Question 1

The notion of reciprocity means that one nation will impose import restrictions on another in order to:

Accepted Answer

A)  stimulate an increase in trade restrictions in the latter. 
B)  stimulate a decrease in trade restrictions in the latter. 
C)  eliminate trade restrictions immediately in both countries. 
D)  improve the government revenue collections through tariffs in both countries. 
E)  enforce standards of product quality in the latter. 
A)  stimulate an increase in trade restrictions in the latter. 
B)  stimulate a decrease in trade restrictions in the latter. 
C)  eliminate trade restrictions immediately in both countries. 
D)  improve the government revenue collections through tariffs in both countries. 
E)  enforce standards of product quality in the latter.

Question 2

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.?Figure 20.4
  
-From Figure 20.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.

Accepted Answer

A)  200 pounds 
B)  250 pounds 
C)  100 pounds 
D)  300 pounds 
E)  350 pounds 
A)  200 pounds 
B)  250 pounds 
C)  100 pounds 
D)  300 pounds 
E)  350 pounds

Question 3

While it is possible to erect barriers to foreign competition and save domestic jobs, restricting international trade may impose large costs on an economy.

Accepted Answer

A) True 
 B)False

Question 4

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 per bushel of wheat is $25, what is the domestic production?

Accepted Answer

A)  300 bushels 
B)  450 bushels 
C)  400 bushels 
D)  150 bushels 
E)  200 bushels 
A)  300 bushels 
B)  450 bushels 
C)  400 bushels 
D)  150 bushels 
E)  200 bushels

Question 5

Employers and workers in the protected industry know that the consequences of protection are principally:

Accepted Answer

A)  lower prices for their output, lower profits for owners, and lower wages for workers. 
B)  higher prices for their output, lower profits for owners, and lower wages for workers. 
C)  higher prices for their output, lower profits for owners, and higher wages for workers. 
D)  lower prices for their output, higher profits for owners, and higher wages for workers. 
E)  higher prices for their output, higher profits for owners, and higher wages for workers. 
A)  lower prices for their output, lower profits for owners, and lower wages for workers. 
B)  higher prices for their output, lower profits for owners, and lower wages for workers. 
C)  higher prices for their output, lower profits for owners, and higher wages for workers. 
D)  lower prices for their output, higher profits for owners, and higher wages for workers. 
E)  higher prices for their output, higher profits for owners, and higher wages for workers.

Question 6

One danger associated with calls for fairness based on reciprocity is that, calls for fair trade may be invoked in cases where, foreign restrictions on U.S. imports do not actually exist.

Accepted Answer

A) True 
 B)False

Question 7

The infant industry argument is that:

Accepted Answer

A)  those industries that produce products for infants should be protected. 
B)  protectionism will provide consumers with lower prices. 
C)  protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms. 
D)  protectionism promotes complete specialization in the country on the basis of comparative advantage. 
E)  new industries should be protected from foreign competition until they have had adequate time to develop. 
A)  those industries that produce products for infants should be protected. 
B)  protectionism will provide consumers with lower prices. 
C)  protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms. 
D)  protectionism promotes complete specialization in the country on the basis of comparative advantage. 
E)  new industries should be protected from foreign competition until they have had adequate time to develop.

Question 8

According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?

Accepted Answer

A)  The Robinson-Patman Act 
B)  The National Recovery Act 
C)  The Smoot-Hawley Tariff Act 
D)  The Sarbanes-Oxley Act 
E)  The Sherman Antitrust Act 
A)  The Robinson-Patman Act 
B)  The National Recovery Act 
C)  The Smoot-Hawley Tariff Act 
D)  The Sarbanes-Oxley Act 
E)  The Sherman Antitrust Act

Question 9

Subsidies are payments made by the government of a country to:

Accepted Answer

A)  foreign firms to encourage imports. 
B)  foreign firms to encourage domestic exports. 
C)  domestic firms to encourage exports. 
D)  domestic firms to encourage imports. 
E)  domestic firms to ensure domestic consumption of their goods. 
A)  foreign firms to encourage imports. 
B)  foreign firms to encourage domestic exports. 
C)  domestic firms to encourage exports. 
D)  domestic firms to encourage imports. 
E)  domestic firms to ensure domestic consumption of their goods.

Question 10

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

Accepted Answer

A) True 
 B)False

Question 11

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.
  
-Refer to Figure 20.1. If the government imposes a tariff such that the price of the good in the domestic market is P₂ when the international price is P₁:

Accepted Answer

A)  the import of the good by the domestic country increases by Q₅ - Q₄ units. 
B)  the import of the good by the domestic country declines. 
C)  the quantity of the good exported by the domestic country declines. 
D)  the domestic country is in equilibrium. 
E)  the quantity of the good exported by the domestic country increases. 
A)  the import of the good by the domestic country increases by Q₅ - Q₄ units. 
B)  the import of the good by the domestic country declines. 
C)  the quantity of the good exported by the domestic country declines. 
D)  the domestic country is in equilibrium. 
E)  the quantity of the good exported by the domestic country increases.

Question 12

Generally speaking, protection from foreign competition benefits:

Accepted Answer

A)  both domestic producers and foreign producers. 
B)  both domestic consumers and foreign consumers 
C)  domestic consumers and foreign consumers. 
D)  neither domestic producers nor foreign producers. 
E)  domestic producers at the expense of domestic consumers. 
A)  both domestic producers and foreign producers. 
B)  both domestic consumers and foreign consumers 
C)  domestic consumers and foreign consumers. 
D)  neither domestic producers nor foreign producers. 
E)  domestic producers at the expense of domestic consumers.

Question 13

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 $10 is imposed by the domestic government, the total tariff revenue collected by the government is:

Accepted Answer

A)  $4,000. 
B)  $0. 
C)  $5,000. 
D)  $2,000. 
E)  $1,000. 
A)  $4,000. 
B)  $0. 
C)  $5,000. 
D)  $2,000. 
E)  $1,000.

Question 14

In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.

Accepted Answer

A)  Fashion designing 
B)  Retail industry 
C)  Iron and steel industry 
D)  Dairy industry 
E)  Software industry 
A)  Fashion designing 
B)  Retail industry 
C)  Iron and steel industry 
D)  Dairy industry 
E)  Software industry

Question 15

Government standards for products sold in the domestic market can have the effect of protecting domestic producers from foreign competition.

Accepted Answer

A) True 
 B)False

Question 16

Since individual consumers do not know how much of the price they pay for a commodity is due to protection, consumers rarely lobby their political representatives to eliminate protection and reduce prices.

Accepted Answer

A) True 
 B)False

Question 17

Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome?

Accepted Answer

A)  Flettner experienced high production costs due to inadequate supply of inputs. 
B)  New firms had entered the helicopter industry. 
C)  The German government ran a balance of payment deficit. 
D)  The Argentine government retaliated by subsidizing Cicare. 
E)  There was very low investment in research and development in this industry. 
A)  Flettner experienced high production costs due to inadequate supply of inputs. 
B)  New firms had entered the helicopter industry. 
C)  The German government ran a balance of payment deficit. 
D)  The Argentine government retaliated by subsidizing Cicare. 
E)  There was very low investment in research and development in this industry.

Question 18

Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million. However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry. Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down. This conclusion rests on which of the following assumptions?

Accepted Answer

A)  The German government was experiencing a budget surplus. 
B)  There was low demand for Cicare automobiles in the world market. 
C)  The German government was able to forecast accurately the subsidy required to induce Flettner to produce helicopters. 
D)  The quality of Flettner's helicopters were inferior compared to that of Cicare's. 
E)  Cicare diversified into the production of automobiles. 
A)  The German government was experiencing a budget surplus. 
B)  There was low demand for Cicare automobiles in the world market. 
C)  The German government was able to forecast accurately the subsidy required to induce Flettner to produce helicopters. 
D)  The quality of Flettner's helicopters were inferior compared to that of Cicare's. 
E)  Cicare diversified into the production of automobiles.

Question 19

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 and a tariff of $10 is imposed by the domestic government, what is the domestic demand?

Accepted Answer

A)  400 bushels 
B)  450 bushels 
C)  200 bushels 
D)  300 bushels 
E)  150 bushels 
A)  400 bushels 
B)  450 bushels 
C)  200 bushels 
D)  300 bushels 
E)  150 bushels

Question 20

Nascent industries require adequate protection from foreign competition because:

Accepted Answer

A)  they experience economies of scale. 
B)  they experience diseconomies of scale. 
C)  the quality of the products of such industries are comparatively inferior than the products of their foreign competitors. 
D)  they do not have adequate resources to undertake research and development. 
E)  their initial costs of production are considerably higher than the foreign firms. 
A)  they experience economies of scale. 
B)  they experience diseconomies of scale. 
C)  the quality of the products of such industries are comparatively inferior than the products of their foreign competitors. 
D)  they do not have adequate resources to undertake research and development. 
E)  their initial costs of production are considerably higher than the foreign firms.

The notion of reciprocity means that one nation will impose import restrictions on another in order to:

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.?Figure 20.4 -From Figure 20.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.

While it is possible to erect barriers to foreign competition and save domestic jobs, restricting international trade may impose large costs on an economy.

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 per bushel of wheat is $25, what is the domestic production?

Employers and workers in the protected industry know that the consequences of protection are principally:

One danger associated with calls for fairness based on reciprocity is that, calls for fair trade may be invoked in cases where, foreign restrictions on U.S. imports do not actually exist.

The infant industry argument is that:

According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?

Subsidies are payments made by the government of a country to:

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

Generally speaking, protection from foreign competition benefits:

In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.

Government standards for products sold in the domestic market can have the effect of protecting domestic producers from foreign competition.

Since individual consumers do not know how much of the price they pay for a commodity is due to protection, consumers rarely lobby their political representatives to eliminate protection and reduce prices.

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 and a tariff of $10 is imposed by the domestic government, what is the domestic demand?

Nascent industries require adequate protection from foreign competition because:

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

The notion of reciprocity means that one nation will impose import restrictions on another in order to:

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.?Figure 20.4 -From Figure 20.4, determine the total volume of U.S. cocoa imports if its government imposes tariff at the rate of $2 per pound on cocoa.

While it is possible to erect barriers to foreign competition and save domestic jobs, restricting international trade may impose large costs on an economy.

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 per bushel of wheat is $25, what is the domestic production?

Employers and workers in the protected industry know that the consequences of protection are principally:

One danger associated with calls for fairness based on reciprocity is that, calls for fair trade may be invoked in cases where, foreign restrictions on U.S. imports do not actually exist.

The infant industry argument is that:

According to economists, which of the following acts was partially responsible for the Great Depression of the 1930s?

Subsidies are payments made by the government of a country to:

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

Generally speaking, protection from foreign competition benefits:

In the light of the infant industry argument, identify the industry which is likely to have substantially high initial costs.

Government standards for products sold in the domestic market can have the effect of protecting domestic producers from foreign competition.

Since individual consumers do not know how much of the price they pay for a commodity is due to protection, consumers rarely lobby their political representatives to eliminate protection and reduce prices.

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 and a tariff of $10 is imposed by the domestic government, what is the domestic demand?

Nascent industries require adequate protection from foreign competition because:

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