Question 1

The General Agreement on Tariffs and Trade and its successor,the World Trade Organization,have resulted in:

Accepted Answer

A)  Termination of export subsidies applied to manufactured goods 
B)  Termination of import tariffs applied to manufactured goods 
C)  Encouragement of beggar-thy-neighbor policies 
D)  Reductions in trade barriers via multilateral negotiations

Question 2

An antidumping duty levied on imports of foreign-produced steel leads to an increase in consumer surplus in the home country.

Accepted Answer

A) True 
 B)False

Question 3

Economic sanctions are most effective in causing the target nation to modify its behavior when the:

Accepted Answer

A)  Target nation had negligible economic relationships with the imposing nation prior to the sanctions 
B)  People of the target nation have weak cultural ties to the people of the imposing nation 
C)  Sanctions are levied by a large number of nations 
D)  Target government is supported by the majority of its people

Question 4

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

Question 5

Safeguard protection (the escape clause) applies to permanent protection provided to home industries encountering competition from unfairly traded foreign goods.

Accepted Answer

A) True 
 B)False

Question 6

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

Question 7

The General Agreement on Tariffs and Trade was founded in 1995 as a successor to the World Trade Organization.

Accepted Answer

A) True 
 B)False

Question 8

Advocates of the U.S.Trade Adjustment Assistance Program maintain that it

Accepted Answer

A)  allows the U.S.government to subsidize firms with comparative advantages 
B)  decreases the prices of imports that compete with American-produced goods 
C)  increases the political acceptances of efforts to reduce trade barriers 
D)  allows the United States to be a net exporter of oil and natural gas

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

One of the objectives of the World Trade Organization is to encourage a non-discriminatory trade environment.

Accepted Answer

A) True 
 B)False

Question 11

It is widely recognized that the economic sanctions levied against Iraq in 1990 were a major factor causing Iraq to withdraw its military forces from Kuwait.

Accepted Answer

A) True 
 B)False

Question 12

Unlike Japan and the United States,France has refrained from forming explicit industrial policies to enhance the competitiveness of its national champions.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Economic theory suggests that if France is a net importer of automobiles,whose production is subsidized by the Korean government,the overall welfare of France decreases because of the Korean subsidy.

Accepted Answer

A) True 
 B)False

Question 15

Unlike the Tokyo Round of multilateral trade negotiations,the Uruguay Round addressed the issues of intellectual property protection,trade barriers in services,and agricultural subsidies.

Accepted Answer

A) True 
 B)False

Question 16

The Export-Import Bank of the United States encourages American firms to sell overseas by providing direct loans and loan guarantees to foreign purchasers of American goods.To American firms,this represents a:

Accepted Answer

A)  Specific subsidy 
B)  Ad valorem subsidy 
C)  Domestic subsidy 
D)  Export subsidy

Question 17

Countervailing duties may be imposed:

Accepted Answer

A)  In response to a foreign export subsidy 
B)  In response to a foreign antidumping tariff 
C)  To promote exports of domestic companies 
D)  To promote imports of domestic consumers

Question 18

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

Question 19

Figure 6.4Japanese Market for Jetliners
 
-Consider the Japanese market for jetliners as depicted in Figure 6.4.Suppose lone producer of jetliners in the world is Boeing and Boeing faces a constant marginal cost of $20 million per jetliner.How much consumer surplus will the Japanese airlines who purchase the jetliners earn from their transactions with Boeing?

Accepted Answer

A)  0 
B)  $115 million 
C)  $230 million 
D)  $250 million

Question 20

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

Exam 6: Trade Regulations and Industrial Policies

The General Agreement on Tariffs and Trade and its successor,the World Trade Organization,have resulted in:

An antidumping duty levied on imports of foreign-produced steel leads to an increase in consumer surplus in the home country.

Economic sanctions are most effective in causing the target nation to modify its behavior when the:

Safeguard protection (the escape clause) applies to permanent protection provided to home industries encountering competition from unfairly traded foreign goods.

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

The General Agreement on Tariffs and Trade was founded in 1995 as a successor to the World Trade Organization.

Advocates of the U.S.Trade Adjustment Assistance Program maintain that it

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

One of the objectives of the World Trade Organization is to encourage a non-discriminatory trade environment.

It is widely recognized that the economic sanctions levied against Iraq in 1990 were a major factor causing Iraq to withdraw its military forces from Kuwait.

Unlike Japan and the United States,France has refrained from forming explicit industrial policies to enhance the competitiveness of its national champions.

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

Economic theory suggests that if France is a net importer of automobiles,whose production is subsidized by the Korean government,the overall welfare of France decreases because of the Korean subsidy.

Unlike the Tokyo Round of multilateral trade negotiations,the Uruguay Round addressed the issues of intellectual property protection,trade barriers in services,and agricultural subsidies.

The Export-Import Bank of the United States encourages American firms to sell overseas by providing direct loans and loan guarantees to foreign purchasers of American goods.To American firms,this represents a:

Countervailing duties may be imposed:

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:

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.