Question 1

Which of the following is not an argument in favor of protecting domestic industries from foreign competition?

Accepted Answer

A) National security 
B) Reducing structural unemployment 
C) Protection against subsidized foreign producers 
D) Making domestic firms more efficient 
A) National security 
B) Reducing structural unemployment 
C) Protection against subsidized foreign producers 
D) Making domestic firms more efficient

Question 2

In general, why are trade sanctions implemented?

Accepted Answer

A) To benefit emerging industries 
B) To lower domestic unemployment rates 
C) For political reasons 
D) To raise revenue from trade 
A) To benefit emerging industries 
B) To lower domestic unemployment rates 
C) For political reasons 
D) To raise revenue from trade

Question 3

What are free trade associations? Explain why they help or hinder international trade.

Accepted Answer

A free trade association is a group of c

Question 4

You are an influential CEO of a company like Wal-Mart,who imports foreign made clothing.The government wants to restrict the quantity of the product that your company imports.Should you use your political influence to lobby the Congress to impose a tariff on the product or a quota? Explain your answer.

Accepted Answer

If your choice was between a tariff or a

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

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 7

As a country develops economically, what changes usually take place in the goods it exports?

Accepted Answer

A) There is little change because comparative advantage does not change. 
B) Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods. 
C) Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products. 
D) Exports go from being diversified to being specialized in whatever the country finds to be its comparative advantage. 
A) There is little change because comparative advantage does not change. 
B) Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods. 
C) Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products. 
D) Exports go from being diversified to being specialized in whatever the country finds to be its comparative advantage.

Question 8

Define tariffs and quotas,and explain the similarities and differences between them.

Accepted Answer

A tariff is a tax imposed by the governm

Question 9

Voluntary restraint agreements:

Accepted Answer

A) are prohibited by NAFTA. 
B) do not affect imports in both the short run and the long run. 
C) hurt consumers in both the short run and the long run. 
D) hurt workers in both the short run and the long run. 
A) are prohibited by NAFTA. 
B) do not affect imports in both the short run and the long run. 
C) hurt consumers in both the short run and the long run. 
D) hurt workers in both the short run and the long run.

Question 10

The type of goods being imported has changed from primarily low-tech goods to agricultural goods.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following groups might be expected to support high United States Department of Agriculture standards for imported citrus fruit?

Accepted Answer

A) Orange and grapefruit producers in other nations 
B) Citrus fruit consumers in New England, where citrus cannot be grown easily 
C) Orange growers in Florida 
D) Shipping companies that import agricultural goods from other countries 
A) Orange and grapefruit producers in other nations 
B) Citrus fruit consumers in New England, where citrus cannot be grown easily 
C) Orange growers in Florida 
D) Shipping companies that import agricultural goods from other countries

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

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 consumption 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 16

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

Accepted Answer

A) prohibited by the WTO. 
B) unlike an import quota and did not affect the price of cars imported. 
C) unlike a tariff and did not affect the price of imports. 
D) a bad deal for the U.S. consumers. 
A) prohibited by the WTO. 
B) unlike an import quota and did not affect the price of cars imported. 
C) unlike a tariff and did not affect the price of imports. 
D) a bad deal for the U.S. consumers.

Question 17

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 consumption 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.

Question 18

Which of the following is a free trade association?

Accepted Answer

A) G7 
B) NAFTA 
C) WTO 
D) NATO 
A) G7 
B) NAFTA 
C) WTO 
D) NATO

Question 19

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

Exam 10: International Trade Policy

Which of the following is not an argument in favor of protecting domestic industries from foreign competition?

In general, why are trade sanctions implemented?

What are free trade associations? Explain why they help or hinder international trade.

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

What does NAFTA stand for?

As a country develops economically, what changes usually take place in the goods it exports?

Define tariffs and quotas,and explain the similarities and differences between them.

Voluntary restraint agreements:

The type of goods being imported has changed from primarily low-tech goods to agricultural goods.

Which of the following groups might be expected to support high United States Department of Agriculture standards for imported citrus fruit?

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

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:

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

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 consumption to:

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

Which of the following is a free trade association?

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

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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