Question 1

Of the following, in which decade were U.S. tariffs at their lowest level?

Accepted Answer

A)  2000s 
B)  1930s 
C)  1970s 
D)  1950s

Question 2

Which of the following statements is true?

Accepted Answer

A)  The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy. 
B)  A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods. 
C)  Both statements are true. 
D)  Neither of the statements is true.

Question 3

-The above figure shows the domestic supply of and domestic demand for an imported good. The world price is
$15 per unit.
a) At the world price of $15 per unit, what is the domestic consumption and domestic production?
b) At the world price of $15 per unit, what is the quantity imported?
c) If the government imposes a tariff of $5 per unit, what is the domestic consumption and domestic production?
d) With the $5 per unit tariff, what is the quantity imported?
e) How much revenue does the government collect with a tariff of $5 per unit?

Accepted Answer

The answer of  
-The above figure shows the domestic...

Question 4

Tariffs_________ the domestic price of the good and import quotas _________the domestic price of the good.

Accepted Answer

A)  lower; lower 
B)  lower; raise 
C)  raise; raise 
D)  raise; lower

Question 5

If a government imposes a quota on imports of a popular doll, the price of the doll in the country will _________and the quantity purchased in the country will _________.

Accepted Answer

A)  rise; decrease 
B)  fall; decrease 
C)  rise; increase 
D)  fall; increase

Question 6

Suppose the country of Atlantica imposes a tariff on foreign-produced cars. As a result of the tariff,

Accepted Answer

A)  there is an increase in the number of imported cars. 
B)  tariff revenue collected by the government in the Atlantica increases. 
C)  there are more efficient trade agreements between Atlantica and its trade partners. 
D)  the gains from trade rise.

Question 7

Trade barriers are politically popular because

Accepted Answer

A)  people recognize their use as a negotiating tool in international relations. 
B)  they are a way to avoid trade wars and still protect domestic producers. 
C)  their benefits are concentrated, while their costs are widespread. 
D)  their benefits are widespread, while their costs are highly concentrated.

Question 8

During the first 6 months of 2008, the European Union EU) initiated an anti -dumping case against China for imports of taper candles. What is dumping?

Accepted Answer

A)  When China sells its candles to the EU at a lower price than other producers 
B)  When China tries to sell more candles to the EU than is allowed by the import quota 
C)  When China sells its candles to the EU at a lower price than Chinaʹs cost of production 
D)  When China does not pay the tariff on the candles

Question 9

A U.S. tariff on textiles would _________U.S. clothing prices and_________ jobs in the U.S. textile industry.

Accepted Answer

A)  reduce; increase 
B)  raise; increase 
C)  raise; decrease 
D)  reduce; decrease

Question 10

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt.
-In the figure above, the U.S. governmentʹs revenue from the tariff is _________.

Accepted Answer

A)  $64 million 
B)  $32 million 
C)  $48 million 
D)  $128 million

Question 11

The current U.S. average tariff rate

Accepted Answer

A)  greater than 10 percent. 
B)  approximately 20 percent. 
C)  less than 5 percent. 
D)  over 50 percent.

Question 12

Which of the following is a reason why only limited attempts are made to compensate those who lose from free international trade?

Accepted Answer

A)  It would be difficult to determine the extent to which someoneʹs sufferings were because of free trade and not due to reasons under their own control. 
B)  No one loses in the from free trade in the long run. 
C)  Free trade advocates consistently lobby to eliminate compensation. 
D)  None of the above answers are correct.

Question 13

In poorer countries, free trade _________the demand for labor in these countries and_________ the wages paid in these countries.

Accepted Answer

A)  increases; lowers 
B)  decreases; lowers 
C)  increases; raises 
D)  decreases; raises

Question 14

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of

Accepted Answer

A)  increasing its gains from trade. 
B)  avoiding import quotas. 
C)  dumping. 
D)  engaging in learning-by-doing.

Question 15

The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter.
-In the figure above, with international trade _________helicopters per year are produced in the United States.

Accepted Answer

A)  240 
B)  360 
C)  720 
D)  480

Question 16

One reason that international trade is restricted is that

Accepted Answer

A)  protectionism benefits consumers. 
B)  the government cannot measure the cost of protectionism. 
C)  the individual gain to parties who benefit from the protection will be much larger than the individual loss to parties who lose. 
D)  the government completely pays the losers from international trade for their losses.

Question 17

A tariff is a

Accepted Answer

A)  tax on an exported good or service. 
B)  subsidy on an imported good. 
C)  tax on an imported good or service. 
D)  subsidy on an exported good.

Question 18

Japan was accused of dumping in the steel industry within the United States when it

Accepted Answer

A)  negotiated an illegal agreement to raise prices with U.S. steel industries. 
B)  negotiated a illegal trade deal with Canada. 
C)  prohibited imports of U.S. steel into Japan. 
D)  sold steel in the United States at a price below its cost of production.

Question 19

It is possible for the United States to compete against cheap foreign labor because expensive domestic workers

Accepted Answer

A)  belong to unions. 
B)  pay U.S. taxes. 
C)  receive subsidies. 
D)  are more productive.

Question 20

When NAFTA was approved, Congress attempted to soften the losses suffered by some industries by

Accepted Answer

A)  reducing tariffs. 
B)  creating new jobs to hire workers who lost their jobs because of NAFTA. 
C)  setting aside funds to support and retrain workers who lost their jobs because of NAFTA. 
D)  imposing quotas.

Exam 15: International Trade Policy