Question 1

Figure 4.3 Domestic Market for Gasoline in the United States
  
-Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

Accepted Answer

A)  60 gallons of gasoline 
B)  $120 
C)  $60 
D)  $3 
A)  60 gallons of gasoline 
B)  $120 
C)  $60 
D)  $3

Question 2

A tax of 20 cents per unit of imported cheese would be an example of:

Accepted Answer

A)  Compound tariff 
B)  Effective tariff 
C)  Ad valorem tariff 
D)  Specific tariff 
A)  Compound tariff 
B)  Effective tariff 
C)  Ad valorem tariff 
D)  Specific tariff

Question 3

A beggar-thy-neighbor policy is the imposition of:

Accepted Answer

A)  Free trade to increase domestic productivity 
B)  Trade barriers to increase domestic demand and employment 
C)  Import tariffs to curb domestic inflation 
D)  Revenue tariffs to make products cheaper for domestic consumers 
A)  Free trade to increase domestic productivity 
B)  Trade barriers to increase domestic demand and employment 
C)  Import tariffs to curb domestic inflation 
D)  Revenue tariffs to make products cheaper for domestic consumers

Question 4

Table 4.1.Production Costs and Prices of Imported and Domestic VCRs
  
-Consider Table 4.1.After 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 5

The deadweight losses of a tariff consist of the sum of the protective effect plus the consumption effect.

Accepted Answer

A) True 
 B)False

Question 6

If the world price of steel is $600 per ton,a specific tariff of $120 per ton is equivalent to an ad valorem tariff of 25 percent.

Accepted Answer

A) True 
 B)False

Question 7

The redistribution effect is the transfer of producer surplus to domestic consumers of the import-competing product.

Accepted Answer

A) True 
 B)False

Question 8

Unlike a specific tariff,an ad valorem tariff differentiates between commodities with different values.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that Mexico is a small country and it imposes a tariff on imports.This results in

Accepted Answer

A)  an improving terms of trade for Mexico 
B)  a worsening terms of trade for Mexico 
C)  no change in the terms of trade for Mexico 
D)  any of the above 
A)  an improving terms of trade for Mexico 
B)  a worsening terms of trade for Mexico 
C)  no change in the terms of trade for Mexico 
D)  any of the above

Question 10

According to the infant-industry argument,temporary tariff protection granted to an infant industry will help it become competitive in the world market; when international competitiveness is achieved,the tariff should be removed.

Accepted Answer

A) True 
 B)False

Question 11

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 revenue effect equals $6,000.

Accepted Answer

A) True 
 B)False

Question 12

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.With a per-unit tariff of $3,the quantity of imports decreases to:

Accepted Answer

A)  20 calculators 
B)  40 calculators 
C)  50 calculators 
D)  70 calculators 
A)  20 calculators 
B)  40 calculators 
C)  50 calculators 
D)  70 calculators

Question 13

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.In the absence of 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 14

If we consider the interests of both consumers and producers,then a policy of tariff reduction in the U.S.auto industry is:

Accepted Answer

A)  In the interest of the United States as a whole,but not in the interest of auto-producing states 
B)  In the interest of the United States as a whole,and in the interest of auto-producing states 
C)  Not in the interest of the United States as a whole,nor in the interest of auto-producing states 
D)  Not in the interest of the United States as a whole,but is in the interest of auto-producing states 
A)  In the interest of the United States as a whole,but not in the interest of auto-producing states 
B)  In the interest of the United States as a whole,and in the interest of auto-producing states 
C)  Not in the interest of the United States as a whole,nor in the interest of auto-producing states 
D)  Not in the interest of the United States as a whole,but is in the interest of auto-producing states

Question 15

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

Accepted Answer

A) True 
 B)False

Question 16

Relatively low wages in Mexico make it impossible for U.S.manufacturers of labor-intensive goods to compete against Mexican manufacturers.

Accepted Answer

A) True 
 B)False

Question 17

The U.S.constitution allows the country to levy tariffs

Accepted Answer

A)  only on exports 
B)  only on imports 
C)  on both exports and imports 
D)  on neither exports nor imports 
A)  only on exports 
B)  only on imports 
C)  on both exports and imports 
D)  on neither exports nor imports

Question 18

The deadweight loss of a tariff:

Accepted Answer

A)  Is a social loss since it promotes inefficient production 
B)  Is a social loss since it reduces the revenue for the government 
C)  Is not a social loss because society as a whole doesn't pay for the loss 
D)  Is not a social loss since only business firms suffer revenue losses 
A)  Is a social loss since it promotes inefficient production 
B)  Is a social loss since it reduces the revenue for the government 
C)  Is not a social loss because society as a whole doesn't pay for the loss 
D)  Is not a social loss since only business firms suffer revenue losses

Question 19

As long as it is assumed that a nation accounts for a negligible portion of international trade,its levying an import tariff necessarily increases its overall welfare.

Accepted Answer

A) True 
 B)False

Question 20

Should the home country be "large" relative to the world,its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the:

Accepted Answer

A)  Revenue effect plus redistribution effect 
B)  Protective effect plus revenue effect 
C)  Consumption effect plus redistribution effect 
D)  Protective effect plus consumption effect 
A)  Revenue effect plus redistribution effect 
B)  Protective effect plus revenue effect 
C)  Consumption effect plus redistribution effect 
D)  Protective effect plus consumption effect

Figure 4.3 Domestic Market for Gasoline in the United States -Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

A tax of 20 cents per unit of imported cheese would be an example of:

A beggar-thy-neighbor policy is the imposition of:

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

The deadweight losses of a tariff consist of the sum of the protective effect plus the consumption effect.

If the world price of steel is $600 per ton,a specific tariff of $120 per ton is equivalent to an ad valorem tariff of 25 percent.

The redistribution effect is the transfer of producer surplus to domestic consumers of the import-competing product.

Unlike a specific tariff,an ad valorem tariff differentiates between commodities with different values.

Suppose that Mexico is a small country and it imposes a tariff on imports.This results in

According to the infant-industry argument,temporary tariff protection granted to an infant industry will help it become competitive in the world market; when international competitiveness is achieved,the tariff should be removed.

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.With a per-unit tariff of $3,the quantity of imports decreases to:

If we consider the interests of both consumers and producers,then a policy of tariff reduction in the U.S.auto industry is:

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

Relatively low wages in Mexico make it impossible for U.S.manufacturers of labor-intensive goods to compete against Mexican manufacturers.

The U.S.constitution allows the country to levy tariffs

The deadweight loss of a tariff:

As long as it is assumed that a nation accounts for a negligible portion of international trade,its levying an import tariff necessarily increases its overall welfare.

Should the home country be "large" relative to the world,its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the:

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

Figure 4.3 Domestic Market for Gasoline in the United States -Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

A tax of 20 cents per unit of imported cheese would be an example of:

A beggar-thy-neighbor policy is the imposition of:

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

The deadweight losses of a tariff consist of the sum of the protective effect plus the consumption effect.

If the world price of steel is $600 per ton,a specific tariff of $120 per ton is equivalent to an ad valorem tariff of 25 percent.

The redistribution effect is the transfer of producer surplus to domestic consumers of the import-competing product.

Unlike a specific tariff,an ad valorem tariff differentiates between commodities with different values.

Suppose that Mexico is a small country and it imposes a tariff on imports.This results in

According to the infant-industry argument,temporary tariff protection granted to an infant industry will help it become competitive in the world market; when international competitiveness is achieved,the tariff should be removed.

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.With a per-unit tariff of $3,the quantity of imports decreases to:

If we consider the interests of both consumers and producers,then a policy of tariff reduction in the U.S.auto industry is:

A tariff quota is a combination of a specific tariff and an ad valorem tariff.

Relatively low wages in Mexico make it impossible for U.S.manufacturers of labor-intensive goods to compete against Mexican manufacturers.

The U.S.constitution allows the country to levy tariffs

The deadweight loss of a tariff:

As long as it is assumed that a nation accounts for a negligible portion of international trade,its levying an import tariff necessarily increases its overall welfare.

Should the home country be "large" relative to the world,its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the:

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