Question 1

What is an infant industry,and why would a country want to protect it?

Accepted Answer

A new industry may have the potential to be internationally competitive,but because its initial production costs are too high (due to lack of know-how and the initial small level of output),this industry cannot be established or grow in the face of foreign competition.If such an industry is protected,it is possible that the long-term benefits from the industry may more than compensate for the short-run costs.

Question 2

One of the most dramatic examples of voluntary export restraints (VER's)centered around

Accepted Answer

A)  agriculture 
B)  automobiles 
C)  textiles 
D)  pharmaceuticals 
A)  agriculture 
B)  automobiles 
C)  textiles 
D)  pharmaceuticals B

Question 3

The WTO was established during the

Accepted Answer

A)  Kennedy Round 
B)  Uruguay Round 
C)  Tokyo Round 
D)  Doha Round 
A)  Kennedy Round 
B)  Uruguay Round 
C)  Tokyo Round 
D)  Doha Round B

Question 4

Adjustment to any shift in the domestic demand or supply of an importable commodity occurs:

Accepted Answer

A)  in domestic price with an import quota 
B)  in the quantity of imports with a tariff 
C)  through the market mechanism with an import tariff but not with an import quota 
D)  all of the above 
A)  in domestic price with an import quota 
B)  in the quantity of imports with a tariff 
C)  through the market mechanism with an import tariff but not with an import quota 
D)  all of the above

Question 5

How can strategic trade policy justify trade protection? What difficulties arise in carrying out a strategic trade policy?

Accepted Answer

According to strategic trade policy,a na

Question 6

The most-favored-nation principle refers to:

Accepted Answer

A)  extension to all trade partners of any reciprocal tariff reduction negotiated by the U.S. with any of its trade partners 
B)  multilateral trade negotiation 
C)  the General Agreement on Tariffs and Trade 
D)  the International Trade Organization 
A)  extension to all trade partners of any reciprocal tariff reduction negotiated by the U.S. with any of its trade partners 
B)  multilateral trade negotiation 
C)  the General Agreement on Tariffs and Trade 
D)  the International Trade Organization

Question 7

Suppose that domestic demand for a product is more inelastic than demand in the foreign country.A seller with market power would set a price in the foreign market that is ______ than the domestic price; this is an example of _________.

Accepted Answer

A)  higher, predatory dumping 
B)  lower, predatory dumping 
C)  higher, international price discrimination 
D)  lower, international price discrimination 
A)  higher, predatory dumping 
B)  lower, predatory dumping 
C)  higher, international price discrimination 
D)  lower, international price discrimination

Question 8

A fallacious argument for protection is:

Accepted Answer

A)  the infant industry argument 
B)  protection for national defense 
C)  the scientific tariff 
D)  to correct domestic distortions 
A)  the infant industry argument 
B)  protection for national defense 
C)  the scientific tariff 
D)  to correct domestic distortions

Question 9

Game theory refers to:

Accepted Answer

A)  a method of choosing the optimal strategy in conflict situations 
B)  the granting of a subsidy to correct a domestic distortion 
C)  the theory of tariff protection 
D)  the theory of comparative advantage 
A)  a method of choosing the optimal strategy in conflict situations 
B)  the granting of a subsidy to correct a domestic distortion 
C)  the theory of tariff protection 
D)  the theory of comparative advantage

Question 10

Which of the following was not negotiated under the Uruguay Round?

Accepted Answer

A)  reduction of tariffs on industrial goods 
B)  replacement of quotas with tariffs 
C)  reduction of subsidies on industrial products and on agricultural exports 
D)  liberalization in trade in most services 
A)  reduction of tariffs on industrial goods 
B)  replacement of quotas with tariffs 
C)  reduction of subsidies on industrial products and on agricultural exports 
D)  liberalization in trade in most services

Question 11

The WTO grew out of the following organization

Accepted Answer

A)  the Bretton Woods system 
B)  The UN 
C)  The World Bank 
D)  The GATT 
A)  the Bretton Woods system 
B)  The UN 
C)  The World Bank 
D)  The GATT

Question 12

What is dumping and what are its various forms?

Accepted Answer

Dumping is the export of a commodity at

Question 13

The type of dumping which would justify antidumping measures by the country subject to the dumping is:

Accepted Answer

A)  predatory dumping 
B)  sporadic dumping 
C)  continuous dumping 
D)  all of the above 
A)  predatory dumping 
B)  sporadic dumping 
C)  continuous dumping 
D)  all of the above

Question 14

An increase in the demand of the imported commodity subject to a given import quota:

Accepted Answer

A)  reduces the domestic quantity demanded of the commodity 
B)  increases the domestic production of the commodity 
C)  reduces the domestic price of the commodity 
D)  reduces the producers' surplus 
A)  reduces the domestic quantity demanded of the commodity 
B)  increases the domestic production of the commodity 
C)  reduces the domestic price of the commodity 
D)  reduces the producers' surplus

Question 15

Explain why and under what conditions the infant-industry argument for an import tariff is valid.How must this argument be qualified?

Accepted Answer

The infant-industry argument for tariffs

Question 16

The temporary sale of a commodity at below cost or at a lower price abroad in order to drive foreign producers out of business is called:

Accepted Answer

A)  predatory dumping 
B)  sporadic dumping 
C)  continuous dumping 
D)  voluntary export restraints 
A)  predatory dumping 
B)  sporadic dumping 
C)  continuous dumping 
D)  voluntary export restraints

Question 17

An international cartel refers to:

Accepted Answer

A)  dumping 
B)  an organization of exporters 
C)  an international commodity agreement 
D)  voluntary export restraints 
A)  dumping 
B)  an organization of exporters 
C)  an international commodity agreement 
D)  voluntary export restraints

Question 18

Summarize the Smoot-Hawley Tariff Act and its effects.

Accepted Answer

The Smoot-Hawley Tariff Act was passed i

Question 19

Which of the following is a correct statement about tariffs and quotas?

Accepted Answer

A)  Tariffs and quotas both increase social welfare. 
B)  Tariffs are less restrictive than quotas if demand increases. 
C)  Quotas have less of an impact on markets than tariffs do. 
D)  Tariffs are restricted under GATT rules but quotas are not. 
A)  Tariffs and quotas both increase social welfare. 
B)  Tariffs are less restrictive than quotas if demand increases. 
C)  Quotas have less of an impact on markets than tariffs do. 
D)  Tariffs are restricted under GATT rules but quotas are not.

Question 20

Industrial policy refers to:

Accepted Answer

A)  an activist policy by the government of an industrial country to stimulate the development of an industry 
B)  the granting of a subsidy to a domestic industry to stimulate the development of an industry 
C)  the granting of a subsidy to a domestic industry to counter a foreign subsidy 
D)  all of the above 
A)  an activist policy by the government of an industrial country to stimulate the development of an industry 
B)  the granting of a subsidy to a domestic industry to stimulate the development of an industry 
C)  the granting of a subsidy to a domestic industry to counter a foreign subsidy 
D)  all of the above

Exam 9: Nontariff Trade Barriers and the New Protectionism

What is an infant industry,and why would a country want to protect it?

One of the most dramatic examples of voluntary export restraints (VER's)centered around

The WTO was established during the

Adjustment to any shift in the domestic demand or supply of an importable commodity occurs:

How can strategic trade policy justify trade protection? What difficulties arise in carrying out a strategic trade policy?

The most-favored-nation principle refers to:

Suppose that domestic demand for a product is more inelastic than demand in the foreign country.A seller with market power would set a price in the foreign market that is ______ than the domestic price; this is an example of _________.

A fallacious argument for protection is:

Game theory refers to:

Which of the following was not negotiated under the Uruguay Round?

The WTO grew out of the following organization

What is dumping and what are its various forms?

The type of dumping which would justify antidumping measures by the country subject to the dumping is:

An increase in the demand of the imported commodity subject to a given import quota:

Explain why and under what conditions the infant-industry argument for an import tariff is valid.How must this argument be qualified?

The temporary sale of a commodity at below cost or at a lower price abroad in order to drive foreign producers out of business is called:

An international cartel refers to:

Summarize the Smoot-Hawley Tariff Act and its effects.

Which of the following is a correct statement about tariffs and quotas?

Industrial policy refers to:

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters

Suppose that domestic demand for a product is more inelastic than demand in the foreign country.A seller with market power would set a price in the foreign market that is than the domestic price; this is an example of ___.