Question 1

A tax of 20 cents per unit of imported garlic is an example of a(n)

Accepted Answer

A)  specific tariff. 
B)  ad valorem tariff. 
C)  nominal tariff. 
D)  effective protection tariff. 
E)  a disadvantageous tariff. 
A)  specific tariff. 
B)  ad valorem tariff. 
C)  nominal tariff. 
D)  effective protection tariff. 
E)  a disadvantageous tariff.

Question 2

Ad valorem tariffs are

Accepted Answer

A)  import taxes stated in ads in industry publications. 
B)  import taxes calculated as a fixed charge for each unit of imported goods. 
C)  import taxes calculated as a fraction of the value of the imported goods. 
D)  the same as import quotas. 
E)  import taxes calculated solely on the origin country. 
A)  import taxes stated in ads in industry publications. 
B)  import taxes calculated as a fixed charge for each unit of imported goods. 
C)  import taxes calculated as a fraction of the value of the imported goods. 
D)  the same as import quotas. 
E)  import taxes calculated solely on the origin country.

Question 3

The main redistribution effect of a tariff is the transfer of income from

Accepted Answer

A)  domestic producers to domestic buyers. 
B)  domestic buyers to domestic producers. 
C)  domestic producers to domestic government. 
D)  domestic government to domestic consumers. 
E)  foreign producers to domestic consumers. 
A)  domestic producers to domestic buyers. 
B)  domestic buyers to domestic producers. 
C)  domestic producers to domestic government. 
D)  domestic government to domestic consumers. 
E)  foreign producers to domestic consumers.

Question 4

-Refer to above figure. With a specific tariff of $3 per unit, what is the quantity of Widgets consumed domestically?

Accepted Answer

The answer of  
-Refer to above figure. With a...

Question 5

A voluntary export restraint will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

Accepted Answer

A)  increase; decrease; increase; have an ambiguous effect on 
B)  increase; decrease; decrease; decrease 
C)  increase; decrease; have no effect on; have an ambiguous effect on 
D)  increase; decrease; have no effect on; decrease 
E)  increase; increase; decrease; have an ambiguous effect on 
A)  increase; decrease; increase; have an ambiguous effect on 
B)  increase; decrease; decrease; decrease 
C)  increase; decrease; have no effect on; have an ambiguous effect on 
D)  increase; decrease; have no effect on; decrease 
E)  increase; increase; decrease; have an ambiguous effect on

Question 6

If a good is imported into (small) country H from country F, then the imposition of a tariff In country H

Accepted Answer

A)  raises the price of the good in both countries (the "Law of One Price"). 
B)  raises the price in country H and does not affect its price in country F. 
C)  lowers the price of the good in both countries. 
D)  lowers the price of the good in H and could raise it in F. 
E)  raises the price of the good in H and lowers it in F. 
A)  raises the price of the good in both countries (the "Law of One Price"). 
B)  raises the price in country H and does not affect its price in country F. 
C)  lowers the price of the good in both countries. 
D)  lowers the price of the good in H and could raise it in F. 
E)  raises the price of the good in H and lowers it in F.

Question 7

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components

Accepted Answer

A)  the nominal tariff automatically increases. 
B)  the rate of (effective) protection automatically decreases. 
C)  the nominal tariff automatically decreases. 
D)  the rate of (effective) protection automatically increases. 
E)  the amount of tariffs levied increases. 
A)  the nominal tariff automatically increases. 
B)  the rate of (effective) protection automatically decreases. 
C)  the nominal tariff automatically decreases. 
D)  the rate of (effective) protection automatically increases. 
E)  the amount of tariffs levied increases.

Question 8

-Refer to above figure. The lowest specific tariff which would be considered prohibitive is ________.

Accepted Answer

The answer of  
-Refer to above figure. The lowest...

Question 9

If the tariff on computers is not changed, but the government then adds hitherto nonexistent tariffs on imported semiconductor components, then the effective rate of protection in the computer industry will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  depend on whether computers are PCs or "Supercomputers." 
E)  no longer apply. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  depend on whether computers are PCs or "Supercomputers." 
E)  no longer apply.

Question 10

The European Union's Common Agricultural Policy (CAP) is, in effect

Accepted Answer

A)  a tariff imposed on agricultural exports. 
B)  a tariff imposed on agricultural imports. 
C)  a subsidy that reduces the cost of agricultural exports. 
D)  a subsidy that increases the cost of agricultural exports. 
E)  a quota that limits production of agricultural goods by EU nations. 
A)  a tariff imposed on agricultural exports. 
B)  a tariff imposed on agricultural imports. 
C)  a subsidy that reduces the cost of agricultural exports. 
D)  a subsidy that increases the cost of agricultural exports. 
E)  a quota that limits production of agricultural goods by EU nations.

Question 11

When a government allows raw materials and other intermediate products to enter a country duty free, this generally results in a(an)

Accepted Answer

A)  effective tariff rate less than the nominal tariff rate. 
B)  nominal tariff rate less than the effective tariff rate. 
C)  rise in both nominal and effective tariff rates. 
D)  fall in both nominal and effective tariff rates. 
E)  rise in only the effective tariff rate. 
A)  effective tariff rate less than the nominal tariff rate. 
B)  nominal tariff rate less than the effective tariff rate. 
C)  rise in both nominal and effective tariff rates. 
D)  fall in both nominal and effective tariff rates. 
E)  rise in only the effective tariff rate.

Question 12

An important difference between tariffs and quotas is that tariffs

Accepted Answer

A)  raise the price of the good. 
B)  generate tax revenue for the government. 
C)  stimulate international trade. 
D)  help domestic producers. 
E)  are paid by foreign producers. 
A)  raise the price of the good. 
B)  generate tax revenue for the government. 
C)  stimulate international trade. 
D)  help domestic producers. 
E)  are paid by foreign producers.

Question 13

The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs. It has been noted that in most industrialized countries, the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets. Why would countries design their tariff structures in this manner?
 Who tends to be helped, and who is harmed by this cascading tariff structure?

Accepted Answer

The cascading tariff structure is probab

Question 14

In the exporting country, an export subsidy will

Accepted Answer

A)  help consumers and raise the overall economic welfare of the exporting country. 
B)  hurt consumers but raise the overall economic welfare of the exporting country. 
C)  hurt consumers and lower the overall economic welfare of the exporting country. 
D)  help consumers but lower economic welfare of the exporting country. 
E)  help consumers and have no effect on the economic welfare of the exporting country. 
A)  help consumers and raise the overall economic welfare of the exporting country. 
B)  hurt consumers but raise the overall economic welfare of the exporting country. 
C)  hurt consumers and lower the overall economic welfare of the exporting country. 
D)  help consumers but lower economic welfare of the exporting country. 
E)  help consumers and have no effect on the economic welfare of the exporting country.

Question 15

The effective rate of protection measures

Accepted Answer

A)  the "true" ad valorem value of a tariff. 
B)  the quota equivalent value of a tariff. 
C)  the efficiency with which the tariff is collected at the customhouse. 
D)  the protection given by the tariff to domestic value added. 
E)  the difference between domestic and foreign prices of the import. 
A)  the "true" ad valorem value of a tariff. 
B)  the quota equivalent value of a tariff. 
C)  the efficiency with which the tariff is collected at the customhouse. 
D)  the protection given by the tariff to domestic value added. 
E)  the difference between domestic and foreign prices of the import.

Question 16

An import quota will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

Accepted Answer

A)  increase; decrease; increase; have an ambiguous effect on 
B)  increase; decrease; decrease; decrease 
C)  increase; decrease; have no effect on; have an ambiguous effect on 
D)  increase; decrease; have no effect on; decrease 
E)  increase; increase; decrease; have an ambiguous effect on 
A)  increase; decrease; increase; have an ambiguous effect on 
B)  increase; decrease; decrease; decrease 
C)  increase; decrease; have no effect on; have an ambiguous effect on 
D)  increase; decrease; have no effect on; decrease 
E)  increase; increase; decrease; have an ambiguous effect on

Question 17

-Refer to above figure. With free trade and no tariffs, what is the quantity of Widgets consumed domestically?

Accepted Answer

The answer of  
-Refer to above figure. With free...

Question 18

An export subsidy is

Accepted Answer

A)  a payment to a firm or individual that ships a good abroad. 
B)  a fee that is charged to a country that ships goods to the U.S. 
C)  a payment made to a foreign government in return for preferential trade treatment. 
D)  illegal in the U.S. but is fairly common in the rest of the world. 
E)  a limit on the quantity of a good or service that can be sold abroad. 
A)  a payment to a firm or individual that ships a good abroad. 
B)  a fee that is charged to a country that ships goods to the U.S. 
C)  a payment made to a foreign government in return for preferential trade treatment. 
D)  illegal in the U.S. but is fairly common in the rest of the world. 
E)  a limit on the quantity of a good or service that can be sold abroad.

Question 19

-Refer to above figure. With free trade and no tariffs, what is the quantity of Widgets produced domestically?

Accepted Answer

The answer of  
-Refer to above figure. With free...

Question 20

An export subsidy differs from a tariff in each of the following ways EXCEPT

Accepted Answer

A)  a tariff generates revenue. 
B)  a tariff is applied to imports. 
C)  a tariff results in an efficiency loss. 
D)  a tariff is a tax. 
E)  a tariff discourages imports. 
A)  a tariff generates revenue. 
B)  a tariff is applied to imports. 
C)  a tariff results in an efficiency loss. 
D)  a tariff is a tax. 
E)  a tariff discourages imports.

Exam 9: The Instruments of Trade Policy

A tax of 20 cents per unit of imported garlic is an example of a(n)

Ad valorem tariffs are

The main redistribution effect of a tariff is the transfer of income from

-Refer to above figure. With a specific tariff of $3 per unit, what is the quantity of Widgets consumed domestically?

A voluntary export restraint will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

If a good is imported into (small) country H from country F, then the imposition of a tariff In country H

As globalization tends to increase the proportion of imported inputs relative to domestically supplied components

-Refer to above figure. The lowest specific tariff which would be considered prohibitive is ________.

If the tariff on computers is not changed, but the government then adds hitherto nonexistent tariffs on imported semiconductor components, then the effective rate of protection in the computer industry will

The European Union's Common Agricultural Policy (CAP) is, in effect

When a government allows raw materials and other intermediate products to enter a country duty free, this generally results in a(an)

An important difference between tariffs and quotas is that tariffs

In the exporting country, an export subsidy will

The effective rate of protection measures

An import quota will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

-Refer to above figure. With free trade and no tariffs, what is the quantity of Widgets consumed domestically?

An export subsidy is

-Refer to above figure. With free trade and no tariffs, what is the quantity of Widgets produced domestically?

An export subsidy differs from a tariff in each of the following ways EXCEPT

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

A voluntary export restraint will producer surplus, consumer surplus, government revenue, and overall domestic national welfare.

An import quota will producer surplus, consumer surplus, government revenue, and overall domestic national welfare.