million worth of US long -grain rice. How is the gain from trade distributed?

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand. As a result of the tariffs, the

Using calculations of the cost to Americans per job saved in protected industries, it can be concluded that

Based on the table below, at what world price would the country import? Price QD emanded Qsupplied 2 100 70 4 95 75 6 90 80 8 85 85 10 80 90 12 75 95

Explain how governments restrict international trade and who benefits as well as who loses from the restrictions.

International trade is restricted because

What Is Economics

The Economic Problem

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

Review

Filters