Question 1

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

Accepted Answer

A) True 
 B)False  False

Question 2

With a compound duty,its "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials,and the "ad valorem" portion of the duty grants protection to the finished-goods industry.

Accepted Answer

A) True 
 B)False  True

Question 3

Refer to Exhibit 4.2.The tariff leads to a deadweight welfare loss for Canada totaling $1,000.

Accepted Answer

A) True 
 B)False  False

Question 4

Suppose that the tariff on imported steel is 40 percent,the tariff on imported iron ore is 20 percent,and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains.The effective rate of protection of steel is approximately 49 percent.

Accepted Answer

A) True 
 B)False

Question 5

A nation whose imports constitute a very small portion of the world market supply is a price taker,facing a constant world price for its import commodity.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that the production of a $30,000 automobile in Canada requires $10,000 worth of steel.The Canadian nominal tariff rates for importing these goods are 25 percent for automobiles and 10 percent for steel.Given this information,the effective rate of protection for the Canadian automobile industry is approximately:

Accepted Answer

A)  15 percent 
B)  32 percent 
C)  48 percent 
D)  67 percent 
A)  15 percent 
B)  32 percent 
C)  48 percent 
D)  67 percent

Question 7

How can tariffs be justified?

Accepted Answer

Tariffs are justified on the grounds tha

Question 8

The principal benefit of tariff protection goes to:

Accepted Answer

A)  Domestic consumers of the good produced 
B)  Domestic producers of the good produced 
C)  Foreign producers of the good produced 
D)  Foreign consumers of the good produced 
A)  Domestic consumers of the good produced 
B)  Domestic producers of the good produced 
C)  Foreign producers of the good produced 
D)  Foreign consumers of the good produced

Question 9

Suppose that the United States eliminates its tariff on steel imports,permitting foreign-produced steel to enter the U.S.market.Steel prices to U.S.consumers would be expected to:

Accepted Answer

A)  Increase,and the foreign demand for U.S.exports would increase 
B)  Decrease,and the foreign demand for U.S.exports would increase 
C)  Increase,and the foreign demand for U.S.exports would decrease 
D)  Decrease,and the foreign demand for U.S.exports would decrease 
A)  Increase,and the foreign demand for U.S.exports would increase 
B)  Decrease,and the foreign demand for U.S.exports would increase 
C)  Increase,and the foreign demand for U.S.exports would decrease 
D)  Decrease,and the foreign demand for U.S.exports would decrease

Question 10

If we consider the impact on both consumers and producers,then protection of the steel industry is:

Accepted Answer

A)  In the interest of the United States as a whole,but not in the interest of the state of Pennsylvania 
B)  In the interest of the United States as a whole and in the interest of the state of Pennsylvania 
C)  Not in the interest of the United States as a whole,but it might be in the interest of the state of Pennsylvania 
D)  Not in the interest of the United States as a whole,nor in the interest of the state of Pennsylvania 
A)  In the interest of the United States as a whole,but not in the interest of the state of Pennsylvania 
B)  In the interest of the United States as a whole and in the interest of the state of Pennsylvania 
C)  Not in the interest of the United States as a whole,but it might be in the interest of the state of Pennsylvania 
D)  Not in the interest of the United States as a whole,nor in the interest of the state of Pennsylvania

Question 11

Tariffs are not defended on the ground that they:

Accepted Answer

A)  Improve the terms of trade of foreign nations 
B)  Protect jobs and reduce unemployment 
C)  Promote growth and development of young industries 
D)  Prevent overdependence of a country on only a few industries 
A)  Improve the terms of trade of foreign nations 
B)  Protect jobs and reduce unemployment 
C)  Promote growth and development of young industries 
D)  Prevent overdependence of a country on only a few industries

Question 12

According to Figure 4.1,the loss in Mexican consumer surplus due to the tariff equals:

Accepted Answer

A)  $225 
B)  $265 
C)  $285 
D)  $325 
A)  $225 
B)  $265 
C)  $285 
D)  $325

Question 13

A lower tariff on imported aluminum would most likely benefit:

Accepted Answer

A)  Foreign producers at the expense of domestic consumers 
B)  Domestic manufacturers of aluminum 
C)  Domestic consumers of aluminum 
D)  Workers in the domestic aluminum industry 
A)  Foreign producers at the expense of domestic consumers 
B)  Domestic manufacturers of aluminum 
C)  Domestic consumers of aluminum 
D)  Workers in the domestic aluminum industry

Question 14

A tariff on steel imports tends to improve the competitiveness of domestic automobile companies.

Accepted Answer

A) True 
 B)False

Question 15

Although tariffs on imported steel may lead to job gains for domestic steel workers,they can lead to job losses for domestic auto workers.

Accepted Answer

A) True 
 B)False

Question 16

Figure 4.4 Market for Gasoline in a Small Nation  
-Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

Accepted Answer

A)  $15 
B)  $12.5 
C)  $47.50 
D)  $57.50 
A)  $15 
B)  $12.5 
C)  $47.50 
D)  $57.50

Question 17

The most vocal political pressure for tariffs is generally made by:

Accepted Answer

A)  Consumers lobbying for export tariffs 
B)  Consumers lobbying for import tariffs 
C)  Producers lobbying for export tariffs 
D)  Producers lobbying for import tariffs 
A)  Consumers lobbying for export tariffs 
B)  Consumers lobbying for import tariffs 
C)  Producers lobbying for export tariffs 
D)  Producers lobbying for import tariffs

Question 18

A decrease in the import tariff will result in:

Accepted Answer

A)  An increase in imports but a decrease in domestic production 
B)  A decrease in imports but an increase in domestic production 
C)  An increase in price but a decrease in quantity purchased 
D)  A decrease in price and a decrease in quantity purchased 
A)  An increase in imports but a decrease in domestic production 
B)  A decrease in imports but an increase in domestic production 
C)  An increase in price but a decrease in quantity purchased 
D)  A decrease in price and a decrease in quantity purchased

Question 19

The deadweight loss of a tariff:

Accepted Answer

A)  Is a social loss since it promotes inefficient production 
B)  Is a social loss since it reduces the revenue for the government 
C)  Is not a social loss because society as a whole doesn't pay for the loss 
D)  Is not a social loss since only business firms suffer revenue losses 
A)  Is a social loss since it promotes inefficient production 
B)  Is a social loss since it reduces the revenue for the government 
C)  Is not a social loss because society as a whole doesn't pay for the loss 
D)  Is not a social loss since only business firms suffer revenue losses

Question 20

With a compound tariff,a domestic importer of an automobile might be required to pay a duty of $200 plus 4 percent of the value of the automobile.

Accepted Answer

A) True 
 B)False

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

With a compound duty,its "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials,and the "ad valorem" portion of the duty grants protection to the finished-goods industry.

Refer to Exhibit 4.2.The tariff leads to a deadweight welfare loss for Canada totaling $1,000.

Suppose that the tariff on imported steel is 40 percent,the tariff on imported iron ore is 20 percent,and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains.The effective rate of protection of steel is approximately 49 percent.

A nation whose imports constitute a very small portion of the world market supply is a price taker,facing a constant world price for its import commodity.

How can tariffs be justified?

The principal benefit of tariff protection goes to:

Suppose that the United States eliminates its tariff on steel imports,permitting foreign-produced steel to enter the U.S.market.Steel prices to U.S.consumers would be expected to:

If we consider the impact on both consumers and producers,then protection of the steel industry is:

Tariffs are not defended on the ground that they:

According to Figure 4.1,the loss in Mexican consumer surplus due to the tariff equals:

A lower tariff on imported aluminum would most likely benefit:

A tariff on steel imports tends to improve the competitiveness of domestic automobile companies.

Although tariffs on imported steel may lead to job gains for domestic steel workers,they can lead to job losses for domestic auto workers.

Figure 4.4 Market for Gasoline in a Small Nation -Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

The most vocal political pressure for tariffs is generally made by:

A decrease in the import tariff will result in:

The deadweight loss of a tariff:

With a compound tariff,a domestic importer of an automobile might be required to pay a duty of $200 plus 4 percent of the value of the automobile.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

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

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Exam 4: Tariffs

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

With a compound duty,its "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials,and the "ad valorem" portion of the duty grants protection to the finished-goods industry.

Refer to Exhibit 4.2.The tariff leads to a deadweight welfare loss for Canada totaling $1,000.

Suppose that the tariff on imported steel is 40 percent,the tariff on imported iron ore is 20 percent,and 30 percent of the cost of producing a ton of steel consists of the iron ore it contains.The effective rate of protection of steel is approximately 49 percent.

A nation whose imports constitute a very small portion of the world market supply is a price taker,facing a constant world price for its import commodity.

How can tariffs be justified?

The principal benefit of tariff protection goes to:

Suppose that the United States eliminates its tariff on steel imports,permitting foreign-produced steel to enter the U.S.market.Steel prices to U.S.consumers would be expected to:

If we consider the impact on both consumers and producers,then protection of the steel industry is:

Tariffs are not defended on the ground that they:

According to Figure 4.1,the loss in Mexican consumer surplus due to the tariff equals:

A lower tariff on imported aluminum would most likely benefit:

A tariff on steel imports tends to improve the competitiveness of domestic automobile companies.

Although tariffs on imported steel may lead to job gains for domestic steel workers,they can lead to job losses for domestic auto workers.

Figure 4.4 Market for Gasoline in a Small Nation -Figure 4.4 represents the market for gasoline in a small nation.The free trade world price of gasoline is $3.50.Suppose this small nation imposes a tariff on gasoline of $.50 per gallon.The change in producer surplus would be

The most vocal political pressure for tariffs is generally made by:

A decrease in the import tariff will result in:

The deadweight loss of a tariff:

With a compound tariff,a domestic importer of an automobile might be required to pay a duty of $200 plus 4 percent of the value of the automobile.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Nontariff Trade Barriers

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

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