Question 1

In the United States, a "buy American" act was passed in 1933 to create larger markets for domestic goods.

Accepted Answer

A) True 
 B)False  True

Question 2

The effect of an import quota on the domestic market is to shift the:

Accepted Answer

A)  demand curve to the right by the amount of the quota. 
B)  demand curve to the left by the amount of the quota. 
C)  supply curve to the right by the amount of the quota. 
D)  supply curve to the left by the amount of the quota. 
E)  consumers' marginal utility curves if they prefer foreign goods to domestic goods. 
A)  demand curve to the right by the amount of the quota. 
B)  demand curve to the left by the amount of the quota. 
C)  supply curve to the right by the amount of the quota. 
D)  supply curve to the left by the amount of the quota. 
E)  consumers' marginal utility curves if they prefer foreign goods to domestic goods. C

Question 3

Which of the following countries is forbidden to impose export tariff by its constitution?

Accepted Answer

A)  The United States 
B)  Brazil 
C)  United Kingdom 
D)  Japan 
E)  Mexico 
A)  The United States 
B)  Brazil 
C)  United Kingdom 
D)  Japan 
E)  Mexico A

Question 4

Creating conditions for fair trade by limiting imports will make the domestic consumers better off, as they will be required to pay low prices for the products.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would result from a tariff?

Accepted Answer

A)  An increase in government budget deficit 
B)  An increase in domestic production 
C)  A greater volume of international trade 
D)  Increased domestic consumption 
E)  Decrease in prices of the imported goods 
A)  An increase in government budget deficit 
B)  An increase in domestic production 
C)  A greater volume of international trade 
D)  Increased domestic consumption 
E)  Decrease in prices of the imported goods

Question 6

One important unintended consequence of the Smoot-Hawley Tariff Act was to:

Accepted Answer

A)  lessen the severity of the Great Depression by increasing exports. 
B)  provide the federal government with an effective tool for exercising monetary policy. 
C)  increase the efficiency of domestic automobile production. 
D)  increase the severity of the Great Depression by causing other countries to retaliate, and thus leading to a decline in exports. 
E)  increase the U.S. government budget deficit by $15 million. 
A)  lessen the severity of the Great Depression by increasing exports. 
B)  provide the federal government with an effective tool for exercising monetary policy. 
C)  increase the efficiency of domestic automobile production. 
D)  increase the severity of the Great Depression by causing other countries to retaliate, and thus leading to a decline in exports. 
E)  increase the U.S. government budget deficit by $15 million.

Question 7

In 1992 the EEC was replaced by the EU with an agreement to:

Accepted Answer

A)  reduce trade barriers among the member countries. 
B)  reduce trade barriers against nonmember countries. 
C)  mutually restrict imports from nonmember countries. 
D)  create a single market for goods and services in western Europe. 
E)  enable the countries of Western Europe to emerge as major world powers. 
A)  reduce trade barriers among the member countries. 
B)  reduce trade barriers against nonmember countries. 
C)  mutually restrict imports from nonmember countries. 
D)  create a single market for goods and services in western Europe. 
E)  enable the countries of Western Europe to emerge as major world powers.

Question 8

Protection of an infant industry should be withdrawn once that industry:

Accepted Answer

A)  charges the same price as foreign competitors. 
B)  goes public on the stock exchange. 
C)  raises a large amount of sales revenue. 
D)  achieves sufficient size to compete with foreign firms. 
E)  earns enough profit as a result of the subsidies to remain in business. 
A)  charges the same price as foreign competitors. 
B)  goes public on the stock exchange. 
C)  raises a large amount of sales revenue. 
D)  achieves sufficient size to compete with foreign firms. 
E)  earns enough profit as a result of the subsidies to remain in business.

Question 9

The figure below shows the demand (D) and supply (S) curves of corn syrups.?Figure 20.3
  
-In Figure 20.3, if the world price per gallon is $8, then without quotas:

Accepted Answer

A)  50 gallons of corn syrup will be imported. 
B)  35 gallons of corn syrup will be imported. 
C)  30 gallons of corn syrup will be imported. 
D)  20 gallons of corn syrup will be imported. 
E)  45 gallons of corn syrup will be imported. 
A)  50 gallons of corn syrup will be imported. 
B)  35 gallons of corn syrup will be imported. 
C)  30 gallons of corn syrup will be imported. 
D)  20 gallons of corn syrup will be imported. 
E)  45 gallons of corn syrup will be imported.

Question 10

Which of the following is a tool of commercial policy?

Accepted Answer

A)  Corporate income tax 
B)  Payroll tax 
C)  Excise duty 
D)  Tariff 
E)  Octroi duty 
A)  Corporate income tax 
B)  Payroll tax 
C)  Excise duty 
D)  Tariff 
E)  Octroi duty

Question 11

Which of the following statements about international trade restrictions is true?

Accepted Answer

A)  They ensure that only efficient producers survive. 
B)  They ensure that countries specialize only in those products that they can produce most efficiently. 
C)  In the majority of cases, they harm domestic consumers. 
D)  They typically benefit foreign producers at the expense of domestic consumers. 
E)  They ensure that higher-quality goods are provided at lower prices. 
A)  They ensure that only efficient producers survive. 
B)  They ensure that countries specialize only in those products that they can produce most efficiently. 
C)  In the majority of cases, they harm domestic consumers. 
D)  They typically benefit foreign producers at the expense of domestic consumers. 
E)  They ensure that higher-quality goods are provided at lower prices.

Question 12

Protecting infant industries from foreign competition may make sense, but only until the industry matures.

Accepted Answer

A) True 
 B)False

Question 13

It is often argued that if foreign goods are kept out of the domestic economy:

Accepted Answer

A)  jobs will be lost at home. 
B)  jobs will be created abroad. 
C)  foreign consumers will enjoy product surpluses. 
D)  jobs will be created at home. 
E)  foreign consumers will suffer product shortages. 
A)  jobs will be lost at home. 
B)  jobs will be created abroad. 
C)  foreign consumers will enjoy product surpluses. 
D)  jobs will be created at home. 
E)  foreign consumers will suffer product shortages.

Question 14

The figure below shows the demand (D) and supply (S) curves of a good produced domestically in an economy as well as traded in the international market.?Figure 20.1??In the figure,?P₁: Price of the good in the international market.?P₂: Price of the good in the domestic market after the imposition of tariff by the government.?P₃: No-trade price of the good in the domestic market.
  
-According to Figure 20.1, the tariff revenue earned by the domestic government is equal to the:

Accepted Answer

A)  area ABEFH. 
B)  area FEQ₄Q₂. 
C)  area ABH. 
D)  area HFP₁P₂. 
E)  area BEFH 
A)  area ABEFH. 
B)  area FEQ₄Q₂. 
C)  area ABH. 
D)  area HFP₁P₂. 
E)  area BEFH

Question 15

According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?

Accepted Answer

A)  The benefits of protecting domestic jobs typically outweigh the costs. 
B)  Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer. 
C)  U.S. GDP would be over $14 billion higher with import restrictions than without restrictions. 
D)  Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar. 
E)  Protection of the domestic industries enable the producers to charge lower prices for their products. 
A)  The benefits of protecting domestic jobs typically outweigh the costs. 
B)  Consumers end up paying much more for the goods they buy in order to subsidize the relatively inefficient domestic producer. 
C)  U.S. GDP would be over $14 billion higher with import restrictions than without restrictions. 
D)  Protection of the U.S. textile and sugar industries means that all consumers pay a lower price for clothing and sugar. 
E)  Protection of the domestic industries enable the producers to charge lower prices for their products.

Question 16

If international trade is restricted by the government:

Accepted Answer

A)  domestic consumers are benefited. 
B)  domestic producers are adversely affected. 
C)  consumers in the importing country are required to pay higher prices for the goods. 
D)  consumers can access to better quality product at lower prices. 
E)  the resources are allocated to their highest paid uses. 
A)  domestic consumers are benefited. 
B)  domestic producers are adversely affected. 
C)  consumers in the importing country are required to pay higher prices for the goods. 
D)  consumers can access to better quality product at lower prices. 
E)  the resources are allocated to their highest paid uses.

Question 17

If average costs of production decline with increases in output for a particular firm:

Accepted Answer

A)  many small firms will be more efficient than a single large firm. 
B)  one large producer will be more efficient than many small producers. 
C)  product diversification is necessary to spread the overhead. 
D)  diseconomies of scale become significant as output increases. 
E)  the variable cost of production must exceed the fixed costs. 
A)  many small firms will be more efficient than a single large firm. 
B)  one large producer will be more efficient than many small producers. 
C)  product diversification is necessary to spread the overhead. 
D)  diseconomies of scale become significant as output increases. 
E)  the variable cost of production must exceed the fixed costs.

Question 18

The total tariff revenue to the government of an imported good is found by adding the tariff to the quantity of the good imported.

Accepted Answer

A) True 
 B)False

Question 19

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.?Figure 20.4
  
-Refer to Figure 20.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.

Accepted Answer

A)  250 pounds 
B)  350 pounds 
C)  300 pounds 
D)  150 pounds 
E)  200 pounds 
A)  250 pounds 
B)  350 pounds 
C)  300 pounds 
D)  150 pounds 
E)  200 pounds

Question 20

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2
  
-Refer to Figure 20.2. In the absence of international trade, what are the domestic equilibrium price and quantity?

Accepted Answer

A)  $30 and 200 bushels 
B)  $50 and 400 bushels 
C)  $30 and 400 bushels 
D)  $50 and 300 bushels 
E)  $25 and 150 bushels 
A)  $30 and 200 bushels 
B)  $50 and 400 bushels 
C)  $30 and 400 bushels 
D)  $50 and 300 bushels 
E)  $25 and 150 bushels

In the United States, a "buy American" act was passed in 1933 to create larger markets for domestic goods.

The effect of an import quota on the domestic market is to shift the:

Which of the following countries is forbidden to impose export tariff by its constitution?

Creating conditions for fair trade by limiting imports will make the domestic consumers better off, as they will be required to pay low prices for the products.

Which of the following would result from a tariff?

One important unintended consequence of the Smoot-Hawley Tariff Act was to:

In 1992 the EEC was replaced by the EU with an agreement to:

Protection of an infant industry should be withdrawn once that industry:

The figure below shows the demand (D) and supply (S) curves of corn syrups.?Figure 20.3 -In Figure 20.3, if the world price per gallon is $8, then without quotas:

Which of the following is a tool of commercial policy?

Which of the following statements about international trade restrictions is true?

Protecting infant industries from foreign competition may make sense, but only until the industry matures.

It is often argued that if foreign goods are kept out of the domestic economy:

According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?

If international trade is restricted by the government:

If average costs of production decline with increases in output for a particular firm:

The total tariff revenue to the government of an imported good is found by adding the tariff to the quantity of the good imported.

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.?Figure 20.4 -Refer to Figure 20.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2 -Refer to Figure 20.2. In the absence of international trade, what are the domestic equilibrium price and quantity?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

Exchapterange Rates and Financial Links Between Countries

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Exam 20: International Trade Restrictions

In the United States, a "buy American" act was passed in 1933 to create larger markets for domestic goods.

The effect of an import quota on the domestic market is to shift the:

Which of the following countries is forbidden to impose export tariff by its constitution?

Creating conditions for fair trade by limiting imports will make the domestic consumers better off, as they will be required to pay low prices for the products.

Which of the following would result from a tariff?

One important unintended consequence of the Smoot-Hawley Tariff Act was to:

In 1992 the EEC was replaced by the EU with an agreement to:

Protection of an infant industry should be withdrawn once that industry:

The figure below shows the demand (D) and supply (S) curves of corn syrups.?Figure 20.3 -In Figure 20.3, if the world price per gallon is $8, then without quotas:

Which of the following is a tool of commercial policy?

Which of the following statements about international trade restrictions is true?

Protecting infant industries from foreign competition may make sense, but only until the industry matures.

It is often argued that if foreign goods are kept out of the domestic economy:

According to empirical observations, the cost of restricting international trade in the U.S. is much greater than the benefits generated from restriction. In the light of the above observation, which of the following statements is true?

If international trade is restricted by the government:

If average costs of production decline with increases in output for a particular firm:

The total tariff revenue to the government of an imported good is found by adding the tariff to the quantity of the good imported.

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.?Figure 20.4 -Refer to Figure 20.4. If cocoa sells for $6 per pound in the world market, determine the volume of U.S. cocoa imports.

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2 -Refer to Figure 20.2. In the absence of international trade, what are the domestic equilibrium price and quantity?

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

National Income Accounting

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

Exchapterange Rates and Financial Links Between Countries

Filters