Question 1

Article XX of the World Trade Organization allows trade restrictions:

Accepted Answer

A) to protect domestic jobs. 
B) that are necessary to protect human, animal, or plant life or health. 
C) to promote the use of solar energy in the developing countries. 
D) in the form of tariffs imposed on capital-intensive commodities. 
A) to protect domestic jobs. 
B) that are necessary to protect human, animal, or plant life or health. 
C) to promote the use of solar energy in the developing countries. 
D) in the form of tariffs imposed on capital-intensive commodities. B

Question 2

Which of the following exists when one person's activity results in direct costs or benefits to someone who is not part of the marketplace decision to undertake the activity?

Accepted Answer

A) Externality 
B) Specificity rule 
C) Property rights 
D) Marginal cost 
A) Externality 
B) Specificity rule 
C) Property rights 
D) Marginal cost A

Question 3

Which of the following was signed in 1987 and banned the exportation and importation of CFCs and halons?

Accepted Answer

A) The Uruguay Round 
B) The CITES 
C) The Montreal Protocol 
D) The Kyoto Protocol 
A) The Uruguay Round 
B) The CITES 
C) The Montreal Protocol 
D) The Kyoto Protocol C

Question 4

NAFTA established processes that have substantially reduced transborder pollution along the Mexico-U.S. border.

Accepted Answer

A) True 
 B)False

Question 5

An increase in per capita incomes can be expected to have little effect on reducing emissions that lead to global warming.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements about trade and domestic pollution is accurate?

Accepted Answer

A) Free trade is likely to cause producers to reduce their levels of pollution due to international competition. 
B) It is possible for free trade to hurt a country if polluters are forced to internalize the external costs associated with their production. 
C) In the presence of free trade, the costs of pollution can be transferred almost completely by the exporting country to the importing country. 
D) If polluters are not forced to internalize the external costs associated with their production, free trade could result in the country exporting the wrong products. 
A) Free trade is likely to cause producers to reduce their levels of pollution due to international competition. 
B) It is possible for free trade to hurt a country if polluters are forced to internalize the external costs associated with their production. 
C) In the presence of free trade, the costs of pollution can be transferred almost completely by the exporting country to the importing country. 
D) If polluters are not forced to internalize the external costs associated with their production, free trade could result in the country exporting the wrong products.

Question 7

Which countries are most and least likely to be harmed by adverse climate changes? What progress that has been made to find a comprehensive way to address global warming?

Accepted Answer

The countries which are most likely to b

Question 8

Which of the following is likely to be the least important factor for firms in determining production location?

Accepted Answer

A) Comparative cost advantage 
B) Environmental standards 
C) Transportation costs 
D) External economies of scale 
A) Comparative cost advantage 
B) Environmental standards 
C) Transportation costs 
D) External economies of scale

Question 9

If the foreign use of Australian-mined coal is harming Australia, according to the specificity rule, the optimal policy for the Australian government to use is to _____.

Accepted Answer

A) tax coal imports 
B) tax coal exports 
C) tax foreign coal producers 
D) subsidize coal exports 
A) tax coal imports 
B) tax coal exports 
C) tax foreign coal producers 
D) subsidize coal exports

Question 10

World Trade Organization rules allow a government to take actions to control environmental damage caused by its own firms' production.

Accepted Answer

A) True 
 B)False

Question 11

Why will the Kyoto Protocol have a small impact on overall global greenhouse-gas emissions? Cite examples from countries that struggle to meet their targets.

Accepted Answer

There are a host of factors which sugges

Question 12

If the production of a good creates a negative externality, exports can be damaging to a nation.

Accepted Answer

A) True 
 B)False

Question 13

A negative externality is said to exist if:

Accepted Answer

A) the private marginal cost exceeds the private marginal benefit. 
B) the producer and the consumer surplus for a particular good are not equal. 
C) a tax imposed on the production of a particular good results in a deadweight loss. 
D) the social costs exceed the private costs. 
A) the private marginal cost exceeds the private marginal benefit. 
B) the producer and the consumer surplus for a particular good are not equal. 
C) a tax imposed on the production of a particular good results in a deadweight loss. 
D) the social costs exceed the private costs.

Question 14

Identify the correct statement.

Accepted Answer

A) The overall effects of the Uruguay Round on global pollution are actually small. 
B) The actual effects of the Uruguay Round on pollution levels are uniform across all the countries. 
C) Evidence shows that free trade is inherently anti-environment. 
D) The composition effect of the Uruguay Round tends to increase production of environment friendly products in the United States. 
A) The overall effects of the Uruguay Round on global pollution are actually small. 
B) The actual effects of the Uruguay Round on pollution levels are uniform across all the countries. 
C) Evidence shows that free trade is inherently anti-environment. 
D) The composition effect of the Uruguay Round tends to increase production of environment friendly products in the United States.

Question 15

Externalities are direct benefits or costs accruing to individuals or groups of individuals who were not participants in the activity.

Accepted Answer

A) True 
 B)False

Question 16

Research supports the claim that there are significant compliance costs associated with environmentally friendly production in countries with strong environmental laws, so that there are significant incentives for firms to produce in countries with lax environmental laws.

Accepted Answer

A) True 
 B)False

Question 17

The relationship between environmental harm and national income per person for arsenic water pollution exhibits a(n):

Accepted Answer

A) downward sloping curve. 
B) upward sloping curve. 
C) U-shape curve. 
D) inverted U-shaped curve. 
A) downward sloping curve. 
B) upward sloping curve. 
C) U-shape curve. 
D) inverted U-shaped curve.

Question 18

Which of the following involved industrial countries agreeing to cut their emissions of greenhouse gases to about 5 percent below their 1990 levels by the years 2008-2012 while developing countries did not make any commitments?

Accepted Answer

A) The Uruguay Round 
B) The CITES 
C) The Montreal Protocol 
D) The Kyoto Protocol 
A) The Uruguay Round 
B) The CITES 
C) The Montreal Protocol 
D) The Kyoto Protocol

Question 19

Which of the following statements is true?

Accepted Answer

A) Evidence shows that measures to keep the environment clean represent a large percentage of the total costs of production for a firm in a country with strict environmental laws. 
B) There are significant incentives for firms to relocate from countries with strict environmental laws to countries with lax environmental regulation. 
C) Firms are unlikely to relocate their high-pollution production to countries with lax environmental laws because they fear that such moves will result in adverse effects on their reputations. 
D) Imposition of a tax on the production of a particular high-pollution product typically has a greater impact on consumer surplus than on producer surplus. 
A) Evidence shows that measures to keep the environment clean represent a large percentage of the total costs of production for a firm in a country with strict environmental laws. 
B) There are significant incentives for firms to relocate from countries with strict environmental laws to countries with lax environmental regulation. 
C) Firms are unlikely to relocate their high-pollution production to countries with lax environmental laws because they fear that such moves will result in adverse effects on their reputations. 
D) Imposition of a tax on the production of a particular high-pollution product typically has a greater impact on consumer surplus than on producer surplus.

Question 20

If the use of fossil fuels is harming our nation, according to the specificity rule, the optimal policy to use to mitigate this harm is to:

Accepted Answer

A) subsidize research and development on alternate fuel sources. 
B) levy taxes on the extraction of coal and petroleum. 
C) tax the consumption of fossil fuels. 
D) impose tariffs on the importation of fossil fuels. 
A) subsidize research and development on alternate fuel sources. 
B) levy taxes on the extraction of coal and petroleum. 
C) tax the consumption of fossil fuels. 
D) impose tariffs on the importation of fossil fuels.

Exam 13: Trade and the Environment

Article XX of the World Trade Organization allows trade restrictions:

Which of the following exists when one person's activity results in direct costs or benefits to someone who is not part of the marketplace decision to undertake the activity?

Which of the following was signed in 1987 and banned the exportation and importation of CFCs and halons?

NAFTA established processes that have substantially reduced transborder pollution along the Mexico-U.S. border.

An increase in per capita incomes can be expected to have little effect on reducing emissions that lead to global warming.

Which of the following statements about trade and domestic pollution is accurate?

Which countries are most and least likely to be harmed by adverse climate changes? What progress that has been made to find a comprehensive way to address global warming?

Which of the following is likely to be the least important factor for firms in determining production location?

If the foreign use of Australian-mined coal is harming Australia, according to the specificity rule, the optimal policy for the Australian government to use is to _____.

World Trade Organization rules allow a government to take actions to control environmental damage caused by its own firms' production.

Why will the Kyoto Protocol have a small impact on overall global greenhouse-gas emissions? Cite examples from countries that struggle to meet their targets.

If the production of a good creates a negative externality, exports can be damaging to a nation.

A negative externality is said to exist if:

Identify the correct statement.

Externalities are direct benefits or costs accruing to individuals or groups of individuals who were not participants in the activity.

Research supports the claim that there are significant compliance costs associated with environmentally friendly production in countries with strong environmental laws, so that there are significant incentives for firms to produce in countries with lax environmental laws.

The relationship between environmental harm and national income per person for arsenic water pollution exhibits a(n):

Which of the following involved industrial countries agreeing to cut their emissions of greenhouse gases to about 5 percent below their 1990 levels by the years 2008-2012 while developing countries did not make any commitments?

Which of the following statements is true?

If the use of fossil fuels is harming our nation, according to the specificity rule, the optimal policy to use to mitigate this harm is to:

International Economics Is Different

The Basic Theory Using Demand and Supply

Why Everybody Trades: Comparative Advantage

Trade: Factor Availability and Factor Proportions Are Key

Who Gains and Who Loses From Trade

Scale Economies, Imperfect Competition, and Trade

Growth and Trade Part II: Trade Policy

Analysis of a Tariff

Nontariff Barriers to Imports

Arguments for and Against Protection

Pushing Exports

Trade Blocs and Trade Blocks

Trade Policies for Developing Countries

Multinationals and Migration: International Factor Movements

Payments Among Nations

The Foreign Exchange Market

Forward Exchange and International Financial Investment

What Determines Exchange Rates

Government Policies Toward the Foreign Exchange Market

International Lending and Financial Crises

How Does the Open Macroeconomy Work

Internal and External Balance With Fixed Exchange Rates

Floating Exchange Rates and Internal Balance

National and Global Choices: Floating Rates and the Alternatives

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