Question 1

Analysts have suggested that the cost of bras is related to trade restrictions on textile imports. What does the price of bras have to do with tariffs and quotas?

Accepted Answer

A) Trade restrictions protect consumers by keeping the price of bras low. 
B) Trade restrictions in the form of tariffs keep prices of bras high, but replacing them with quotas will result in lower prices. 
C) Trade restrictions keep the prices of bras high, and ending them will result in lower prices. 
D) Trade restrictions do not influence the price of bras; the price is determined by domestic technology and the overall inflation rate. 
A) Trade restrictions protect consumers by keeping the price of bras low. 
B) Trade restrictions in the form of tariffs keep prices of bras high, but replacing them with quotas will result in lower prices. 
C) Trade restrictions keep the prices of bras high, and ending them will result in lower prices. 
D) Trade restrictions do not influence the price of bras; the price is determined by domestic technology and the overall inflation rate.

Question 2

According to most economists, outsourcing service jobs:

Accepted Answer

A) helps both countries in the long run. 
B) hurts both countries because the United States loses jobs and the employees of the call center are exploited with low wages. 
C) helps the United States but hurts the country with the low-cost labor. 
D) helps the country getting the jobs but hurts the United States with the loss of jobs. 
A) helps both countries in the long run. 
B) hurts both countries because the United States loses jobs and the employees of the call center are exploited with low wages. 
C) helps the United States but hurts the country with the low-cost labor. 
D) helps the country getting the jobs but hurts the United States with the loss of jobs.

Question 3

What is the major reason why developing countries often impose tariffs on imports rather than quotas?

Accepted Answer

Developing countries

Question 4

Transshipments, which are used commonly in international trade, tend to:

Accepted Answer

A) undermine the effectiveness of a sanction. 
B) strengthen the national security argument for trade restrictions. 
C) increase the effectiveness of trade restrictions. 
D) reduce the volume of world trade. 
A) undermine the effectiveness of a sanction. 
B) strengthen the national security argument for trade restrictions. 
C) increase the effectiveness of trade restrictions. 
D) reduce the volume of world trade.

Question 5

Technological changes in telecommunications have:

Accepted Answer

A) reduced the importance of services in the world economy. 
B) allowed increased foreign trade in many services. 
C) reduced the need for foreign trade in many services. 
D) profoundly affected trade in manufactured goods with little effect on trade in services. 
A) reduced the importance of services in the world economy. 
B) allowed increased foreign trade in many services. 
C) reduced the need for foreign trade in many services. 
D) profoundly affected trade in manufactured goods with little effect on trade in services.

Question 6

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 there are no trade restrictions, this country will produce:

Accepted Answer

A) 2,400 units domestically and import 5,000 units. 
B) 7,400 units domestically and export 5,000 units. 
C) 4,800 units domestically and consume 4,800 units. 
D) 4,800 units domestically and import 2,600 units. 
A) 2,400 units domestically and import 5,000 units. 
B) 7,400 units domestically and export 5,000 units. 
C) 4,800 units domestically and consume 4,800 units. 
D) 4,800 units domestically and import 2,600 units.

Question 7

The voluntary export restraints on autos by Japan in the early 1980s were:

Accepted Answer

A) prohibited under the GATT treaty. 
B) unlike an import quota and did not affect the quantity of cars imported. 
C) unlike a tariff and did not affect the price of imports. 
D) probably approved of by the Japanese car companies since it increased their profits. 
A) prohibited under the GATT treaty. 
B) unlike an import quota and did not affect the quantity of cars imported. 
C) unlike a tariff and did not affect the price of imports. 
D) probably approved of by the Japanese car companies since it increased their profits.

Question 8

A voluntary restraint agreement:

Accepted Answer

A) is prohibited under the GATT treaty and has become less common recently. 
B) does not, unlike a quota, affect the quantity of imports. 
C) does not, unlike a tariff, affect the price of imports. 
D) raises the price of imports in the same way as a quota. 
A) is prohibited under the GATT treaty and has become less common recently. 
B) does not, unlike a quota, affect the quantity of imports. 
C) does not, unlike a tariff, affect the price of imports. 
D) raises the price of imports in the same way as a quota.

Question 9

The text suggests that if economists had a mantra, it would be:

Accepted Answer

A) do unto others before they do unto you. 
B) justice is the measure of all things. 
C) when one person benefits, another is hurt. 
D) trade is good. 
A) do unto others before they do unto you. 
B) justice is the measure of all things. 
C) when one person benefits, another is hurt. 
D) trade is good.

Question 10

Countries restrict international trade for all of the following reasons except:

Accepted Answer

A) international trade probably will lead to the displacement of workers. 
B) the benefits of trade usually are limited to small groups, whereas the costs are widely scattered across the population. 
C) it is sometimes difficult to decide where a country's comparative advantage lies when "learning by doing" effects are important. 
D) economies of scale can mean that a country is able to develop a comparative advantage by protecting infant industries. 
A) international trade probably will lead to the displacement of workers. 
B) the benefits of trade usually are limited to small groups, whereas the costs are widely scattered across the population. 
C) it is sometimes difficult to decide where a country's comparative advantage lies when "learning by doing" effects are important. 
D) economies of scale can mean that a country is able to develop a comparative advantage by protecting infant industries.

Question 11

A country imposing trade restrictions can benefit only if other countries also impose trade restrictions.

Accepted Answer

A) True 
 B)False

Question 12

Import duties ranging from 28 percent to 113 percent on Chinese frozen and canned shrimp are an example of a policy that:

Accepted Answer

A) protects domestic fisheries from overfishing. 
B) uses regulations and taxes to protect domestic consumers. 
C) protects domestic producers from foreign producers. 
D) protects domestic consumers from foreign producers. 
A) protects domestic fisheries from overfishing. 
B) uses regulations and taxes to protect domestic consumers. 
C) protects domestic producers from foreign producers. 
D) protects domestic consumers from foreign producers.

Question 13

One impact of an import quota is to:

Accepted Answer

A) decrease the price of the imported good for the consumer. 
B) increase the price of the domestic good for the consumer. 
C) redistribute income from domestic producers to domestic consumers. 
D) decrease the price received by foreign producers. 
A) decrease the price of the imported good for the consumer. 
B) increase the price of the domestic good for the consumer. 
C) redistribute income from domestic producers to domestic consumers. 
D) decrease the price received by foreign producers.

Question 14

In strategic trade bargaining it is sometimes reasonable to be unreasonable.

Accepted Answer

A) True 
 B)False

Question 15

Free trade associations can potentially be harmful to international trade.

Accepted Answer

A) True 
 B)False

Question 16

What are the six main methods used by governments to restrict trade?

Accepted Answer

Governments have six main cate

Question 17

What does it mean for a country to be a debtor nation? What has to happen for a country to change from a debtor nation to a creditor nation?

Accepted Answer

A country is considered a debtor nation

Question 18

The percentage of goods and services the United States has imported from China and India over the last 15 years:

Accepted Answer

A) has remained roughly the same. 
B) has risen. 
C) has fallen. 
D) initially rose and then dropped back to the original level. 
A) has remained roughly the same. 
B) has risen. 
C) has fallen. 
D) initially rose and then dropped back to the original level.

Question 19

Threats to put tariffs on a nation in an attempt to get that nation to reduce its restrictions on trade are called:

Accepted Answer

A) strategic trade policies. 
B) trade adjustment assistance programs. 
C) learning by doing. 
D) inertia and cachet. 
A) strategic trade policies. 
B) trade adjustment assistance programs. 
C) learning by doing. 
D) inertia and cachet.

Question 20

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, a tariff in the amount of $2 per unit would be expected to cause domestic production to:

Accepted Answer

A) increase from 2,400 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 2,400 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.

Exam 10: International Trade Policy

Analysts have suggested that the cost of bras is related to trade restrictions on textile imports. What does the price of bras have to do with tariffs and quotas?

According to most economists, outsourcing service jobs:

What is the major reason why developing countries often impose tariffs on imports rather than quotas?

Transshipments, which are used commonly in international trade, tend to:

Technological changes in telecommunications have:

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 there are no trade restrictions, this country will produce:

The voluntary export restraints on autos by Japan in the early 1980s were:

A voluntary restraint agreement:

The text suggests that if economists had a mantra, it would be:

Countries restrict international trade for all of the following reasons except:

A country imposing trade restrictions can benefit only if other countries also impose trade restrictions.

Import duties ranging from 28 percent to 113 percent on Chinese frozen and canned shrimp are an example of a policy that:

One impact of an import quota is to:

In strategic trade bargaining it is sometimes reasonable to be unreasonable.

Free trade associations can potentially be harmful to international trade.

What are the six main methods used by governments to restrict trade?

What does it mean for a country to be a debtor nation? What has to happen for a country to change from a debtor nation to a creditor nation?

The percentage of goods and services the United States has imported from China and India over the last 15 years:

Threats to put tariffs on a nation in an attempt to get that nation to reduce its restrictions on trade are called:

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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