Question 1

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

Accepted Answer

A) True 
 B)False

Question 2

In order to protect key industries, some countries impose taxes on their exports instead of imports, mainly because it is easier to collect taxes from the export industry.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:

Accepted Answer

A)  cause foreign producers to be better off, because the price they charge is now higher by $1 per box. 
B)  cause domestic producers to be worse off by $5 per box. 
C)  allow domestic consumers to enjoy kiwi fruit for $5 more per box than the free trade price, but still $2 less than the domestic price. 
D)  allow domestic consumers to enjoy kiwi fruit for $1 more per box than the free trade price, but still $1 less than the domestic price. 
E)  cause domestic producers to be worse off by $10 per box. 
A)  cause foreign producers to be better off, because the price they charge is now higher by $1 per box. 
B)  cause domestic producers to be worse off by $5 per box. 
C)  allow domestic consumers to enjoy kiwi fruit for $5 more per box than the free trade price, but still $2 less than the domestic price. 
D)  allow domestic consumers to enjoy kiwi fruit for $1 more per box than the free trade price, but still $1 less than the domestic price. 
E)  cause domestic producers to be worse off by $10 per box.

Question 4

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2
  
-In Figure 20.2, if the world price per bushel of wheat is $25, how much wheat will be imported?

Accepted Answer

A)  450 bushels 
B)  350 bushels 
C)  200 bushels 
D)  150 bushels 
E)  300 bushels 
A)  450 bushels 
B)  350 bushels 
C)  200 bushels 
D)  150 bushels 
E)  300 bushels

Question 5

The figure below shows the demand (D) and supply (S) curves of corn syrups.?Figure 20.3
  
-In Figure 20.3, what are the equilibrium price and quantity in the absence of trade?

Accepted Answer

A)  $8, 50 gallons 
B)  $12, 35 gallons 
C)  $8, 35 gallons 
D)  $4, 20 gallons 
E)  $16, 50 gallons 
A)  $8, 50 gallons 
B)  $12, 35 gallons 
C)  $8, 35 gallons 
D)  $4, 20 gallons 
E)  $16, 50 gallons

Question 6

In a free trade area, member nations have no trade barriers among themselves but are free to set their own trade policies toward nonmembers.

Accepted Answer

A) True 
 B)False

Question 7

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established, it is not at all clear that government should even offer protection to reduce short-run losses.

Accepted Answer

A) True 
 B)False

Question 8

If the world price of a good is lower than its domestic equilibrium price, the country will:

Accepted Answer

A)  import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. 
B)  export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. 
C)  import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers. 
D)  export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically. 
E)  import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers. 
A)  import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. 
B)  export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. 
C)  import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers. 
D)  export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically. 
E)  import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.

Question 9

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2
  
-According to Figure 20.2, if the world price of wheat is $25 and a tariff of $25 is imposed by the domestic government, the total tariff revenue collected by the government is:

Accepted Answer

A)  $2,000. 
B)  $0. 
C)  $200. 
D)  $100. 
E)  $4,000 
A)  $2,000. 
B)  $0. 
C)  $200. 
D)  $100. 
E)  $4,000

Question 10

According to strategic trade policy, international trade largely involves firms which:

Accepted Answer

A)  enjoy monopolistic power in the domestic market. 
B)  has a high initial cost of production. 
C)  pursues economies of scale. 
D)  experiences diseconomies of scale. 
E)  generates adequate employment in the domestic economy. 
A)  enjoy monopolistic power in the domestic market. 
B)  has a high initial cost of production. 
C)  pursues economies of scale. 
D)  experiences diseconomies of scale. 
E)  generates adequate employment in the domestic economy.

Question 11

Many economists believe that the collapse of world trade and the depression in the 1930s were linked by a decrease in real income caused by producing on the basis of comparative advantage.

Accepted Answer

A) True 
 B)False

Question 12

The most successful free trade agreements achieve all of the following goals, except:

Accepted Answer

A)  benefiting exporters by increasing exports to member countries. 
B)  ensuring that production occurs on the basis of comparative advantage. 
C)  benefiting consumers by making a wider variety of goods available at a lower price. 
D)  stimulating trade creation to allow the benefits of trade to be realized. 
E)  protecting domestic industries from foreign competition. 
A)  benefiting exporters by increasing exports to member countries. 
B)  ensuring that production occurs on the basis of comparative advantage. 
C)  benefiting consumers by making a wider variety of goods available at a lower price. 
D)  stimulating trade creation to allow the benefits of trade to be realized. 
E)  protecting domestic industries from foreign competition.

Question 13

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, if the international price of the good is P₁, which of the following statements is true?

Accepted Answer

A)  The domestic market is in equilibrium. 
B)  There is an excess supply in the domestic market by the amount Q₄ - Q₂. 
C)  The country will export Q₃ - Q₁ units of the good. 
D)  There is an excess demand of Q₄ - Q₂ units in the domestic market. 
E)  The country needs to import Q₅ - Q₁ units of the good to satisfy domestic demand. 
A)  The domestic market is in equilibrium. 
B)  There is an excess supply in the domestic market by the amount Q₄ - Q₂. 
C)  The country will export Q₃ - Q₁ units of the good. 
D)  There is an excess demand of Q₄ - Q₂ units in the domestic market. 
E)  The country needs to import Q₅ - Q₁ units of the good to satisfy domestic demand.

Question 14

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

Accepted Answer

A)  domestic consumers; domestic producers 
B)  domestic consumers; government 
C)  domestic producers; domestic consumers 
D)  foreign producers; domestic producers 
E)  foreign producers; domestic consumers 
A)  domestic consumers; domestic producers 
B)  domestic consumers; government 
C)  domestic producers; domestic consumers 
D)  foreign producers; domestic producers 
E)  foreign producers; domestic consumers

Question 15

As a result of the government procurement policy in the U.S.:

Accepted Answer

A)  the domestic consumers are required to pay a higher price than the government for the domestically produced goods. 
B)  the government wields the sole authority of importing goods from abroad. 
C)  the government wields the sole authority of exporting goods. 
D)  the government is required to buy the domestic goods if the domestic price is less than the world price. 
E)  the government is required to sponsor research and development for the domestic firms. 
A)  the domestic consumers are required to pay a higher price than the government for the domestically produced goods. 
B)  the government wields the sole authority of importing goods from abroad. 
C)  the government wields the sole authority of exporting goods. 
D)  the government is required to buy the domestic goods if the domestic price is less than the world price. 
E)  the government is required to sponsor research and development for the domestic firms.

Question 16

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2
  
-In Figure 20.2, if the world price of wheat is $25 and a $10 tariff is imposed:

Accepted Answer

A)  imports will decrease from 300 to 200 bushels of wheat. 
B)  imports will increase from 200 to 400 bushels of wheat. 
C)  imports will remain unchanged. 
D)  domestic production will decrease from 200 to 150 bushels of wheat. 
E)  domestic production will remain unchanged. 
A)  imports will decrease from 300 to 200 bushels of wheat. 
B)  imports will increase from 200 to 400 bushels of wheat. 
C)  imports will remain unchanged. 
D)  domestic production will decrease from 200 to 150 bushels of wheat. 
E)  domestic production will remain unchanged.

Question 17

The abbreviation GATT stands for:

Accepted Answer

A)  General Analysis of Taxes and Transfers. 
B)  General Agreement on Tariffs and Trade. 
C)  Government Agency for Trade and Transportation. 
D)  Government Agency for Treaties and Taxes. 
E)  General Agreement on Terms of Trade. 
A)  General Analysis of Taxes and Transfers. 
B)  General Agreement on Tariffs and Trade. 
C)  Government Agency for Trade and Transportation. 
D)  Government Agency for Treaties and Taxes. 
E)  General Agreement on Terms of Trade.

Question 18

Which of the following tools of commercial policy yields a revenue to the government?

Accepted Answer

A)  Quota 
B)  Tariff 
C)  Export subsidy 
D)  Government procurement policy 
E)  Health and safety standards 
A)  Quota 
B)  Tariff 
C)  Export subsidy 
D)  Government procurement policy 
E)  Health and safety standards

Question 19

Protection provided to the infant industries is rarely withdrawn because:

Accepted Answer

A)  the costs of withdrawing protection outweigh the benefits. 
B)  the industries begin to experience diseconomies of scale. 
C)  it leads to a loss of government revenue. 
D)  the industries produce goods which are close substitutes of the imported goods. 
E)  the larger and more successful the industry becomes, the more political power it wields. 
A)  the costs of withdrawing protection outweigh the benefits. 
B)  the industries begin to experience diseconomies of scale. 
C)  it leads to a loss of government revenue. 
D)  the industries produce goods which are close substitutes of the imported goods. 
E)  the larger and more successful the industry becomes, the more political power it wields.

Question 20

Which of the following can be considered as a cultural barrier to trade?

Accepted Answer

A)  Prohibition on Zimbabwean aircrafts from flying over or landing in Canada. 
B)  Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada. 
C)  An arms embargo imposed on China by the U.K. government 
D)  Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business. 
E)  Restriction on the export of strategic goods to Ghana imposed by the government of U.K. 
A)  Prohibition on Zimbabwean aircrafts from flying over or landing in Canada. 
B)  Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada. 
C)  An arms embargo imposed on China by the U.K. government 
D)  Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business. 
E)  Restriction on the export of strategic goods to Ghana imposed by the government of U.K.

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

In order to protect key industries, some countries impose taxes on their exports instead of imports, mainly because it is easier to collect taxes from the export industry.

Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2 -In Figure 20.2, if the world price per bushel of wheat is $25, how much wheat will be imported?

The figure below shows the demand (D) and supply (S) curves of corn syrups.?Figure 20.3 -In Figure 20.3, what are the equilibrium price and quantity in the absence of trade?

In a free trade area, member nations have no trade barriers among themselves but are free to set their own trade policies toward nonmembers.

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established, it is not at all clear that government should even offer protection to reduce short-run losses.

If the world price of a good is lower than its domestic equilibrium price, the country will:

According to strategic trade policy, international trade largely involves firms which:

Many economists believe that the collapse of world trade and the depression in the 1930s were linked by a decrease in real income caused by producing on the basis of comparative advantage.

The most successful free trade agreements achieve all of the following goals, except:

When restrictions alter the pattern of international trade, the _ benefit and the _ suffer(s).

As a result of the government procurement policy in the U.S.:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2 -In Figure 20.2, if the world price of wheat is $25 and a $10 tariff is imposed:

The abbreviation GATT stands for:

Which of the following tools of commercial policy yields a revenue to the government?

Protection provided to the infant industries is rarely withdrawn because:

Which of the following can be considered as a cultural barrier to trade?

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

Exam 20: International Trade Restrictions

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

In order to protect key industries, some countries impose taxes on their exports instead of imports, mainly because it is easier to collect taxes from the export industry.

Suppose that the world price of kiwi fruit ($10 per box) is below the domestic price ($12 per box). A tariff of $1 per box would:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2 -In Figure 20.2, if the world price per bushel of wheat is $25, how much wheat will be imported?

The figure below shows the demand (D) and supply (S) curves of corn syrups.?Figure 20.3 -In Figure 20.3, what are the equilibrium price and quantity in the absence of trade?

In a free trade area, member nations have no trade barriers among themselves but are free to set their own trade policies toward nonmembers.

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established, it is not at all clear that government should even offer protection to reduce short-run losses.

If the world price of a good is lower than its domestic equilibrium price, the country will:

According to strategic trade policy, international trade largely involves firms which:

Many economists believe that the collapse of world trade and the depression in the 1930s were linked by a decrease in real income caused by producing on the basis of comparative advantage.

The most successful free trade agreements achieve all of the following goals, except:

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

As a result of the government procurement policy in the U.S.:

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country.?Figure 20.2 -In Figure 20.2, if the world price of wheat is $25 and a $10 tariff is imposed:

The abbreviation GATT stands for:

Which of the following tools of commercial policy yields a revenue to the government?

Protection provided to the infant industries is rarely withdrawn because:

Which of the following can be considered as a cultural barrier to trade?

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

When restrictions alter the pattern of international trade, the _ benefit and the _ suffer(s).