Question 1

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 2

In 1995,the General Agreement on Tariffs and Trade replaced the World Trade Organization as the body for governing the conduct of trade relations among member countries.

Accepted Answer

A) True 
 B)False

Question 3

Assume that the United States imports chemicals from Germany.Trade theory predicts that if the German government grants an export subsidy to its chemical firms,the overall welfare of the United States will increase.

Accepted Answer

A) True 
 B)False

Question 4

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.As a result of the South Korean subsidy,Mexicans find their consumer surplus:

Accepted Answer

A)  Rising by $160 
B)  Rising by $220 
C)  Falling by $160 
D)  Falling by $220

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The U.S."trade-remedy laws" could establish all of the following except:

Accepted Answer

A)  Import tariffs to protect U.S.firms seriously injured by foreign competition 
B)  Countervailing duties which neutralize foreign export subsidies 
C)  Antidumping duties which protect U.S.firms from imports sold at less-than-fair-value 
D)  Economic sanctions levied against hostile nations

Question 7

The World Trade Organization primarily involves bilateral trade negotiations between two countries,say,the United States and China.

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

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 (NAFT
A)  
B)  European Union (EU) 
C)  World Bank 
D)  World Trade Organization

Question 10

The effect of antidumping duties is to impose a floor on the price of foreign goods that are imported by the home country.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 $____.

Accepted Answer

A)  Increase,$2000,decrease,$40,000 
B)  Increase,$4000,decrease,$60,000 
C)  Decrease,$2000,increase,$40,000 
D)  Decrease,$4000,increase,$60,000

Question 13

According to the escape clause,temporary trade restrictions may be imposed in industries where domestic producers are substantially being harmed by surging imports.

Accepted Answer

A) True 
 B)False

Question 14

For the United States,which organization makes loans to foreign buyers of U.S.manufactured goods?

Accepted Answer

A)  Export-Import Bank 
B)  Domestic International Sales Corporation 
C)  Organization for Economic Cooperation and Development 
D)  Commodity Credit Corporation

Question 15

Under U.S.commercial policy,which clause permits the modification of a trade liberalization agreement on a temporary basis if serious injury occurs to domestic producers as a result of the agreement?

Accepted Answer

A)  Adjustment assistance clause 
B)  Escape clause 
C)  Most-favored-nation clause 
D)  Reciprocal-trade clause

Question 16

Under the World Trade Organization,the most recent round of multilateral trade negotiations was the

Accepted Answer

A)  Uruguay Round 
B)  Doha Round 
C)  Nixon Round 
D)  Kennedy Round

Question 17

Among the codes of conduct addressed at the Tokyo Round of multilateral trade negotiations were customs valuation,product standards,subsidies and countervailing duties,government procurement policies,and import licensing procedures.

Accepted Answer

A) True 
 B)False

Question 18

The Reciprocal Trade Agreements Act of 1934 authorized

Accepted Answer

A)  the President to negotiate bilateral trade agreements with other nations 
B)  Congress to negotiate bilateral trade agreements with other nations 
C)  the President to increase tariffs without the approval of Congress 
D)  Congress to increase tariffs without the approval of the President

Question 19

In 1791,Alexander Hamilton presented to Congress his famous "Report on Manufacturers," which proposed that young industries of the United States be granted import protection.Hamilton was using the ______ to justify protection

Accepted Answer

A)  revenue argument 
B)  scientific tariff argument 
C)  infant industry argument 
D)  cheap foreign labor argument

Question 20

Trade adjustment assistance policies

Accepted Answer

A)  Can resolve all workers' challenges to free trade 
B)  Attempt to share gains from free trade with disadvantaged workers 
C)  Have never been used to sustain a losing business concern 
D)  Are financed by state and local tax revenues

Exam 6: Trade Regulations and Industrial Policies

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.

In 1995,the General Agreement on Tariffs and Trade replaced the World Trade Organization as the body for governing the conduct of trade relations among member countries.

Assume that the United States imports chemicals from Germany.Trade theory predicts that if the German government grants an export subsidy to its chemical firms,the overall welfare of the United States will increase.

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

The U.S."trade-remedy laws" could establish all of the following except:

The World Trade Organization primarily involves bilateral trade negotiations between two countries,say,the United States and China.

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 effect of antidumping duties is to impose a floor on the price of foreign goods that are imported by the home country.

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.

According to the escape clause,temporary trade restrictions may be imposed in industries where domestic producers are substantially being harmed by surging imports.

For the United States,which organization makes loans to foreign buyers of U.S.manufactured goods?

Under U.S.commercial policy,which clause permits the modification of a trade liberalization agreement on a temporary basis if serious injury occurs to domestic producers as a result of the agreement?

Under the World Trade Organization,the most recent round of multilateral trade negotiations was the

Among the codes of conduct addressed at the Tokyo Round of multilateral trade negotiations were customs valuation,product standards,subsidies and countervailing duties,government procurement policies,and import licensing procedures.

The Reciprocal Trade Agreements Act of 1934 authorized

In 1791,Alexander Hamilton presented to Congress his famous "Report on Manufacturers," which proposed that young industries of the United States be granted import protection.Hamilton was using the ______ to justify protection

Trade adjustment assistance policies