Question 1

A key difference between a quota and a tariff is that

Accepted Answer

A)  a quota has a larger effect on quantity than on price. 
B)  a tariff has a larger effect on quantity than on price. 
C)  the government of the importing country gains revenue from a tariff, but the price gap caused by a quota benefits domestic importers. 
D)  All of the above answers are correct. 
A)  a quota has a larger effect on quantity than on price. 
B)  a tariff has a larger effect on quantity than on price. 
C)  the government of the importing country gains revenue from a tariff, but the price gap caused by a quota benefits domestic importers. 
D)  All of the above answers are correct.

Question 2

The U.S.government limits the amount of sugar that can be imported into the United States.This policy is

Accepted Answer

A)  an import quota. 
B)  a tariff. 
C)  a comparative advantage limitation. 
D)  None of the above answers are correct. 
A)  an import quota. 
B)  a tariff. 
C)  a comparative advantage limitation. 
D)  None of the above answers are correct.

Question 3

The most efficient way to encourage the growth of an infant-industry is through a

Accepted Answer

A)  voluntary export restraint. 
B)  tariff. 
C)  subsidy. 
D)  an import quota. 
A)  voluntary export restraint. 
B)  tariff. 
C)  subsidy. 
D)  an import quota.

Question 4

Which of the following statements is true?

Accepted Answer

A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true. 
A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true.

Question 5

One reason that international trade is restricted is that

Accepted Answer

A)  the individual gain to parties who benefit from the protection will be much larger than the individual loss to parties who lose. 
B)  the government completely pays the losers from international trade for their losses. 
C)  protectionism benefits consumers. 
D)  the government cannot measure the cost of protectionism. 
A)  the individual gain to parties who benefit from the protection will be much larger than the individual loss to parties who lose. 
B)  the government completely pays the losers from international trade for their losses. 
C)  protectionism benefits consumers. 
D)  the government cannot measure the cost of protectionism.

Question 6

Consider a market that sells some of its goods as exports. Who does NOT benefit?

Accepted Answer

A)  domestic consumers 
B)  domestic producers 
C)  workers in the industry 
D)  foreign consumers 
A)  domestic consumers 
B)  domestic producers 
C)  workers in the industry 
D)  foreign consumers

Question 7

During the first 6 months of 2008,the European Union (EU) initiated an anti-dumping case against China for imports of taper candles. What is dumping?

Accepted Answer

A)  When China sells its candles to the EU at a lower price than China's cost of production 
B)  When China does not pay the tariff on the candles 
C)  When China sells its candles to the EU at a lower price than other producers 
D)  When China tries to sell more candles to the EU than is allowed by the import quota 
A)  When China sells its candles to the EU at a lower price than China's cost of production 
B)  When China does not pay the tariff on the candles 
C)  When China sells its candles to the EU at a lower price than other producers 
D)  When China tries to sell more candles to the EU than is allowed by the import quota

Question 8

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt.
-In the figure above,the tariff ________ the domestic production of shirts in the United States by ________ per year.

Accepted Answer

A)  increases; 8 million 
B)  decreases; 16 million 
C)  increases; 4 million 
D)  decreases; 8 million 
A)  increases; 8 million 
B)  decreases; 16 million 
C)  increases; 4 million 
D)  decreases; 8 million

Question 9

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars.Pacifica could be accused of

Accepted Answer

A)  avoiding import quotas. 
B)  increasing its gains from trade. 
C)  dumping. 
D)  engaging in learning-by-doing. 
A)  avoiding import quotas. 
B)  increasing its gains from trade. 
C)  dumping. 
D)  engaging in learning-by-doing.

Question 10

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand.As a result of the tariffs,the

Accepted Answer

A)  price of beef in Mooland falls. 
B)  quantity of beef exported by Mooland increases. 
C)  quantity of beef imported by Mooland decreases. 
D)  quantity of beef imported by Mooland increases. 
A)  price of beef in Mooland falls. 
B)  quantity of beef exported by Mooland increases. 
C)  quantity of beef imported by Mooland decreases. 
D)  quantity of beef imported by Mooland increases.

Question 11

Suppose that the country of Pacifica imposes a quota on bananas.The reason that the government imposed this trade restriction could be

Accepted Answer

A)  that the government of Pacifica needs to increase its revenue. 
B)  lobbying from banana farmers in Pacifica. 
C)  comparative advantage. 
D)  Both answers A and B are correct. 
A)  that the government of Pacifica needs to increase its revenue. 
B)  lobbying from banana farmers in Pacifica. 
C)  comparative advantage. 
D)  Both answers A and B are correct.

Question 12

The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed by ________ number of people.

Accepted Answer

A)  small; large 
B)  large; small 
C)  small; small 
D)  large; large 
A)  small; large 
B)  large; small 
C)  small; small 
D)  large; large

Question 13

Tariffs ________ the domestic price of the good and import quotas ________ the domestic price of the good.

Accepted Answer

A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise 
A)  lower; lower 
B)  lower; raise 
C)  raise; lower 
D)  raise; raise

Question 14

Quotas are less damaging to an economy than are tariffs.

Accepted Answer

A) True 
 B)False

Question 15

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Accepted Answer

A)  pay U.S. taxes. 
B)  receive subsidies. 
C)  are more productive. 
D)  belong to unions. 
A)  pay U.S. taxes. 
B)  receive subsidies. 
C)  are more productive. 
D)  belong to unions.

Question 16

"Because the United States is the largest economy in the world and can produce anything it needs domestically,there are no gains from trade for the United States." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The

Question 17

International trade is restricted because

Accepted Answer

A)  there is an uneven distribution of benefits and costs of free trade. 
B)  free trade creates an inefficient use of resources. 
C)  free trade leads to higher costs. 
D)  free trade stifles diversity and stability. 
A)  there is an uneven distribution of benefits and costs of free trade. 
B)  free trade creates an inefficient use of resources. 
C)  free trade leads to higher costs. 
D)  free trade stifles diversity and stability.

Question 18

Which of the following is an explanation for the existence of trade restrictions?

Accepted Answer

A)  Tariffs generate revenue for the government. 
B)  rent seeking 
C)  inefficient quotas 
D)  Both answers A and B are key explanations. 
A)  Tariffs generate revenue for the government. 
B)  rent seeking 
C)  inefficient quotas 
D)  Both answers A and B are key explanations.

Question 19

During 2010,as oil and gas prices continued to increase,a growing number of Americans called for the United States to become less reliant on Middle-Eastern oil.Would it make sense for the United States to try to become totally self-reliant in the production of oil?
Why or why not?

Accepted Answer

It would be foolish for the United State

Question 20

Which of the following are reasons economists consider valid for trade protection?
I. Protection penalizes countries that have weak environmental standards.
II. Protection limits dumping of low-wage jobs into the domestic economy.
III. Protection prevents low-wage jobs in foreign countries from lowering wages in the United States.

Accepted Answer

A)  I and II 
B)  II and III 
C)  I, II, and III 
D)  none of the above 
A)  I and II 
B)  II and III 
C)  I, II, and III 
D)  none of the above

A key difference between a quota and a tariff is that

The U.S.government limits the amount of sugar that can be imported into the United States.This policy is

The most efficient way to encourage the growth of an infant-industry is through a

Which of the following statements is true?

One reason that international trade is restricted is that

Consider a market that sells some of its goods as exports. Who does NOT benefit?

During the first 6 months of 2008,the European Union (EU) initiated an anti-dumping case against China for imports of taper candles. What is dumping?

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars.Pacifica could be accused of

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand.As a result of the tariffs,the

Suppose that the country of Pacifica imposes a quota on bananas.The reason that the government imposed this trade restriction could be

The gains from free trade are enjoyed by a number of people and the costs of free trade are imposed by number of people.

Tariffs the domestic price of the good and import quotas the domestic price of the good.

Quotas are less damaging to an economy than are tariffs.

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

"Because the United States is the largest economy in the world and can produce anything it needs domestically,there are no gains from trade for the United States." Is the previous statement correct or incorrect?

International trade is restricted because

Which of the following is an explanation for the existence of trade restrictions?

During 2010,as oil and gas prices continued to increase,a growing number of Americans called for the United States to become less reliant on Middle-Eastern oil.Would it make sense for the United States to try to become totally self-reliant in the production of oil? Why or why not?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 15: International Trade Policy

A key difference between a quota and a tariff is that

The U.S.government limits the amount of sugar that can be imported into the United States.This policy is

The most efficient way to encourage the growth of an infant-industry is through a

Which of the following statements is true?

One reason that international trade is restricted is that

Consider a market that sells some of its goods as exports. Who does NOT benefit?

During the first 6 months of 2008,the European Union (EU) initiated an anti-dumping case against China for imports of taper candles. What is dumping?

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars.Pacifica could be accused of

Suppose the country of Mooland imposes tariffs on imported beef from the country of Aqualand.As a result of the tariffs,the

Suppose that the country of Pacifica imposes a quota on bananas.The reason that the government imposed this trade restriction could be

The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed by ________ number of people.

Tariffs ________ the domestic price of the good and import quotas ________ the domestic price of the good.

Quotas are less damaging to an economy than are tariffs.

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

"Because the United States is the largest economy in the world and can produce anything it needs domestically,there are no gains from trade for the United States." Is the previous statement correct or incorrect?

International trade is restricted because

Which of the following is an explanation for the existence of trade restrictions?

During 2010,as oil and gas prices continued to increase,a growing number of Americans called for the United States to become less reliant on Middle-Eastern oil.Would it make sense for the United States to try to become totally self-reliant in the production of oil? Why or why not?

What Is Economics

The Economic Problem

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

The gains from free trade are enjoyed by a number of people and the costs of free trade are imposed by number of people.

Tariffs the domestic price of the good and import quotas the domestic price of the good.