Question 1

The strongest political pressure for a trade policy that results in higher protectionism comes from:

Accepted Answer

A)  Domestic workers lobbying for import restrictions 
B)  Domestic workers lobbying for export restrictions 
C)  Domestic consumers lobbying for export restrictions 
D)  Domestic consumers lobbying for import restrictions 
A)  Domestic workers lobbying for import restrictions 
B)  Domestic workers lobbying for export restrictions 
C)  Domestic consumers lobbying for export restrictions 
D)  Domestic consumers lobbying for import restrictions

Question 2

Under the normal-trade-relations (most-favored-nation)principle,two nations agree to apply tariffs to each other at rates as low as those applied to any other nation.

Accepted Answer

A) True 
 B)False

Question 3

In 1995 the General Agreement on Tariffs and Trade was replaced by the ____.

Accepted Answer

A)  Agency for International Development 
B)  Organization for Economic Cooperation and Development 
C)  United Nations Center for Trade and Development 
D)  World Trade Organization 
A)  Agency for International Development 
B)  Organization for Economic Cooperation and Development 
C)  United Nations Center for Trade and Development 
D)  World Trade Organization

Question 4

Suppose the president lowers tariffs on radios as the result of negotiations under the trade agreements program.Radio producers in the United States can appeal under the:

Accepted Answer

A)  Escape clause if rising imports substantially injure the U.S. radio industry 
B)  Escape clause if rising unemployment occurs even though imports remain unchanged 
C)  Infant industry clause if rising imports cause unemployment to rise among U.S. radio workers 
D)  Infant industry clause if rising imports result in losses for U.S. radio companies 
A)  Escape clause if rising imports substantially injure the U.S. radio industry 
B)  Escape clause if rising unemployment occurs even though imports remain unchanged 
C)  Infant industry clause if rising imports cause unemployment to rise among U.S. radio workers 
D)  Infant industry clause if rising imports result in losses for U.S. radio companies

Question 5

The strategic-trade-policy hypothesis assumes that domestic firms operate under increasing cost conditions as well as in perfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 6

The Export-Import Bank provides export-credit subsidies to U.S.producers of agricultural goods.

Accepted Answer

A) True 
 B)False

Question 7

A trade policy designed to alleviate some domestic economic problem by exporting it to foreign countries is known as a (an):

Accepted Answer

A)  International dumping policy 
B)  Trade adjustment assistance policy 
C)  Most-favored-nation policy 
D)  Beggar-thy-neighbor policy 
A)  International dumping policy 
B)  Trade adjustment assistance policy 
C)  Most-favored-nation policy 
D)  Beggar-thy-neighbor policy

Question 8

Assume Boeing Inc. (of the United States) and Airbus Industrie (of Europe) rival for monopoly profits in the Canadian aircraft market. Suppose the two firms face identical cost and demand conditions, as seen in Figure 6.1.
Figure 6.1. Strategic Trade Policy: Boeing versus Airbus
  
-Consider Figure 6.1.Suppose the European government provides Airbus a subsidy of $4 million on each aircraft manufactured,and that the subsidy convinces Boeing to exit the Canadian market.As the monopoly seller,Airbus maximizes profit by selling ____ aircraft at a price of $____,and realizes profits totaling $____.

Accepted Answer

A)  6, $10 million, $36 million 
B)  6, $12 million, $24 million 
C)  12, $10 million, $36 million 
D)  12, $12 million, $24 million 
A)  6, $10 million, $36 million 
B)  6, $12 million, $24 million 
C)  12, $10 million, $36 million 
D)  12, $12 million, $24 million

Question 9

Although the Uruguay Round of multilateral trade negotiations succeeded in reducing nontariff trade barriers,it could not achieve reductions in tariff trade barriers.

Accepted Answer

A) True 
 B)False

Question 10

Throughout the post-World War II era,the importance of tariffs as a trade barrier has:

Accepted Answer

A)  Increased 
B)  Decreased 
C)  Remained the same 
D)  None of the above 
A)  Increased 
B)  Decreased 
C)  Remained the same 
D)  None of the above

Question 11

Suppose the United States imposes trade sanctions (export quotas)on grain sold to the Russians.Assuming other nations do not increase grain exports to the Russians,all of the following would occur except:

Accepted Answer

A)  Grain prices would rise in Russia 
B)  Consumer surplus would decrease for the Russians 
C)  Grain prices would rise in the United States 
D)  Export revenues would decrease for U.S. producers 
A)  Grain prices would rise in Russia 
B)  Consumer surplus would decrease for the Russians 
C)  Grain prices would rise in the United States 
D)  Export revenues would decrease for U.S. producers

Question 12

The classical theory of comparative advantage assumes that firms operate in imperfectly competitive markets,while the theory of strategic trade policy assumes that firms operate in perfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 13

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.Of the quota-induced change in Iraqi consumer surplus,$____ is not transferred to other sectors of Iraq's economy and represents deadweight loss.

Accepted Answer

A)  $5000 
B)  $10,000 
C)  $15,000 
D)  $20,000 
A)  $5000 
B)  $10,000 
C)  $15,000 
D)  $20,000

Question 14

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.Of the quota-induced change in Iraqi consumer surplus,the amount of the change in Iraq's consumer surplus that is transferred to other sectors of Iraq's economy is captured by the United States as:

Accepted Answer

A)  Tax revenue 
B)  Export revenue 
C)  Producer surplus 
D)  Consumer surplus 
A)  Tax revenue 
B)  Export revenue 
C)  Producer surplus 
D)  Consumer surplus

Question 15

According to the strategic-trade-policy hypothesis,government can alter the terms of competition to favor domestic companies,thus increasing their profits at the expense of their rivals.

Accepted Answer

A) True 
 B)False

Question 16

The Uruguay Round of multilateral trade negotiations succeeded in establishing the World Trade Organization.

Accepted Answer

A) True 
 B)False

Question 17

The World Trade Organization was established by the ____ of multilateral trade negotiations:

Accepted Answer

A)  Kennedy Round 
B)  Tokyo Round 
C)  Uruguay Round 
D)  Clinton Round 
A)  Kennedy Round 
B)  Tokyo Round 
C)  Uruguay Round 
D)  Clinton Round

Question 18

Established in 1995,the World Trade Organization took charge of administering the new global trade rules agreed in the Uruguay Round of multilateral trade negotiations.

Accepted Answer

A) True 
 B)False

Question 19

The Uruguay Round of trade negotiations lowered:

Accepted Answer

A)  Trade sanctions levied against South Africa 
B)  Trade sanctions levied against the Soviet Union 
C)  Tariffs, but not nontariff trade barriers 
D)  Tariffs as well as nontariff trade barriers 
A)  Trade sanctions levied against South Africa 
B)  Trade sanctions levied against the Soviet Union 
C)  Tariffs, but not nontariff trade barriers 
D)  Tariffs as well as nontariff trade barriers

Question 20

What is the basis for trade adjustment assistance?

Accepted Answer

The rationale of trade adjustment assist

The strongest political pressure for a trade policy that results in higher protectionism comes from:

Under the normal-trade-relations (most-favored-nation)principle,two nations agree to apply tariffs to each other at rates as low as those applied to any other nation.

In 1995 the General Agreement on Tariffs and Trade was replaced by the ____.

Suppose the president lowers tariffs on radios as the result of negotiations under the trade agreements program.Radio producers in the United States can appeal under the:

The strategic-trade-policy hypothesis assumes that domestic firms operate under increasing cost conditions as well as in perfectly competitive markets.

The Export-Import Bank provides export-credit subsidies to U.S.producers of agricultural goods.

A trade policy designed to alleviate some domestic economic problem by exporting it to foreign countries is known as a (an):

Although the Uruguay Round of multilateral trade negotiations succeeded in reducing nontariff trade barriers,it could not achieve reductions in tariff trade barriers.

Throughout the post-World War II era,the importance of tariffs as a trade barrier has:

Suppose the United States imposes trade sanctions (export quotas)on grain sold to the Russians.Assuming other nations do not increase grain exports to the Russians,all of the following would occur except:

The classical theory of comparative advantage assumes that firms operate in imperfectly competitive markets,while the theory of strategic trade policy assumes that firms operate in perfectly competitive markets.

According to the strategic-trade-policy hypothesis,government can alter the terms of competition to favor domestic companies,thus increasing their profits at the expense of their rivals.

The Uruguay Round of multilateral trade negotiations succeeded in establishing the World Trade Organization.

The World Trade Organization was established by the ____ of multilateral trade negotiations:

Established in 1995,the World Trade Organization took charge of administering the new global trade rules agreed in the Uruguay Round of multilateral trade negotiations.

The Uruguay Round of trade negotiations lowered:

What is the basis for trade adjustment assistance?

the International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

the Balance of Payments

Foreign Exchange

Exchange-rate Determination

Balance-of-payments Adjustments

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 6: Trade Regulations and Industrial Policies

The strongest political pressure for a trade policy that results in higher protectionism comes from:

Under the normal-trade-relations (most-favored-nation)principle,two nations agree to apply tariffs to each other at rates as low as those applied to any other nation.

In 1995 the General Agreement on Tariffs and Trade was replaced by the ____.

Suppose the president lowers tariffs on radios as the result of negotiations under the trade agreements program.Radio producers in the United States can appeal under the:

The strategic-trade-policy hypothesis assumes that domestic firms operate under increasing cost conditions as well as in perfectly competitive markets.

The Export-Import Bank provides export-credit subsidies to U.S.producers of agricultural goods.

A trade policy designed to alleviate some domestic economic problem by exporting it to foreign countries is known as a (an):

Although the Uruguay Round of multilateral trade negotiations succeeded in reducing nontariff trade barriers,it could not achieve reductions in tariff trade barriers.

Throughout the post-World War II era,the importance of tariffs as a trade barrier has:

Suppose the United States imposes trade sanctions (export quotas)on grain sold to the Russians.Assuming other nations do not increase grain exports to the Russians,all of the following would occur except:

The classical theory of comparative advantage assumes that firms operate in imperfectly competitive markets,while the theory of strategic trade policy assumes that firms operate in perfectly competitive markets.

According to the strategic-trade-policy hypothesis,government can alter the terms of competition to favor domestic companies,thus increasing their profits at the expense of their rivals.

The Uruguay Round of multilateral trade negotiations succeeded in establishing the World Trade Organization.

The World Trade Organization was established by the ____ of multilateral trade negotiations:

Established in 1995,the World Trade Organization took charge of administering the new global trade rules agreed in the Uruguay Round of multilateral trade negotiations.

The Uruguay Round of trade negotiations lowered:

What is the basis for trade adjustment assistance?

the International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

the Balance of Payments

Foreign Exchange

Exchange-rate Determination

Balance-of-payments Adjustments

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