Question 1

Tariffs are taxes that governments place on internationally traded goods.

Accepted Answer

A) True 
 B)False

Question 2

Strategic bargaining:

Accepted Answer

A)  always produces freer trade. 
B)  always increases a country's gains from trade. 
C)  may reduce trade if it is unsuccessful. 
D)  always reduces a country's gains from trade. 
A)  always produces freer trade. 
B)  always increases a country's gains from trade. 
C)  may reduce trade if it is unsuccessful. 
D)  always reduces a country's gains from trade.

Question 3

Which of the following is not a regulatory trade restriction?

Accepted Answer

A)  Vegetables prohibited because of excess pesticide usage 
B)  Inspections designed to impede trade processes 
C)  A limit on the number of imported cars 
D)  Leather products banned because of tanning by urine 
A)  Vegetables prohibited because of excess pesticide usage 
B)  Inspections designed to impede trade processes 
C)  A limit on the number of imported cars 
D)  Leather products banned because of tanning by urine

Question 4

Cuba is known for its tobacco products. Which of the following results would we expect to see from a U.S. sanction on Cuba?

Accepted Answer

A)  Transshipment of Cuban cigars to the United States occurring through other nations. 
B)  Cigar producers in Cuba being better off since their product is scarcer in the United States and therefore commands a higher price. 
C)  Cuba's economy gaining because its own citizens enjoy less expensive tobacco. 
D)  The U.S. government benefiting from tariff revenue on Cuban tobacco products. 
A)  Transshipment of Cuban cigars to the United States occurring through other nations. 
B)  Cigar producers in Cuba being better off since their product is scarcer in the United States and therefore commands a higher price. 
C)  Cuba's economy gaining because its own citizens enjoy less expensive tobacco. 
D)  The U.S. government benefiting from tariff revenue on Cuban tobacco products.

Question 5

Quotas on imported automobiles cost jobs in the U.S. automobile industry but lower auto prices for domestic consumers.

Accepted Answer

A) True 
 B)False

Question 6

Most economists believe that the infant industry argument for protection, though theoretically justified, often keeps firms from becoming more competitive.

Accepted Answer

A) True 
 B)False

Question 7

A 50 percent tax on imports of Danish cheese is an example of:

Accepted Answer

A)  a tariff. 
B)  a quota. 
C)  a regulatory trade restriction. 
D)  a sanction. 
A)  a tariff. 
B)  a quota. 
C)  a regulatory trade restriction. 
D)  a sanction.

Question 8

One reason economists oppose trade restrictions is that:

Accepted Answer

A)  it is difficult to limit trade restrictions to instances when their use is justified. 
B)  they are an ineffective way to raise tax revenue. 
C)  they protect national security, particularly in wartime. 
D)  no nation can benefit from trade restrictions. 
A)  it is difficult to limit trade restrictions to instances when their use is justified. 
B)  they are an ineffective way to raise tax revenue. 
C)  they protect national security, particularly in wartime. 
D)  no nation can benefit from trade restrictions.

Question 9

Germany's environmental policies restrict the sale of nonrefillable bottles and cans. This policy reduces the imports of these products. A foreign country that argues that this policy is really intended to protect German beverage makers from competition is arguing that the policy is an example of:

Accepted Answer

A)  a tariff. 
B)  a quota. 
C)  a regulatory trade restriction. 
D)  a sanction. 
A)  a tariff. 
B)  a quota. 
C)  a regulatory trade restriction. 
D)  a sanction.

Question 10

The benefits of free trade tend to be highly concentrated whereas the costs are widely scattered.

Accepted Answer

A) True 
 B)False

Question 11

Strategic bargaining:

Accepted Answer

A)  always reduces the number of trade restrictions. 
B)  always increases the number of trade restrictions. 
C)  may increase the number of trade restrictions if it is successful. 
D)  may reduce the number of trade restrictions if it is successful. 
A)  always reduces the number of trade restrictions. 
B)  always increases the number of trade restrictions. 
C)  may increase the number of trade restrictions if it is successful. 
D)  may reduce the number of trade restrictions if it is successful.

Question 12

A quota differs from a tariff in that quotas:

Accepted Answer

A)  limit the volume of imports more than tariffs. 
B)  do not increase the price of imports as much as tariffs. 
C)  do not generate tax revenues, unlike tariffs. 
D)  reduce consumer welfare more than do tariffs. 
A)  limit the volume of imports more than tariffs. 
B)  do not increase the price of imports as much as tariffs. 
C)  do not generate tax revenues, unlike tariffs. 
D)  reduce consumer welfare more than do tariffs.

Question 13

The United States has a trade deficit when the value of the goods and services we import exceeds the value of the goods and services we export.

Accepted Answer

A) True 
 B)False

Question 14

What does NAFTA stand for?

Accepted Answer

A)  North African Fair Trade Association 
B)  North Atlantic Favored Trade Association 
C)  North Atlantic Flat Tax Association 
D)  North American Free Trade Agreement 
A)  North African Fair Trade Association 
B)  North Atlantic Favored Trade Association 
C)  North Atlantic Flat Tax Association 
D)  North American Free Trade Agreement

Question 15

Which of the following groups would be most likely to benefit from a tariff on Japanese-manufactured light trucks (i.e., pickup trucks)?

Accepted Answer

A)  U.S. domestic pickup truck manufacturers 
B)  Japanese auto workers 
C)  U.S. consumers of pickup trucks 
D)  U.S. firms that export products to Japan 
A)  U.S. domestic pickup truck manufacturers 
B)  Japanese auto workers 
C)  U.S. consumers of pickup trucks 
D)  U.S. firms that export products to Japan

Question 16

Refer to the graph shown for a small country that is a price taker internationally.   Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, an import quota of 2,500 would cause domestic production to:

Accepted Answer

A)  increase from 6,100 to 7,400. 
B)  increase from 2,400 to 3,600. 
C)  decrease from 4,800 to 3,600. 
D)  decrease from 7,400 to 6,100. 
A)  increase from 6,100 to 7,400. 
B)  increase from 2,400 to 3,600. 
C)  decrease from 4,800 to 3,600. 
D)  decrease from 7,400 to 6,100.

Question 17

The WTO authorized several countries to impose about $150 million in trade sanctions against the United States in retaliation for a U.S. import law that the WTO ruled to be illegal. The organization that issued this ruling against the United States is known as the:

Accepted Answer

A)  Wage Tariff Objective. 
B)  World Trade Organization. 
C)  Wealth Technology Order. 
D)  Welfare Tax Order. 
A)  Wage Tariff Objective. 
B)  World Trade Organization. 
C)  Wealth Technology Order. 
D)  Welfare Tax Order.

Question 18

Regulatory trade restrictions:

Accepted Answer

A)  are always justified. 
B)  are never justified. 
C)  may be justified depending on the nature of the restriction. 
D)  are irrelevant since they are seldom used. 
A)  are always justified. 
B)  are never justified. 
C)  may be justified depending on the nature of the restriction. 
D)  are irrelevant since they are seldom used.

Question 19

Refer to the graph shown for a small country that is a price taker internationally.   Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. If government imposes a tariff in the amount of $2 per unit, it will collect revenue in the amount of:

Accepted Answer

A)  $0. 
B)  $2,400. 
C)  $5,000. 
D)  $10,000. 
A)  $0. 
B)  $2,400. 
C)  $5,000. 
D)  $10,000.

Question 20

The limit that United States places on textile imports is an example of:

Accepted Answer

A)  a tariff. 
B)  a quota. 
C)  a regulatory trade restriction. 
D)  a sanction. 
A)  a tariff. 
B)  a quota. 
C)  a regulatory trade restriction. 
D)  a sanction.

Exam 10: International Trade Policy

Tariffs are taxes that governments place on internationally traded goods.

Strategic bargaining:

Which of the following is not a regulatory trade restriction?

Cuba is known for its tobacco products. Which of the following results would we expect to see from a U.S. sanction on Cuba?

Quotas on imported automobiles cost jobs in the U.S. automobile industry but lower auto prices for domestic consumers.

Most economists believe that the infant industry argument for protection, though theoretically justified, often keeps firms from becoming more competitive.

A 50 percent tax on imports of Danish cheese is an example of:

One reason economists oppose trade restrictions is that:

Germany's environmental policies restrict the sale of nonrefillable bottles and cans. This policy reduces the imports of these products. A foreign country that argues that this policy is really intended to protect German beverage makers from competition is arguing that the policy is an example of:

The benefits of free trade tend to be highly concentrated whereas the costs are widely scattered.

Strategic bargaining:

A quota differs from a tariff in that quotas:

The United States has a trade deficit when the value of the goods and services we import exceeds the value of the goods and services we export.

What does NAFTA stand for?

Which of the following groups would be most likely to benefit from a tariff on Japanese-manufactured light trucks (i.e., pickup trucks)?

Refer to the graph shown for a small country that is a price taker internationally. Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. Starting from a free trade equilibrium, an import quota of 2,500 would cause domestic production to:

The WTO authorized several countries to impose about $150 million in trade sanctions against the United States in retaliation for a U.S. import law that the WTO ruled to be illegal. The organization that issued this ruling against the United States is known as the:

Regulatory trade restrictions:

Refer to the graph shown for a small country that is a price taker internationally. Assume the foreign supply of this product is perfectly elastic at a price of $4 per unit. If government imposes a tariff in the amount of $2 per unit, it will collect revenue in the amount of:

The limit that United States places on textile imports is an example of:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

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