Question 1

in 2013 the U.S. government imposed a tariff on Chinese solar panels. The group that lobbied for this tariff was

Accepted Answer

A)  U.S. consumers of solar panels. 
B)  only U.S. producers of solar panels. 
C)  only Chinese producers of solar panels. 
D)  Both U.S. and Chinese producers of solar panels. 
A)  U.S. consumers of solar panels. 
B)  only U.S. producers of solar panels. 
C)  only Chinese producers of solar panels. 
D)  Both U.S. and Chinese producers of solar panels. B

Question 2

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited ________ of ethanol, each of whom gained a ________.

Accepted Answer

A)  U.S. producers; little 
B)  U.S. producers; lot 
C)  U.S. consumers; little 
D)  U.S. consumers; lot 
A)  U.S. producers; little 
B)  U.S. producers; lot 
C)  U.S. consumers; little 
D)  U.S. consumers; lot C

Question 3

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?

Accepted Answer

The argument claims that rich nations will exploit poor nations by importing goods from the poor nations and that the workers in the poor nations are paid slave wages to produce these goods. This argument has a truly fatal flaw. Free trade increases the demand for the goods produced by workers in developing countries. Thus in order to produce more of these goods, the firms must hire more workers. Hence the demand for the labor used to produce the goods increases, which means that the wage rates paid the workers in the developing countries rises. Thus rather than exploiting the workers in the poor nations, free international trade is one of their few hopes for better lives!

Question 4

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor?
I.Low-wage foreigners are just as productive as U.S. workers.
II.U.S. workers have a comparative advantage in low-wage jobs.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II is correct. 
A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II is correct.

Question 5

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

Accepted Answer

A)  tariff on imported coffee 
B)  subsidy on imported coffee 
C)  quota on imported coffee 
D)  voluntary export restraints on coffee 
A)  tariff on imported coffee 
B)  subsidy on imported coffee 
C)  quota on imported coffee 
D)  voluntary export restraints on coffee

Question 6

If the United States imposes a tariff of $1 per imported shirt, the higher tariff

Accepted Answer

A)  raises the price of a shirt to U.S. consumers. 
B)  benefits U.S. shirt consumers. 
C)  increases imports of shirts into the United States. 
D)  none of the above. 
A)  raises the price of a shirt to U.S. consumers. 
B)  benefits U.S. shirt consumers. 
C)  increases imports of shirts into the United States. 
D)  none of the above.

Question 7

Which of the following statements is TRUE?

Accepted Answer

A)  Dumping is illegal under the rules of the WTO. 
B)  Dumping occurs when a foreign firm sells its exports at a higher price than its cost of production. 
C)  Both statements are true. 
D)  Neither of the statements is true. 
A)  Dumping is illegal under the rules of the WTO. 
B)  Dumping occurs when a foreign firm sells its exports at a higher price than its cost of production. 
C)  Both statements are true. 
D)  Neither of the statements is true.

Question 8

Explain the effects of a quota.

Accepted Answer

A quota is a quantitative restriction on

Question 9

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

Accepted Answer

A)  no U.S. worker has actually lost a job because of free trade. 
B)  most jobs lost because of free trade pay less than the poverty level. 
C)  free trade creates jobs in export industries. 
D)  the jobs lost are concentrated in restricted geographic areas. 
A)  no U.S. worker has actually lost a job because of free trade. 
B)  most jobs lost because of free trade pay less than the poverty level. 
C)  free trade creates jobs in export industries. 
D)  the jobs lost are concentrated in restricted geographic areas.

Question 10

In poorer countries, free trade ________ the demand for labor in these countries and ________ the wages paid in these countries.

Accepted Answer

A)  decreases; lowers 
B)  decreases; raises 
C)  increases; lowers 
D)  increases; raises 
A)  decreases; lowers 
B)  decreases; raises 
C)  increases; lowers 
D)  increases; raises

Question 11

The argument that protection ________.

Accepted Answer

A)  penalizes poor environmental standards is true 
B)  allows us to compete with cheap foreign wages is true 
C)  is necessary for infant industries is true 
D)  saves jobs is flawed 
A)  penalizes poor environmental standards is true 
B)  allows us to compete with cheap foreign wages is true 
C)  is necessary for infant industries is true 
D)  saves jobs is flawed

Question 12

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

Accepted Answer

Wage rates must be weighed against produ

Question 13

Currently Belize, a country in Central America, has a small coffee industry but does not export any coffee. Suppose the government of Belize, in order to protect the new coffee industry to enable it to grow into a mature industry that can compete in world markets, places a tariff on the importation of coffee. What is the argument for placing the tariff on coffee?

Accepted Answer

A)  the infant-industry argument 
B)  the dumping argument 
C)  to protect Belize coffee workers 
D)  to prevent rich countries from exploiting developing countries 
A)  the infant-industry argument 
B)  the dumping argument 
C)  to protect Belize coffee workers 
D)  to prevent rich countries from exploiting developing countries

Question 14

A tariff is a

Accepted Answer

A)  tax on an exported good or service. 
B)  tax on an imported good or service. 
C)  subsidy on an exported good. 
D)  subsidy on an imported good. 
A)  tax on an exported good or service. 
B)  tax on an imported good or service. 
C)  subsidy on an exported good. 
D)  subsidy on an imported good.

Question 15

The reason tariffs and quotas are imposed is that

Accepted Answer

A)  their costs are spread among many people and their benefits are concentrated. 
B)  their costs are concentrated and their benefits are spread among many people. 
C)  they create net benefits in the long run. 
D)  they reduce import dependence. 
A)  their costs are spread among many people and their benefits are concentrated. 
B)  their costs are concentrated and their benefits are spread among many people. 
C)  they create net benefits in the long run. 
D)  they reduce import dependence.

Question 16

Average tariff levels in the United States in the last decade are

Accepted Answer

A)  about equal to the average since 1930. 
B)  above the average since 1930. 
C)  positive, but below the average since 1930. 
D)  zero, as there are no longer any tariffs in the United States. 
A)  about equal to the average since 1930. 
B)  above the average since 1930. 
C)  positive, but below the average since 1930. 
D)  zero, as there are no longer any tariffs in the United States.

Question 17

An import quota is a

Accepted Answer

A)  tariff imposed on goods that are dumped in the country. 
B)  law that prevents ecologically damaging goods from being imported into a country. 
C)  market-imposed balancing factor that keeps prices of imports and exports in equilibrium. 
D)  government-imposed restriction on the quantity of a specific good that can be imported. 
A)  tariff imposed on goods that are dumped in the country. 
B)  law that prevents ecologically damaging goods from being imported into a country. 
C)  market-imposed balancing factor that keeps prices of imports and exports in equilibrium. 
D)  government-imposed restriction on the quantity of a specific good that can be imported.

Question 18

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.
-In the figure above, with international trade ________ million shirts per year are produced in the United States.

Accepted Answer

A)  48 
B)  32 
C)  16 
D)  20 
A)  48 
B)  32 
C)  16 
D)  20

Question 19

A country specializes in the production of goods for which it has a comparative advantage. We find that

Accepted Answer

A)  some producers and consumers win, some lose, but overall the gains exceed the losses. 
B)  all producers win. 
C)  all consumers win. 
D)  producers win, consumers lose, but overall the gains exceed the losses. 
A)  some producers and consumers win, some lose, but overall the gains exceed the losses. 
B)  all producers win. 
C)  all consumers win. 
D)  producers win, consumers lose, but overall the gains exceed the losses.

Question 20

A major purpose of tariffs is to

Accepted Answer

A)  encourage imports. 
B)  encourage exports. 
C)  discourage imports. 
D)  discourage exports. 
A)  encourage imports. 
B)  encourage exports. 
C)  discourage imports. 
D)  discourage exports.

in 2013 the U.S. government imposed a tariff on Chinese solar panels. The group that lobbied for this tariff was

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited of ethanol, each of whom gained a .

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I.Low-wage foreigners are just as productive as U.S. workers. II.U.S. workers have a comparative advantage in low-wage jobs.

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

If the United States imposes a tariff of $1 per imported shirt, the higher tariff

Which of the following statements is TRUE?

Explain the effects of a quota.

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

In poorer countries, free trade the demand for labor in these countries and the wages paid in these countries.

The argument that protection ________.

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

A tariff is a

The reason tariffs and quotas are imposed is that

Average tariff levels in the United States in the last decade are

An import quota is a

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. -In the figure above, with international trade ________ million shirts per year are produced in the United States.

A country specializes in the production of goods for which it has a comparative advantage. We find that

A major purpose of tariffs is to

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Filters

Exam 15: International Trade Policy

in 2013 the U.S. government imposed a tariff on Chinese solar panels. The group that lobbied for this tariff was

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited ________ of ethanol, each of whom gained a ________.

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I.Low-wage foreigners are just as productive as U.S. workers. II.U.S. workers have a comparative advantage in low-wage jobs.

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

If the United States imposes a tariff of $1 per imported shirt, the higher tariff

Which of the following statements is TRUE?

Explain the effects of a quota.

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

In poorer countries, free trade ________ the demand for labor in these countries and ________ the wages paid in these countries.

The argument that protection ________.

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

A tariff is a

The reason tariffs and quotas are imposed is that

Average tariff levels in the United States in the last decade are

An import quota is a

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. -In the figure above, with international trade ________ million shirts per year are produced in the United States.

A country specializes in the production of goods for which it has a comparative advantage. We find that

A major purpose of tariffs is to

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Filters

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited of ethanol, each of whom gained a .

In poorer countries, free trade the demand for labor in these countries and the wages paid in these countries.