Question 1

What do tariffs do?

Accepted Answer

A)   reduce the price of foreign goods
B)   reduce efficiency because a protective tariff encourages domestic firms to produce products at home
C)   create efficient utilization of resources
D)   are unambiguously pro-consumer and anti-producer
E)   help domestic producers increase their efficiency and resist foreign competitionF) C) and D)
G) B) and D)

Question 2

According to the opening case,one of the reasons why China imposed an export quota on rare earth metals is that several of its own mining companies did not meet environmental standards and had to be closed.

Accepted Answer

A) True 
 B)False

Question 3

Specific tariffs are leveled as a proportion of the value of the imported good (for example,5% of the value of a new car).

Accepted Answer

A) True 
 B)False

Question 4

Tariffs fall into two categories ________ and _________.

Accepted Answer

A)   specific tariffs and ad valorem tariffs.
B)   global tariffs and domestic tariffs.
C)   general tariffs and specific tariffs.
D)   flexible tariffs and ad valorem tariffs.
E)   domestic tariffs and GATTF) B) and E)
G) A) and E)

Question 5

Who gains and who losses from the imposition of a tariff on an imported goods? How can it be determined whether the net gain from the tariff exceeds the net loss?

Accepted Answer

The government gains,because the tariff ...

Question 6

An import quota is a direct restriction on the quantity of some good that may be

Accepted Answer

A)   subsidized by a country.
B)   imported into a country.
C)   exported out of a country.
D)   produced in a country.
E)   qualified for tariff relief.F) B) and E)
G) A) and E)

Question 7

In general,what are two types of arguments for government intervention into the free flow of trade?

Accepted Answer

A)   Patriotic and sociocultural
B)   Sociocultural and legal
C)   Political and economic
D)   Legal and patriotic
E)   Socioeconomic and legalF) C) and D)
G) None of the above

Question 8

By far,the oldest economic argument for government intervention into the free flow of trade is the __________ argument.

Accepted Answer

A)   mature industry
B)   infant industry
C)   declining industry
D)   proprietary industry
E)   mercantilistF) C) and E)
G) B) and C)

Question 9

Lowering production costs helps domestic producers

Accepted Answer

A)   gain export markets.
B)   develop trade reconciliation.
C)   create voluntary export subsidy.
D)   determine specialized quotas.
E)   increase their valueF) B) and E)
G) B) and D)

Question 10

An example of a(n) _______ that limits imports is if a country restricted the import of a particular good to a remote seaport that made it extremely difficult for any other country to import the good profitably.

Accepted Answer

A)   ad valorem trade policy
B)   administrative trade policy
C)   situational trade policy
D)   directional trade policy
E)   anti-dumping policyF) A) and B)
G) B) and D)

Question 11

Due to __________,according to our textbook,government intervention in trade policy is unlikely to be well executed.

Accepted Answer

A)   inexperience
B)   the costs associated with intervention
C)   the impact of special interest groups
D)   because of the high turnover of officials in government industries
E)   opposition from other countriesF) A) and D)
G) C) and D)

Question 12

The Canadian company Clearwater Seafoods has its fishing catches being subject to ______.

Accepted Answer

A)   ad valorem trade policy
B)   administrative trade policy
C)   situational trade policy
D)   quotas
E)   anti-dumping policyF) A) and B)
G) B) and D)

Question 13

Which of the following may limit a firm's ability to serve a country from locations outside of that country?

Accepted Answer

A)   Statutory export restraints
B)   Voluntary export restraints
C)   Involuntary export restraints
D)   Legal export restraints
E)   Domestic transportation regulationsF) None of the above
G) A) and D)

Question 14

What is a subsidy? Provide some examples of the forms that subsidies take.How do subsidies help domestic producers?

Accepted Answer

A subsidy is a government payment to a d...

Question 15

In the United States,if a domestic producer believes that a foreign firm is dumping production in the U.S.market,it can file a petition with the following two government agencies

Accepted Answer

A)   Treasury Department and the Senate Committee on Fair Trade.
B)   Department of Agricultural and the Department of Labor.
C)   Department of State and the Treasury Department.
D)   Commerce Department and International Trade Commission.
E)   U.S. office of the WTO.F) A) and E)
G) All of the above

Question 16

Administrative trade policies are bureaucratic rules that are designed to make it easy for imports to enter a country.

Accepted Answer

A) True 
 B)False

Question 17

Tariffs cause the most damage to whom?

Accepted Answer

A)   trade associations
B)   governments
C)   retailers
D)   producers
E)   consumersF) A) and E)
G) A) and B)

Question 18

Although the trade deficit in the U.S.peaked in 1987 at more than $170 billion,by the end of 1992,the annual deficit rate was still running about

Accepted Answer

A)   125 billion.
B)   80 billion.
C)   40 billion.
D)   15 billion.
E)   25 billion.F) A) and B)
G) C) and D)

Question 19

An indirect effect of protecting consumers from "unsafe" products is to ____________

Accepted Answer

A)   decrease the costs of the products.
B)   decrease the prices of the products.
C)   limit or ban the importation of the products.
D)   both A and C are correct.
E)   A, B and C are correct.F) A) and D)
G) B) and E)

Question 20

According to the strategic trade policy argument,a government should use subsidies to do what?

Accepted Answer

A)   support promising firms in emerging industries
B)   support established firms in key industries
C)   support the import of goods that a country cannot produce domestically
D)   support the export of agricultural products
E)   support large employersF) A) and B)
G) A) and C)

Exam 6: The Political Economy of International Trade

In general,what are two types of arguments for government intervention into the free flow of trade?

Correct AnswerverifiedShow Answer

According to the opening case,one of the reasons why China imposed an export quota on rare earth metals is that several of its own mining companies did not meet environmental standards and had to be closed.

Correct AnswerverifiedShow Answer

The Canadian company Clearwater Seafoods has its fishing catches being subject to ______.

Correct AnswerverifiedShow Answer

An import quota is a direct restriction on the quantity of some good that may be

Correct AnswerverifiedShow Answer

Administrative trade policies are bureaucratic rules that are designed to make it easy for imports to enter a country.

Correct AnswerverifiedShow Answer

An example of a(n) _______ that limits imports is if a country restricted the import of a particular good to a remote seaport that made it extremely difficult for any other country to import the good profitably.

Correct AnswerverifiedShow Answer

Tariffs cause the most damage to whom?

Correct AnswerverifiedShow Answer

Lowering production costs helps domestic producers

Correct AnswerverifiedShow Answer

Due to __________,according to our textbook,government intervention in trade policy is unlikely to be well executed.

Correct AnswerverifiedShow Answer

In the United States,if a domestic producer believes that a foreign firm is dumping production in the U.S.market,it can file a petition with the following two government agencies

Correct AnswerverifiedShow Answer

What is a subsidy? Provide some examples of the forms that subsidies take.How do subsidies help domestic producers?

Correct AnswerverifiedA subsidy is a government payment to a d...View AnswerShow Answer

Although the trade deficit in the U.S.peaked in 1987 at more than $170 billion,by the end of 1992,the annual deficit rate was still running about

Correct AnswerverifiedShow Answer

By far,the oldest economic argument for government intervention into the free flow of trade is the __________ argument.

Correct AnswerverifiedShow Answer

Tariffs fall into two categories ________ and _________.

Correct AnswerverifiedShow Answer

What do tariffs do?

Correct AnswerverifiedShow Answer

Which of the following may limit a firm's ability to serve a country from locations outside of that country?

Correct AnswerverifiedShow Answer

Who gains and who losses from the imposition of a tariff on an imported goods? How can it be determined whether the net gain from the tariff exceeds the net loss?

Correct AnswerverifiedThe government gains,because the tariff ...View AnswerShow Answer

According to the strategic trade policy argument,a government should use subsidies to do what?

Correct AnswerverifiedShow Answer

Specific tariffs are leveled as a proportion of the value of the imported good (for example,5% of the value of a new car).

Correct AnswerverifiedShow Answer

An indirect effect of protecting consumers from "unsafe" products is to ____________

Correct AnswerverifiedShow Answer

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A subsidy is a government payment to a d...
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Tariffs fall into two categories and _.

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The government gains,because the tariff ...
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