Question 1

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods,the subsidizing country's terms of trade worsen.

Accepted Answer

A) True 
 B)False

Question 2

Because export subsidies tend to result in domestic exporters charging lower prices on their goods sold overseas,the home country's:

Accepted Answer

A)  Export revenues will decrease 
B)  Export revenues will rise 
C)  Terms of trade will worsen 
D)  Terms of trade will improve 
A)  Export revenues will decrease 
B)  Export revenues will rise 
C)  Terms of trade will worsen 
D)  Terms of trade will improve

Question 3

A subsidy granted to import-competing producers results in a welfare loss to the economy by an amount equal to the protective effect plus the consumption effect.

Accepted Answer

A) True 
 B)False

Question 4

Is a tariff-rate quota a two-tier tariff? Why?

Accepted Answer

Yes.It allows a specified numb

Question 5

Figure 5.3 illustrates the apple market for Sweden,assumed to be a "small" country that is unable to affect the world price.SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand.SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3.Sweden's Apple Market  
-Consider Figure 5.3.Assume that Swedish import companies behave as a monopoly buyer while foreign export companies behave as competitive sellers.Compared to free trade,Sweden's import quota results in domestic welfare:

Accepted Answer

A)  Gains totaling $1.60 
B)  Gains totaling $3.20 
C)  Losses totaling $1.60 
D)  Losses totaling $3.20 
A)  Gains totaling $1.60 
B)  Gains totaling $3.20 
C)  Losses totaling $1.60 
D)  Losses totaling $3.20

Question 6

Export quotas,placed on Japanese auto shipments to the United States in the 1980s,led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S.consumer.

Accepted Answer

A) True 
 B)False

Question 7

To maintain that South Koreans are dumping their VCRs in the United States is to maintain that:

Accepted Answer

A)  Koreans are selling VCRs in the United States below their production cost 
B)  Koreans are selling VCRs in the United States above their production cost 
C)  The cost of manufacturing VCRs in Korea is lower in Korea than in the United States since wages are lower in Korea 
D)  The cost of manufacturing VCRs in Korea is higher in Korea than in the United States since wages are higher in Korea 
A)  Koreans are selling VCRs in the United States below their production cost 
B)  Koreans are selling VCRs in the United States above their production cost 
C)  The cost of manufacturing VCRs in Korea is lower in Korea than in the United States since wages are lower in Korea 
D)  The cost of manufacturing VCRs in Korea is higher in Korea than in the United States since wages are higher in Korea

Question 8

Assume the U.S.has a competitive advantage in producing calculators,while the rest of the world has a competitive advantage in steel.Suppose the U.S.and the rest of the world enter into an agreement to lower import quotas below existing levels on calculators and steel.Which of the following would least likely occur for the U.S.? Rising levels of:

Accepted Answer

A)  Consumer surplus for American buyers of steel 
B)  Producer surplus for American steelmakers 
C)  Production in the American calculator industry 
D)  Producer surplus for American calculator producers 
A)  Consumer surplus for American buyers of steel 
B)  Producer surplus for American steelmakers 
C)  Production in the American calculator industry 
D)  Producer surplus for American calculator producers

Question 9

When voluntary export limits are imposed on the world's chief exporter

Accepted Answer

A)  The exports of the non-restrained suppliers may be stimulated 
B)  A trade diversion effect may occur 
C)  Both a and b 
D)  None of the above 
A)  The exports of the non-restrained suppliers may be stimulated 
B)  A trade diversion effect may occur 
C)  Both a and b 
D)  None of the above

Question 10

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country  
-Consider Figure 5.1.With free trade,Mexico's consumer surplus and producer surplus respectively equal:

Accepted Answer

A)  $2000 and $1200 
B)  $3200 and $200 
C)  $3600 and $800 
D)  $4000 and $600 
A)  $2000 and $1200 
B)  $3200 and $200 
C)  $3600 and $800 
D)  $4000 and $600

Question 11

Figure 5.4.Venezuelan Calculator Market  
-Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling:

Accepted Answer

A)  $8 
B)  $12 
C)  $16 
D)  $20 
A)  $8 
B)  $12 
C)  $16 
D)  $20

Question 12

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

Accepted Answer

A) True 
 B)False

Question 13

When increases in nonrestraint supply offset part of the cutback in shipments that occur under an export quota,the overall inefficiency loss for the importing country is less than that which would have occurred in the absence of nonrestrained exports.

Accepted Answer

A) True 
 B)False

Question 14

Figure 5.3 illustrates the apple market for Sweden,assumed to be a "small" country that is unable to affect the world price.SS1U1B1SwedenS1U1B0 is the domestic supply and DS1U1B1SwedenS1U1B0 is the domestic demand.SS1U1B1Sweden+QuotaS1U1B0 is Sweden's supply schedule with an import quota.
Figure 5.3.Sweden's Apple Market  
-Consider Figure 5.3.The quota's revenue effect equals:

Accepted Answer

A)  $1.60 
B)  $2.40 
C)  $3.20 
D)  $4.00 
A)  $1.60 
B)  $2.40 
C)  $3.20 
D)  $4.00

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods,the subsidizing country's terms of trade worsen.

Because export subsidies tend to result in domestic exporters charging lower prices on their goods sold overseas,the home country's:

A subsidy granted to import-competing producers results in a welfare loss to the economy by an amount equal to the protective effect plus the consumption effect.

Is a tariff-rate quota a two-tier tariff? Why?

Export quotas,placed on Japanese auto shipments to the United States in the 1980s,led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S.consumer.

To maintain that South Koreans are dumping their VCRs in the United States is to maintain that:

When voluntary export limits are imposed on the world's chief exporter

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.With free trade,Mexico's consumer surplus and producer surplus respectively equal:

Figure 5.4.Venezuelan Calculator Market -Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling:

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

When increases in nonrestraint supply offset part of the cutback in shipments that occur under an export quota,the overall inefficiency loss for the importing country is less than that which would have occurred in the absence of nonrestrained exports.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

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

Filters

Exam 5: Nontariff Trade Barriers

To the extent that subsidies granted to exporting firms reduce the foreign price of their goods,the subsidizing country's terms of trade worsen.

Because export subsidies tend to result in domestic exporters charging lower prices on their goods sold overseas,the home country's:

A subsidy granted to import-competing producers results in a welfare loss to the economy by an amount equal to the protective effect plus the consumption effect.

Is a tariff-rate quota a two-tier tariff? Why?

Export quotas,placed on Japanese auto shipments to the United States in the 1980s,led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S.consumer.

To maintain that South Koreans are dumping their VCRs in the United States is to maintain that:

When voluntary export limits are imposed on the world's chief exporter

Figure 5.1.Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.With free trade,Mexico's consumer surplus and producer surplus respectively equal:

Figure 5.4.Venezuelan Calculator Market -Consider Figure 5.4.The production subsidy results in an overall welfare loss for Venezuela totaling:

An effective Buy American law would tend to increase U.S.producer surplus at the expense of U.S.consumer surplus.

When increases in nonrestraint supply offset part of the cutback in shipments that occur under an export quota,the overall inefficiency loss for the importing country is less than that which would have occurred in the absence of nonrestrained exports.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

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

Filters