Question 1

Commercial policy is government policy that influences:

Accepted Answer

A) the operation of commercial banks. 
B) domestic trade flows. 
C) domestic private corporations. 
D) international trade flows. 
E) the operation of capital markets. 
A) the operation of commercial banks. 
B) domestic trade flows. 
C) domestic private corporations. 
D) international trade flows. 
E) the operation of capital markets.

Question 2

Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market.The firm caters to the global market and earns a profit of $10 million.Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million.However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry.Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down.This conclusion rests on which of the following assumptions?

Accepted Answer

A) The German government was experiencing a budget surplus. 
B) There was low demand for Cicare automobiles in the world market. 
C) The German government was able to forecast accurately the subsidy required to induce Flettner to produce helicopters. 
D) The quality of Flettner's helicopters were inferior compared to that of Cicare's. 
E) Cicare diversified into the production of automobiles. 
A) The German government was experiencing a budget surplus. 
B) There was low demand for Cicare automobiles in the world market. 
C) The German government was able to forecast accurately the subsidy required to induce Flettner to produce helicopters. 
D) The quality of Flettner's helicopters were inferior compared to that of Cicare's. 
E) Cicare diversified into the production of automobiles.

Question 3

In 1992 the EEC was replaced by the EU with an agreement to:

Accepted Answer

A) reduce trade barriers among the member countries. 
B) reduce trade barriers against nonmember countries. 
C) mutually restrict imports from nonmember countries. 
D) create a single market for goods and services in western Europe. 
E) enable the countries of Western Europe to emerge as major world powers. 
A) reduce trade barriers among the member countries. 
B) reduce trade barriers against nonmember countries. 
C) mutually restrict imports from nonmember countries. 
D) create a single market for goods and services in western Europe. 
E) enable the countries of Western Europe to emerge as major world powers.

Question 4

When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses.

Accepted Answer

A) True 
 B)False

Question 5

If international trade is restricted by the government:

Accepted Answer

A) domestic consumers are benefited. 
B) domestic producers are adversely affected. 
C) consumers in the importing country are required to pay higher prices for the goods. 
D) consumers can access to better quality product at lower prices. 
E) the resources are allocated to their highest paid uses. 
A) domestic consumers are benefited. 
B) domestic producers are adversely affected. 
C) consumers in the importing country are required to pay higher prices for the goods. 
D) consumers can access to better quality product at lower prices. 
E) the resources are allocated to their highest paid uses.

Question 6

In the United States, a "buy American" act was passed in 1933 to create larger markets for domestic goods.

Accepted Answer

A) True 
 B)False

Question 7

It is often argued that if foreign goods are kept out of the domestic economy:

Accepted Answer

A) jobs will be lost at home. 
B) jobs will be created abroad. 
C) foreign consumers will enjoy product surpluses. 
D) jobs will be created at home. 
E) foreign consumers will suffer product shortages. 
A) jobs will be lost at home. 
B) jobs will be created abroad. 
C) foreign consumers will enjoy product surpluses. 
D) jobs will be created at home. 
E) foreign consumers will suffer product shortages.

Question 8

Which of the following can be considered as a cultural barrier to trade?

Accepted Answer

A) Prohibition on Zimbabwean aircrafts from flying over or landing in Canada. 
B) Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada. 
C) An arms embargo imposed on China by the U.K.government 
D) Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business. 
E) Restriction on the export of strategic goods to Ghana imposed by the government of U.K. 
A) Prohibition on Zimbabwean aircrafts from flying over or landing in Canada. 
B) Restriction on the export of luxury goods to the Democratic Peoples Republic of Korea from Canada. 
C) An arms embargo imposed on China by the U.K.government 
D) Japanese law requiring a new retail firm to receive permission from other retailers in the area in order to open a business. 
E) Restriction on the export of strategic goods to Ghana imposed by the government of U.K.

Question 9

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

Accepted Answer

A) True 
 B)False

Question 10

Tariff accounts for 32% of the total government revenue in the U.K.and only 1.2% in India.

Accepted Answer

A) True 
 B)False

Question 11

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 35.2   According to Figure 35.2, if the world price of wheat is $25 and a tariff of $10 is imposed by the domestic government, the total tariff revenue collected by the government is:

Accepted Answer

A) $4, 000. 
B) $0. 
C) $5, 000. 
D) $2, 000. 
E) $1, 000. 
A) $4, 000. 
B) $0. 
C) $5, 000. 
D) $2, 000. 
E) $1, 000.

Question 12

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

Accepted Answer

A) True 
 B)False

Question 13

The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 35.3   In Figure 35.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?

Accepted Answer

A) $4 
B) $6 
C) $8 
D) $10 
E) $12 
A) $4 
B) $6 
C) $8 
D) $10 
E) $12

Question 14

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 35.2   Refer to Figure 35.2.In the absence of international trade, what are the domestic equilibrium price and quantity?

Accepted Answer

A) $30 and 200 bushels 
B) $50 and 400 bushels 
C) $30 and 400 bushels 
D) $50 and 300 bushels 
E) $25 and 150 bushels 
A) $30 and 200 bushels 
B) $50 and 400 bushels 
C) $30 and 400 bushels 
D) $50 and 300 bushels 
E) $25 and 150 bushels

Question 15

By restricting the amount of a good that may be imported, quotas:

Accepted Answer

A) increase the price, thus causing domestic producers to sell less than they would with free trade. 
B) lower the price, thus allowing domestic producers to sell more than they would with free trade. 
C) increase the price and allow domestic producers to sell more at a higher price than they would with free trade. 
D) lower the price, thus causing domestic producers to realize lower total revenue from the quota item. 
E) simply replace foreign production with domestic production. 
A) increase the price, thus causing domestic producers to sell less than they would with free trade. 
B) lower the price, thus allowing domestic producers to sell more than they would with free trade. 
C) increase the price and allow domestic producers to sell more at a higher price than they would with free trade. 
D) lower the price, thus causing domestic producers to realize lower total revenue from the quota item. 
E) simply replace foreign production with domestic production.

Question 16

The European Economic Community was created in 1957 by:

Accepted Answer

A) France, the United Kingdom, Italy, Belgium, the Netherlands, and Luxembourg. 
B) France, West Germany, Italy, Belgium, the Netherlands, and Luxemburg. 
C) France, West Germany, Italy, Belgium, the Netherlands, and the United Kingdom. 
D) France, West Germany, Italy, the United Kingdom, Belgium, the Netherlands, and Luxembourg. 
E) France, West Germany, Italy, Belgium, the United Kingdom, and Luxembourg. 
A) France, the United Kingdom, Italy, Belgium, the Netherlands, and Luxembourg. 
B) France, West Germany, Italy, Belgium, the Netherlands, and Luxemburg. 
C) France, West Germany, Italy, Belgium, the Netherlands, and the United Kingdom. 
D) France, West Germany, Italy, the United Kingdom, Belgium, the Netherlands, and Luxembourg. 
E) France, West Germany, Italy, Belgium, the United Kingdom, and Luxembourg.

Question 17

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

Accepted Answer

A) domestic consumers;domestic producers 
B) domestic consumers;government 
C) domestic producers;domestic consumers 
D) foreign producers;domestic producers 
E) foreign producers;domestic consumers 
A) domestic consumers;domestic producers 
B) domestic consumers;government 
C) domestic producers;domestic consumers 
D) foreign producers;domestic producers 
E) foreign producers;domestic consumers

Question 18

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established, it is not at all clear that government should even offer protection to reduce short-run losses.

Accepted Answer

A) True 
 B)False

Question 19

The world output is higher if the countries follow restrictive trade policies rather than free trade.

Accepted Answer

A) True 
 B)False

Question 20

According to strategic trade policy, international trade largely involves firms which:

Accepted Answer

A) enjoy monopolistic power in the domestic market. 
B) has a high initial cost of production. 
C) pursues economies of scale. 
D) experiences diseconomies of scale. 
E) generates adequate employment in the domestic economy. 
A) enjoy monopolistic power in the domestic market. 
B) has a high initial cost of production. 
C) pursues economies of scale. 
D) experiences diseconomies of scale. 
E) generates adequate employment in the domestic economy.

Exam 56: International Trade Restrictions

Commercial policy is government policy that influences:

In 1992 the EEC was replaced by the EU with an agreement to:

When production does not proceed on the basis of comparative advantage, resources are expended on their most efficient uses.

If international trade is restricted by the government:

In the United States, a "buy American" act was passed in 1933 to create larger markets for domestic goods.

It is often argued that if foreign goods are kept out of the domestic economy:

Which of the following can be considered as a cultural barrier to trade?

Industries that are truly critical to the national defense should be protected from foreign competition if that is the only way to ensure their existence.

Tariff accounts for 32% of the total government revenue in the U.K.and only 1.2% in India.

The United States has no comparative advantage in shipping, so a domestic shipping industry has no reason to exist.

The figure below shows the demand (D)and supply (S)curves of corn syrups. Figure 35.3 In Figure 35.3, with an import quota of 30 gallons of corn syrup, what is the new equilibrium price?

The figure given below depicts the negatively sloped demand and positively sloped supply curves of wheat in a country. Figure 35.2 Refer to Figure 35.2.In the absence of international trade, what are the domestic equilibrium price and quantity?

By restricting the amount of a good that may be imported, quotas:

The European Economic Community was created in 1957 by:

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).

If an infant industry truly has a good chance to become competitive and produce profitably once it is well established, it is not at all clear that government should even offer protection to reduce short-run losses.

The world output is higher if the countries follow restrictive trade policies rather than free trade.

According to strategic trade policy, international trade largely involves firms which:

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

Filters

When restrictions alter the pattern of international trade, the _ benefit and the _ suffer(s).