Exam 6: Trade Regulations and Industrial Policies

Members of the General Agreement on Tariffs and Trade and its successor,the World trade through Trade Organization,agree to the principle of nondiscrimination in trade and the reduction of trade barriers by multilateral negotiations.

By reducing available supplies of a product,an export embargo leads to falling prices in the target nation and increasing target-nation consumer surplus.

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator. Figure 6.2. Effects of an Export Subsidy -Consider Figure 6.2.With free trade,Mexicans attain $____ of consumer surplus from the availability of calculators,while Mexican producer surplus equals $____.

The Commodity Credit Corporation makes available export credit financing for U.S.agricultural exports.

The Smoot-Hawley Tariff Act of 1930 has generally been associated with:

Under the trade adjustment assistance program,a domestic firm or worker can file for governmental assistance only if it demonstrates that it suffered economic hardship due to imports of foreign-subsidized goods.

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator. Figure 6.2. Effects of an Export Subsidy -Consider Figure 6.2.With free trade,Mexican consumers purchase ____ calculators,Mexican firms produce ____ calculators,and ____ calculators are imported.

If the U.S.government pursued a "knowledge-based growth policy," it would subsidize particular firms to help them compete in the world economy.

Figure 6.3 represents the Iraqi computer market. Assume Iraq purchases all of its computers from the United States. Figure 6.3 Iraqi Computer Market and Economic Sanctions -Consider Figure 6.3.For the United States,the export quota results in a (an):

____ attempt to produce a fair and free-trading environment in which there exists a level playing field.

The purpose of "countervailing duties," as levied by the domestic government,is to neutralize import tariffs imposed by foreign governments.

The main focus of the Uruguay Round of multilateral trade negotiations was on tariff barriers rather than nontariff trade barriers.

According to U.S.trade law,the escape clause provides relief to U.S.firms due to unfair foreign competition.

The Uruguay Round of Multilateral Trade Negotiations accomplished all of the following except:

Industrial policy attempts to foster the development of industries that offer long-run comparative disadvantages and which are insulated from other sectors of the economy.

The United States

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable influence the South Korean (world) price. Assume the South Korean price to be $60 per calculator. Figure 6.2. Effects of an Export Subsidy -Consider Figure 6.2.To help its firms further penetrate export markets,suppose the South Korean government provides them a production subsidy of $20 per calculator.With the subsidy,South Korean firms charge a price of $____ and export ____ calculators to Mexico.

Intellectual property refers to holdings of rare books and pieces of art that are traded on the world market.

Industrial policy attempts to fulfill all of the following objectives except:

Figure 6.3 represents the Iraqi computer market. Assume Iraq purchases all of its computers from the United States. Figure 6.3 Iraqi Computer Market and Economic Sanctions -Consider Figure 6.3.In response to Iraq's armed invasion of neighboring countries,suppose the United States imposes a partial embargo that limits exports to Iraq to 10 computers.The export quota leads to an increase/decrease in the price of computers equal to $____,and an increase/decrease in consumer surplus equal to $____.