Question 1

For the United States,a foreign trade zone (FTZ) is

Accepted Answer

A)  A site within the United States 
B)  A site outside the United States 
C)  Always located in poorer developing countries 
D)  Is used to discourage trade 
A)  A site within the United States 
B)  A site outside the United States 
C)  Always located in poorer developing countries 
D)  Is used to discourage trade

Question 2

Frederic Bastiat's "Petition of the Candle Makers" was a satire that illustrated the disadvantages of free trade as opposed to protectionism.

Accepted Answer

A) True 
 B)False

Question 3

If a "small" country levies a tariff on an imported good,its overall welfare increases if the monetary value of the tariff's consumption effect plus protective effect is less than the monetary value of the terms-of-trade effect.

Accepted Answer

A) True 
 B)False

Question 4

Suppose that Germany levies a tariff on oranges,but none are grown in Germany.This tariff has

Accepted Answer

A)  only a protective effect 
B)  only a revenue effect 
C)  both a protective effect and revenue effect 
D)  neither a protective effect nor revenue effect 
A)  only a protective effect 
B)  only a revenue effect 
C)  both a protective effect and revenue effect 
D)  neither a protective effect nor revenue effect

Question 5

When no imported inputs are used in the production of computers,the effective tariff rate on computers

Accepted Answer

A)  exceeds the nominal tariff rate on computers 
B)  is less than the nominal tariff rate on computers 
C)  equals the nominal tariff rate on computers 
A)  exceeds the nominal tariff rate on computers 
B)  is less than the nominal tariff rate on computers 
C)  equals the nominal tariff rate on computers

Question 6

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

Accepted Answer

A) True 
 B)False

Question 7

Figure 4.4 Market for Gasoline in a Small Nation
  
-Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

Accepted Answer

A)  $15 
B)  $12.5 
C)  $47.50 
D)  $57.50 
A)  $15 
B)  $12.5 
C)  $47.50 
D)  $57.50

Question 8

Figure 4.1 illustrates the demand and supply schedules for pocket calculators in Mexico,a "small" nation that is unable to affect the world price.
Figure 4.1.Import Tariff Levied by a "Small" Country
  
-Consider Figure 4.1.In the absence of trade,Mexico's producer surplus and consumer surplus respectively equal:

Accepted Answer

A)  $120,$240 
B)  $180,$180 
C)  $180,$320 
D)  $240,$240 
A)  $120,$240 
B)  $180,$180 
C)  $180,$320 
D)  $240,$240

Question 9

For a large nation,the levying of an import tariff on steel

Accepted Answer

A)  necessarily causes the nation's welfare to decline 
B)  causes price of steel on the world market to decline 
C)  causes the price of steel for domestic consumers to rise by the full amount of the tariff 
D)  necessarily causes the nation's welfare to increase 
A)  necessarily causes the nation's welfare to decline 
B)  causes price of steel on the world market to decline 
C)  causes the price of steel for domestic consumers to rise by the full amount of the tariff 
D)  necessarily causes the nation's welfare to increase

Question 10

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

Accepted Answer

A) True 
 B)False

Question 11

Table 4.1.Production Costs and Prices of Imported and Domestic VCRs
  
-Consider Table 4.1.Prior to the tariff,domestic value added equals:

Accepted Answer

A)  $25 
B)  $50 
C)  $75 
D)  $100 
A)  $25 
B)  $50 
C)  $75 
D)  $100

Question 12

Suppose that Japan levies a 40 percent on pickup trucks and a 20 percent on engines.The effective rate of protection on pickup trucks

Accepted Answer

A)  more than the nominal rate of protection on pickup trucks 
B)  less than the nominal rate of protection on pickup trucks 
C)  is equal to the nominal rate of protection on pickup trucks 
A)  more than the nominal rate of protection on pickup trucks 
B)  less than the nominal rate of protection on pickup trucks 
C)  is equal to the nominal rate of protection on pickup trucks

Question 13

Assume the United States is a large consumer of steel that is able to influence the world price.Its demand and supply schedules are respectively denoted by DU.S.and SU.S.in Figure 4.2.The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2.Import Tariff Levied by a "Large" Country
  
-Referring to Figure 4.2,the tariff's deadweight welfare loss to the United States totals:

Accepted Answer

A)  $450 
B)  $550 
C)  $650 
D)  $750 
A)  $450 
B)  $550 
C)  $650 
D)  $750

Question 14

Exhibit 4.2 
In the absence of international trade,assume that the equilibrium price and quantity of motorcycles in Canada is $14,000 and 10 units respectively.Assuming that Canada is a small country that is unable to affect the world price of motorcycles,suppose its market is opened to international trade.As a result,the price of motorcycles falls to $12,000 and the total quantity demanded rises to 14 units; out of this total,6 units are produced in Canada while 8 units are imported.Now assume that the Canadian government levies an import tariff of $1,000 on motorcycles.
-Refer to Exhibit 4.2.The tariff's redistribution effect equals $7,000.

Accepted Answer

A) True 
 B)False

Question 15

Exhibit 4.1 
Assume that the United States imports automobiles from South Korea at a price of $20,000 per vehicle and that these vehicles are subject to an import tariff of 20 percent.Also assume that U.S.components are used in the vehicles assembled by South Korea and that these components have a value of $10,000.
-Refer to Exhibit 4.1.Under the Offshore Assembly Provision of U.S.tariff policy,the price of an imported vehicle to the U.S.consumer after the tariff has been levied is:

Accepted Answer

A)  $22,000 
B)  $23,000 
C)  $24,000 
D)  $25,000 
A)  $22,000 
B)  $23,000 
C)  $24,000 
D)  $25,000

Question 16

A lower tariff on imported aluminum would most likely benefit:

Accepted Answer

A)  Foreign producers at the expense of domestic consumers 
B)  Domestic manufacturers of aluminum 
C)  Domestic consumers of aluminum 
D)  Workers in the domestic aluminum industry 
A)  Foreign producers at the expense of domestic consumers 
B)  Domestic manufacturers of aluminum 
C)  Domestic consumers of aluminum 
D)  Workers in the domestic aluminum industry

Question 17

When a manufacturing firm uses some imported inputs in the production process,the appropriate measure of protection is the nominal tariff.

Accepted Answer

A) True 
 B)False

Question 18

Assume the United States is a large consumer of steel that is able to influence the world price.Its demand and supply schedules are respectively denoted by DU.S.and SU.S.in Figure 4.2.The overall (United States plus world) supply schedule of steel is denoted by SU.S.+W.
Figure 4.2.Import Tariff Levied by a "Large" Country
  
-According to Figure 4.2,the tariff leads to the overall welfare of the United States:

Accepted Answer

A)  Rising by $250 
B)  Rising by $500 
C)  Falling by $250 
D)  Falling by $500 
A)  Rising by $250 
B)  Rising by $500 
C)  Falling by $250 
D)  Falling by $500

Question 19

When a government allows raw materials and other intermediate products to enter a country duty free,its tariff policy generally results in a:

Accepted Answer

A)  Effective tariff rate less than the nominal tariff rate 
B)  Nominal tariff rate less than the effective tariff rate 
C)  Rise in both nominal and effective tariff rates 
D)  Fall in both nominal and effective tariff rates 
A)  Effective tariff rate less than the nominal tariff rate 
B)  Nominal tariff rate less than the effective tariff rate 
C)  Rise in both nominal and effective tariff rates 
D)  Fall in both nominal and effective tariff rates

Question 20

If Germany is considered to be a "large" country,a tariff will ______ increase its national welfare.

Accepted Answer

A)  never 
B)  always 
C)  sometimes 
A)  never 
B)  always 
C)  sometimes

For the United States,a foreign trade zone (FTZ) is

Frederic Bastiat's "Petition of the Candle Makers" was a satire that illustrated the disadvantages of free trade as opposed to protectionism.

If a "small" country levies a tariff on an imported good,its overall welfare increases if the monetary value of the tariff's consumption effect plus protective effect is less than the monetary value of the terms-of-trade effect.

Suppose that Germany levies a tariff on oranges,but none are grown in Germany.This tariff has

When no imported inputs are used in the production of computers,the effective tariff rate on computers

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

Figure 4.4 Market for Gasoline in a Small Nation -Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

For a large nation,the levying of an import tariff on steel

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

Table 4.1.Production Costs and Prices of Imported and Domestic VCRs -Consider Table 4.1.Prior to the tariff,domestic value added equals:

Suppose that Japan levies a 40 percent on pickup trucks and a 20 percent on engines.The effective rate of protection on pickup trucks

A lower tariff on imported aluminum would most likely benefit:

When a manufacturing firm uses some imported inputs in the production process,the appropriate measure of protection is the nominal tariff.

When a government allows raw materials and other intermediate products to enter a country duty free,its tariff policy generally results in a:

If Germany is considered to be a "large" country,a tariff will ______ increase its national welfare.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance-of-payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance-of-payments

Exchange Rate Systems and Currency Crises

Macroeconomic Policy in an Open-economy

International Banking: Reserves, Debt, and Risk

Filters

Exam 4: Tariffs

For the United States,a foreign trade zone (FTZ) is

Frederic Bastiat's "Petition of the Candle Makers" was a satire that illustrated the disadvantages of free trade as opposed to protectionism.

If a "small" country levies a tariff on an imported good,its overall welfare increases if the monetary value of the tariff's consumption effect plus protective effect is less than the monetary value of the terms-of-trade effect.

Suppose that Germany levies a tariff on oranges,but none are grown in Germany.This tariff has

When no imported inputs are used in the production of computers,the effective tariff rate on computers

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

Figure 4.4 Market for Gasoline in a Small Nation -Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

For a large nation,the levying of an import tariff on steel

A specific tariff is expressed as a fixed percentage of the total value of an imported product.

Table 4.1.Production Costs and Prices of Imported and Domestic VCRs -Consider Table 4.1.Prior to the tariff,domestic value added equals:

Suppose that Japan levies a 40 percent on pickup trucks and a 20 percent on engines.The effective rate of protection on pickup trucks

A lower tariff on imported aluminum would most likely benefit:

When a manufacturing firm uses some imported inputs in the production process,the appropriate measure of protection is the nominal tariff.

When a government allows raw materials and other intermediate products to enter a country duty free,its tariff policy generally results in a:

If Germany is considered to be a "large" country,a tariff will ______ increase its national welfare.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance-of-payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance-of-payments

Exchange Rate Systems and Currency Crises

Macroeconomic Policy in an Open-economy

International Banking: Reserves, Debt, and Risk

Filters