Question 1

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 2

In U.S.trade law,Section 301 cases involve accusations of:

Accepted Answer

A)  International dumping by U.S. companies 
B)  Full-cost pricing by U.S. companies 
C)  Unfair trade practices by foreign nations 
D)  Trade embargoes by foreign nations

Question 3

Which international organization stipulates procedures for the settlement of international trade disputes?

Accepted Answer

A)  World Trade Organization 
B)  World Bank 
C)  International Monetary Fund 
D)  Organization of Economic Development

Question 4

Export embargoes induce greater losses in consumer surplus for the target country:

Accepted Answer

A)  The lesser its initial dependence on foreign produced goods 
B)  The more elastic the target country's demand schedule 
C)  The greater the available output from alternative suppliers 
D)  The more inelastic the target country's supply schedule

Question 5

The principle of normal trade relations (most-favored-nation)treatment was established with the passage of the:

Accepted Answer

A)  Fordney-McCumber Act of 1922 
B)  Smoot-Hawley Act of 1930 
C)  Reciprocal Trade Agreements Act of 1934 
D)  Trade Act of 1974

Question 6

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 7

Under U.S.commercial policy,the escape clause results in:

Accepted Answer

A)  Temporary quotas granted to firms injured by import competition 
B)  Tariffs that offset export subsidies granted to foreign producers 
C)  Tax advantages extended to minority-owned exporting firms 
D)  Duties which offset commercial dumping on the part of foreign firms

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.At the monopoly price as established by Boeing,Canadian consumers realize $____ of consumer surplus from the availability of aircraft.

Accepted Answer

A)  $4 million 
B)  $8 million 
C)  $12 million 
D)  $16 million

Question 9

Concerning industrial policy,the United States has nationalized its major industries in an attempt to promote global champions.

Accepted Answer

A) True 
 B)False

Question 10

Adjustment assistance is sometimes used to assist:

Accepted Answer

A)  In retraining workers displaced by imports 
B)  In retraining workers displaced by exports 
C)  Foreign firms injured by our quotas 
D)  Foreign firms injured by our tariffs

Question 11

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 12

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 13

In the post World War II era,the Japanese government formed industrial policies to encourage the development of its steel,auto,shipbuilding,and machine tool industries.

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

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
 
-Referring to Figure 6.1,assume that Boeing is the first to enter the Canadian market.Without a governmental subsidy,the firm maximizes profits by selling ____ aircraft at a price of $____,and realizes profits totaling $____.

Accepted Answer

A)  4, $12 million, $16 million 
B)  4, $16 million, $12 million 
C)  8, $12 million, $16 million 
D)  8, $16 million, $12 million

Question 16

Industrial policies of the U.S.government have included subsidizing particular firms to promote national champions,nationalizing basic industries,and encouraging cartelization of industries.

Accepted Answer

A) True 
 B)False

Question 17

Trade theory suggests that the United States would gain from a subsidy provided by Japan to its calculator producers if the gains to American consumers of calculators more than offset the losses to American calculator producers.This occurs as long as the United States:

Accepted Answer

A)  Is a net importer of calculators 
B)  Is a net exporter of calculators 
C)  Has an absolute advantage in calculator production 
D)  Has a comparative advantage in calculator production

Question 18

Assume that Russia has a comparative advantage in vodka.If the United States extends Russia the benefits of the normal-trade-relations (most favored nation)principle,U.S.consumer surplus decreases in the vodka market.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The only members of the General Agreement on Tariffs and Trade and its successor,the World Trade Organization,are developing countries rather than developed countries.

Accepted Answer

A) True 
 B)False

Exam 6: Trade Regulations and Industrial Policies

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.

In U.S.trade law,Section 301 cases involve accusations of:

Which international organization stipulates procedures for the settlement of international trade disputes?

Export embargoes induce greater losses in consumer surplus for the target country:

The principle of normal trade relations (most-favored-nation) treatment was established with the passage of the:

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

Under U.S.commercial policy,the escape clause results in:

Concerning industrial policy,the United States has nationalized its major industries in an attempt to promote global champions.

Adjustment assistance is sometimes used to assist:

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.

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.

In the post World War II era,the Japanese government formed industrial policies to encourage the development of its steel,auto,shipbuilding,and machine tool industries.

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

Industrial policies of the U.S.government have included subsidizing particular firms to promote national champions,nationalizing basic industries,and encouraging cartelization of industries.

Trade theory suggests that the United States would gain from a subsidy provided by Japan to its calculator producers if the gains to American consumers of calculators more than offset the losses to American calculator producers.This occurs as long as the United States:

Assume that Russia has a comparative advantage in vodka.If the United States extends Russia the benefits of the normal-trade-relations (most favored nation)principle,U.S.consumer surplus decreases in the vodka market.

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

The only members of the General Agreement on Tariffs and Trade and its successor,the World Trade Organization,are developing countries rather than developed countries.