Question 1

If the home country's government grants a subsidy on a domestically produced good, domestic producers tend to:

Accepted Answer

A)  Capture the entire subsidy in the form of higher profits 
B)  Increase their level of production 
C)  Reduce wages paid to domestic workers 
D)  Consider the subsidy as an increase in production cost 
A)  Capture the entire subsidy in the form of higher profits 
B)  Increase their level of production 
C)  Reduce wages paid to domestic workers 
D)  Consider the subsidy as an increase in production cost

Question 2

When voluntary export limits are imposed on the world's chief exporter

Accepted Answer

A)  The exports of the non-restrained suppliers may be stimulated 
B)  A trade diversion effect may occur 
C)  Both a and b 
D)  None of the above 
A)  The exports of the non-restrained suppliers may be stimulated 
B)  A trade diversion effect may occur 
C)  Both a and b 
D)  None of the above

Question 3

During the 1980s, the U.S. government imposed sugar import quotas in an attempt to reduce its costs of maintaining price supports for U.S. sugar growers.

Accepted Answer

A) True 
 B)False

Question 4

Subsidies to domestic firms may lead to

Accepted Answer

A)  An increase in prices 
B)  Higher volume of exports 
C)  Higher volume of imports 
D)  Increase in welfare of the trading partner 
A)  An increase in prices 
B)  Higher volume of exports 
C)  Higher volume of imports 
D)  Increase in welfare of the trading partner

Question 5

An import quota is a physical restriction on the quantity of goods that may be imported during a specified time period.

Accepted Answer

A) True 
 B)False

Question 6

Concerning international dumping, many economists argue that "fair value" should be based on

Accepted Answer

A)  Average variable cost 
B)  Average fixed cost 
C)  Marginal cost 
D)  Total cost 
A)  Average variable cost 
B)  Average fixed cost 
C)  Marginal cost 
D)  Total cost

Question 7

What are the intent and impact of domestic content requirements?

Accepted Answer

Domestic content requirements try to lim

Question 8

Figure 5.1 illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection.
Figure 5.1. Alternative Nontariff Trade Barriers Levied by a "Small" Country
  
-Consider Figure 5.1. Suppose the Mexican government provides a subsidy of $200 per ton to its steel producers, as indicated by the supply schedule SM (with subsidy). As a result of the subsidy Mexican steel producers gain ____ of producer surplus.

Accepted Answer

A)  $200 
B)  $400 
C)  $600 
D)  $800 
A)  $200 
B)  $400 
C)  $600 
D)  $800

Question 9

What is an OMA?

Accepted Answer

An OMA involves limi

Question 10

A global import quota permits a specified number of goods to be imported each year, but does not specify where the product is shipped from and who is permitted to import.

Accepted Answer

A) True 
 B)False

Question 11

Figure 5.3 illustrates the apple market for Sweden, assumed to be a "small" country that is unable to affect the world price. SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand. SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3. Sweden's Apple Market
  
-Consider Figure 5.3. The quota leads to a deadweight welfare loss for Sweden of an amount equaling:

Accepted Answer

A)  $0.80 
B)  $1.60 
C)  $2.40 
D)  $3.20 
A)  $0.80 
B)  $1.60 
C)  $2.40 
D)  $3.20

Question 12

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SS1U1B1MexicoS1U1B0 is the domestic supply schedule and DS1U1B1MexicoS1U1B0 is the domestic demand schedule. Suppose that Japan can supply televisions to Mexico at a price of $100 per set.
Figure 5.5. Mexico's Television Market
  
-Consider Figure 5.5. The deadweight welfare loss to Mexico, as a result of the Japanese export quota, totals $1200.

Accepted Answer

A) True 
 B)False

Question 13

Figure 5.5 illustrates the television market for Mexico, assumed to be a small country that is unable to affect the world price. SS1U1B1MexicoS1U1B0 is the domestic supply schedule and DS1U1B1MexicoS1U1B0 is the domestic demand schedule. Suppose that Japan can supply televisions to Mexico at a price of $100 per set.
Figure 5.5. Mexico's Television Market
  
-Consider Figure 5.5. Compared to free trade, the Japanese export quota leads to an increase in Mexican producer surplus of $1050.

Accepted Answer

A) True 
 B)False

Question 14

Domestic content legislation applied to autos would tend to:

Accepted Answer

A)  Support wage levels of American autoworkers 
B)  Lower auto prices for American autoworkers 
C)  Encourage American automakers to locate production overseas 
D)  Increase profits of American auto companies 
A)  Support wage levels of American autoworkers 
B)  Lower auto prices for American autoworkers 
C)  Encourage American automakers to locate production overseas 
D)  Increase profits of American auto companies

Question 15

The distribution of an import quota's revenue effect depends on the relative concentration of bargaining power between foreign exporters and domestic importers.

Accepted Answer

A) True 
 B)False

Question 16

Figure 5.3 illustrates the apple market for Sweden, assumed to be a "small" country that is unable to affect the world price. SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand. SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3. Sweden's Apple Market
  
-Consider Figure 5.3. After the quota is levied, the price of apples in Sweden will equal:

Accepted Answer

A)  $0.60 per pound 
B)  $1.00 per pound 
C)  $1.40 per pound 
D)  $1.80 per pound 
A)  $0.60 per pound 
B)  $1.00 per pound 
C)  $1.40 per pound 
D)  $1.80 per pound

Question 17

Figure 5.3 illustrates the apple market for Sweden, assumed to be a "small" country that is unable to affect the world price. SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand. SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3. Sweden's Apple Market
  
-Consider Figure 5.3. In the absence of trade, Sweden's equilibrium price and quantity of apples would be:

Accepted Answer

A)  $0.60 and 22 pounds 
B)  $0.60 and 14 pounds 
C)  $1.00 and 18 pounds 
D)  $1.40 and 14 pounds 
A)  $0.60 and 22 pounds 
B)  $0.60 and 14 pounds 
C)  $1.00 and 18 pounds 
D)  $1.40 and 14 pounds

Question 18

A voluntary export agreement

Accepted Answer

A)  Typically applies only to the world's most important exporting nation(s) 
B)  Typically applies only to the world's least important exporting nation (s) 
C)  Is always more restrictive on trade than a tariff or import quota 
D)  All of the above 
A)  Typically applies only to the world's most important exporting nation(s) 
B)  Typically applies only to the world's least important exporting nation (s) 
C)  Is always more restrictive on trade than a tariff or import quota 
D)  All of the above

Question 19

If the U.S. demand for Korean steel is price elastic, an export subsidy granted to Korean steel firms will increase Korea's export revenue.

Accepted Answer

A) True 
 B)False

Question 20

To the extent that a local content requirement forces firms to locate production in a high-cost nation, product price rises and consumer surplus falls.

Accepted Answer

A) True 
 B)False

If the home country's government grants a subsidy on a domestically produced good, domestic producers tend to:

When voluntary export limits are imposed on the world's chief exporter

During the 1980s, the U.S. government imposed sugar import quotas in an attempt to reduce its costs of maintaining price supports for U.S. sugar growers.

Subsidies to domestic firms may lead to

An import quota is a physical restriction on the quantity of goods that may be imported during a specified time period.

Concerning international dumping, many economists argue that "fair value" should be based on

What are the intent and impact of domestic content requirements?

What is an OMA?

A global import quota permits a specified number of goods to be imported each year, but does not specify where the product is shipped from and who is permitted to import.

Domestic content legislation applied to autos would tend to:

The distribution of an import quota's revenue effect depends on the relative concentration of bargaining power between foreign exporters and domestic importers.

A voluntary export agreement

If the U.S. demand for Korean steel is price elastic, an export subsidy granted to Korean steel firms will increase Korea's export revenue.

To the extent that a local content requirement forces firms to locate production in a high-cost nation, product price rises and consumer surplus falls.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

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 5: Nontariff Trade Barriers

If the home country's government grants a subsidy on a domestically produced good, domestic producers tend to:

When voluntary export limits are imposed on the world's chief exporter

During the 1980s, the U.S. government imposed sugar import quotas in an attempt to reduce its costs of maintaining price supports for U.S. sugar growers.

Subsidies to domestic firms may lead to

An import quota is a physical restriction on the quantity of goods that may be imported during a specified time period.

Concerning international dumping, many economists argue that "fair value" should be based on

What are the intent and impact of domestic content requirements?

What is an OMA?

A global import quota permits a specified number of goods to be imported each year, but does not specify where the product is shipped from and who is permitted to import.

Domestic content legislation applied to autos would tend to:

The distribution of an import quota's revenue effect depends on the relative concentration of bargaining power between foreign exporters and domestic importers.

A voluntary export agreement

If the U.S. demand for Korean steel is price elastic, an export subsidy granted to Korean steel firms will increase Korea's export revenue.

To the extent that a local content requirement forces firms to locate production in a high-cost nation, product price rises and consumer surplus falls.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

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