Question 1

Concerning the tariff policy of the United States, the country imposes

Accepted Answer

A)  identical tariff rates on products from all countries. 
B)  lower tariff rates on products from countries with most-favored-nation status. 
C)  higher tariff rates on products from countries with most-favored-nation status. 
D)  zero tariff rates on products from all developing countries.

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6.2 illustrates the calculator market for Mexico, assumed to be a small nation that is unable to 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 $______________.

Accepted Answer

A)  $400, $200 
B)  $200, $400 
C)  $500, $180 
D)  $500, $240

Question 4

According to the strategic trade policy hypothesis, governmental subsidies granted to domestic producers can help them in capturing economic profits from foreign competitors.

Accepted Answer

A) True 
 B)False

Question 5

Responding to Russia's annexation of Crimea in 2014, the United States and its allies imposed economic sanctions against Russia.

Accepted Answer

A) True 
 B)False

Question 6

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.With free trade, Iraq purchases ______________ computers at a price of $______________ and realizes $______________ of consumer surplus from the availability of computers.

Accepted Answer

A)  30, $3,000, $25,000 
B)  30, $3,000, $35,000 
C)  30, $3,000, $45,000 
D)  30, $3,000, $55,000

Question 7

Unlike Germany and the United States, France has refrained from helping unemployed workers back into the labor force.

Accepted Answer

A) True 
 B)False

Question 8

The Smoot-Hawley Tariff Act of 1930

Accepted Answer

A)  decreased U.S. tariffs to the lowest level since the early 1800s. 
B)  decreased U.S. tariffs to the lowest level since the late 1800s. 
C)  increased U.S. tariffs to an average of 53 percent on protected imports. 
D)  resulted in foreign nations increasing their tariffs on U.S. export.

Question 9

Copyrights, trademarks, and patents are used to protect the intellectual property of a nation from foreign imitators.

Accepted Answer

A) True 
 B)False

Question 10

The ______________ was created to administer the provisions of multilateral trade agreements, to resolve international trade disagreements, and to meet periodically to consider new trade liberalization agreements.

Accepted Answer

A)  North American Free Trade Agreement 
B)  European Union 
C)  World Bank 
D)  World Trade Organization

Question 11

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 12

Which is the main reason for sanctions NOT being able to pressure North Korea into changing its behavior?

Accepted Answer

A)  North Korea's trade and financial relations with the rest of the world are limited. 
B)  China has refrained from implementing substantial sanctions against its neighbor. 
C)  The tension that prevails between the United States and North Korea. 
D)  It sees nuclear weapons as the only way to survive its repressive regime.

Question 13

For the United States, countervailing duty cases consist of allegations of

Accepted Answer

A)  foreign impediments to American exports. 
B)  dumping by foreign exporting companies. 
C)  foreign export subsidies. 
D)  monopoly pricing by foreign importing companies.

Question 14

The World Trade Organization brings into the multilateral trading system manufactured goods and agricultural products but NOT trade in services, intellectual property protection, and investment.

Accepted Answer

A) True 
 B)False

Question 15

During the post-World War II era, the United States has adopted explicit industrial policies similar to those of France and Japan.

Accepted Answer

A) True 
 B)False

Question 16

U.S.tariffs on imports from countries issued normal-trade-relations (most-favored-nation) status are often three or four times as high as those on comparable imports from nations NOT receiving that status.

Accepted Answer

A) True 
 B)False

Question 17

Assume that the United States is the only supplier of grain to China and that it levies a partial export embargo against China.The embargo leads to increased U.S.welfare if the resulting improvement in the U.S.terms of trade with China more than offset the costs of the lower export volume to China.

Accepted Answer

A) True 
 B)False

Question 18

Advocates of the U.S.Trade Adjustment Assistance Program argue that it allows American farmers to maintain prices that are higher than that which would occur under free trade.

Accepted Answer

A) True 
 B)False

Question 19

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 that was due to imports of foreign-subsidized goods.

Accepted Answer

A) True 
 B)False

Question 20

Predatory dumping is a widely used practice by American companies.

Accepted Answer

A) True 
 B)False

Exam 6: Trade Regulations and Industrial Policies

Concerning the tariff policy of the United States, the country imposes

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.

According to the strategic trade policy hypothesis, governmental subsidies granted to domestic producers can help them in capturing economic profits from foreign competitors.

Responding to Russia's annexation of Crimea in 2014, the United States and its allies imposed economic sanctions against Russia.

Unlike Germany and the United States, France has refrained from helping unemployed workers back into the labor force.

The Smoot-Hawley Tariff Act of 1930

Copyrights, trademarks, and patents are used to protect the intellectual property of a nation from foreign imitators.

The ______________ was created to administer the provisions of multilateral trade agreements, to resolve international trade disagreements, and to meet periodically to consider new trade liberalization agreements.

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.

Which is the main reason for sanctions NOT being able to pressure North Korea into changing its behavior?

For the United States, countervailing duty cases consist of allegations of

The World Trade Organization brings into the multilateral trading system manufactured goods and agricultural products but NOT trade in services, intellectual property protection, and investment.

During the post-World War II era, the United States has adopted explicit industrial policies similar to those of France and Japan.

U.S.tariffs on imports from countries issued normal-trade-relations (most-favored-nation) status are often three or four times as high as those on comparable imports from nations NOT receiving that status.

Assume that the United States is the only supplier of grain to China and that it levies a partial export embargo against China.The embargo leads to increased U.S.welfare if the resulting improvement in the U.S.terms of trade with China more than offset the costs of the lower export volume to China.

Advocates of the U.S.Trade Adjustment Assistance Program argue that it allows American farmers to maintain prices that are higher than that which would occur under free trade.

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 that was due to imports of foreign-subsidized goods.

Predatory dumping is a widely used practice by American companies.