ECNS 314 Final

A country that is saving more than it is investing domestically: a. has a current account surplus. b. has a financial account deficit. c. has a trade balance. d. has a trade disequilibrium.

A

A credit item in the balance of payments is: a. an item for which the country must be paid. b. any loan given out by the country. c. any imported item. d. an item that creates a monetary claim owed to a foreigner.

A

A lower interest rate will lead to a) Increasing net exports b) Decreasing private Investments c) Lower capital export rate d) Worse trade balance

A

A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. If the government auctions the quota licenses, calculate the revenue collected by the government. a. $40 million b. $70 million c. $200 million d. $240 million

A

A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles Calculate the government revenue from the tariff. a. $250,000 b. $1.25 million c. $3.5 million d. $500,000

A

A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles The imposition of the tariff on wine will cause the country's economic well-being to _____ by _____. a. fall; $0.5 million b. rise; $0.75 million c. fall; $100,000 d. fall; $0.75 million

A

If Social Marginal Cost (SMC) > Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Benefit (SMB), it implies that: a. a commodity is oversupplied. b. there is an excess demand for a commodity. c. the socially optimal amount of a good is supplied. d. firms are not maximizing profits.

A

Restricting imports into a small country by the government: a. protects domestic producers from foreign competition. b. increases consumer welfare in the country. c. increases the general welfare of the importing nation. d. increases well-being of the global economy.

A

Suppose that the domestic production of computer games creates enjoyment for those who play the games. Domestic production of computer games also results in knowledge spillovers that positively impact many other industries. One possible policy that could be employed to encourage increased production of computer games by domestic firms is: a. to impose tariffs on computer game imports. b. to tax the production of computer games. c. to tax the consumption of computer games. d. to eliminate all restrictions on the importation of computer games.

A

The tax-or-subsidy approach for solving externality problems was developed by: a. Arthur Pigou. b. Ronald Coase. c. Eli Heckscher. d. Bertil Ohlin.

A

What did we mention as an indicator for the supply of illegal drugs? a. Changes in the seizure rates of illegal drugs. b. Changes in the amount of people doing drugs. c. Changes in the amount of drugs that is thought to still be connected to Pablo Escobar. d. Changes in the regulations on marijuana in countries.

A

Which of the following refers to the consumption effect of a tariff on imported automobiles? a. The decline in the purchase of the imported product due to the increase in its price. b. The net increase in the availability of the domestic automobiles for the consumers owing to higher prices. c. The net increase in the government revenue by taxing the domestic consumers who buy the imported automobiles. d. The net increase in the consumption of imported automobiles by the domestic consumers.

A

Which of the following refers to the extra cost of shifting to more expensive home production following the imposition of a tariff? a. Production effect b. Revenue effect c. Deadweight loss d. Producer surplus

A

1. Which of the following organizations is at the forefront of leveraging international trade to alleviate domestic pharmaceutical shortage in the U.S.? a. International Trade Administration (ITA) b. U.S. Food and Drug Administration (FDA) c. World Trade Organization (WTO) d. U.S. Foreign Agricultural Service (FAS)

B

A country experiencing a current account surplus: a. needs to borrow internationally. b. is able to lend internationally. c. must also have had a surplus in its overall payments balance. d. spends more than it earns on its merchandise and service trade, international income payments and receipts and international transfers.

B

A debit item in the balance of payments is: a. any foreign aid received by the country. b. an item for which the country must pay. c. any exported item. d. an item that creates a monetary claim on a foreigner.

B

A nation is called a lender if: a. its financial account is in deficit during a time period. b. its current account is in surplus during a time period. c. its current account is in deficit during a time period. d. its net stock of foreign assets is positive.

B

A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. If the government auctions the import licenses, the national well-being will _____ by _____. a. increase; $40 million b. decrease; $12 million c. increase; $65 million d. decrease; $5 million

B

A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles Before the tariff is imposed, the country imports _____ bottles of wine, but following the imposition of the tariff, the country will import _____ bottles of wine. a. 100,000; 100,000 b. 250,000; 50,000 c. 150,000; 50,000 d. 750,000; 650,000

B

At free-trade prices, a bicycle in country X sells for $100 when the per-unit cost of material inputs is $90. Country X has a nominal tariff rate of 15% on bicycles, and 10% on the material inputs. Based on this information, calculate the effective rate of protection for the bicycle industry in country X. Assume that country X is a small country. a. 80% b. 60% c. 5% d. 15%

B

How much of China's Foreign Trade Reserves were from the United States in 2008: a. 65% b. 70% c. 34% d. 12%

B

If Social Marginal Benefit (SMB) > Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Cost (SMC), it implies that: a. too much is supplied. b. not enough of a good is being demanded. c. the socially optimal amount is supplied. d. the buyers are not maximizing utility.

B

If the balance of payments accounts of a country shows a current account deficit, it means that: a. it is acting as a net lender to the rest of the world. b. its foreign assets are growing slower than its foreign liabilities. c. its foreign assets are growing faster than its foreign liabilities. d. its exports are higher than its imports.

B

In the case of a small country, the effects of a quota and a tariff are (almost) identical if: a. the government allocates licenses for free to importers using a rule or process that involves (almost) no resource cost. b. the government auctions off import licenses to the highest bidder. c. the government allocates licenses to importers through application and selection procedures that require the use of substantial resources. d. the government allocates import licenses directly to the public using a free lottery system.

B

One of the reasons that protectionists and government officials may favor using a quota instead of a tariff is: a. quotas generate more revenue for the government than tariffs. b. quotas ensure that the quantities of imports are strictly limited. c. quotas create less market distortions than tariffs. d. quotas give less power to politicians than tariffs

B

The current account balance of the balance of payments account equals: a. the sum of national savings and domestic capital formation. b. net foreign investment. c. the domestic production of goods and services. d. net credits minus debits involving changes in nonofficial foreign financial assets and liabilities

B

What country was the first to adopt negative interest rates. a. The Moon b. Sweden c. Swaziland d. Sri Lanka

B

What distinguishing factor has made Yemen less resilient to exogenous shocks than Afghanistan, despite having otherwise similar economies? a. Yemen's infrastructure has been devastated by war. b. Yemen primarily exports one good whereas Afghanistan's exports are diversified. c. Yemen has a high trade deficit. d. Yemen is a coastal nation, whereas Afghanistan is landlocked.

B

What two Countries in the America's Region have fully legalized Marijuana? A. United States and Canada B. Canada and Uruguay C. Montana and Texas D. Brazil and Chile

B

Which market region contributed the most to fleet growth in 2017 in terms of DWT? A. Oceania B. Asia C. North America D. Europe

B

Which of the following asserts that temporary protection from international competition is needed for a nascent industry that initially has high costs? a. The developing government argument b. The infant industry argument c. The dying industry argument d. The optimal tariff argument

B

Which of the following correctly identifies the impact of tariffs on the producers of importcompeting products in the imposing country? a. They can price their products higher than the imported goods. b. They can expand their production and sales. c. They are forced to go out of business in the long run. d. They are forced to charge a price equal to the average cost of production

B

Which of the following is NOT true of nontariff barriers to imports? a. Nontariff barriers can limit imports with greater certainty than tariffs. b. Unlike tariffs, the nontariff barriers do not increase the price of the imported goods in the domestic markets. c. Some nontariff barriers create uncertainty about the conditions under which imports will be permitted. d. Like tariffs, nontariff barriers also result in a net welfare loss in a small country.

B

Which of the following is an expected effect of a tariff or a nontariff barrier (NTB) on a product? a. A decrease in the domestic production of the product b. An increase in the employment of labor and other resources used in the import-competing industry in the tariff imposing country c. An increase in domestic consumption of the imported product d. A decrease in government revenue

B

Which of the following is true of the specificity rule? a. The specificity rule suggests that tariffs should be imposed only on specific products. b. According to the specificity rule, government policy should target as closely as possible the source of the distortion that separates private and social benefits (or costs). c. The specificity rule posits that tariff imposed on a good favors only the interests of a specific group within a country. d. According to the specificity rule, only specific industries should be allowed to participate in government lobbying

B

A large country can gain from imposing a tariff on the import of a good if: a. the tariff drives the quantity imported to zero. b. the tariff is high enough that the country becomes an exporter of the product. c. the part of the tariff paid by the foreign exporters is greater than the losses arising from the production and consumption effects of the tariff in the domestic market d. the tariff revenue collected by the domestic government is less than the losses caused by the production and consumption effects of the tariff

C

A nation is considered to be a(n) _____ in the international market, if its current account is in deficit. a. importer b. exporter c. borrower d. lender

C

A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. How much would the importing nation lose if the government used VER instead of import quota? a. $12 million b. $20 million c. $52 million d. $24 million

C

A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. The quota on T-shirts causes domestic producers to: a. gain $5 million. b. lose $5 million. c. gain $25 million. d. gain $30 million.

C

A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles The imposition of the tariff on wine will cause the surplus of the domestic consumers to _____ by _____. a. fall; $10 million b. fall; $250,000 c. fall; $3.5 million d. rise; $3.5 million

C

Chinese household consumption (annual variation in %) fell in 2017 to: a. 1.2% b. 3.4% c. 6.4% d. 12.7%

C

If a small country imposes a tariff on imported motorcycles, the world price of motorcycles will _____ and the domestic price of motorcycles will _____. a. rise; fall b. fall; rise c. remain constant; rise d. remain constant; fall

C

If there is something extra bad about local consumption of a product, then a tariff can be good for the country because: a. the tariff makes all residents richer. b. the tariff brings down the domestic price of the product. c. the tariff leads to higher domestic price for the product. d. the tariff revenue is invested in the production of substitute products

C

In which of the following cases does an import quota result in a higher welfare loss than a tariff? a. The domestic firms producing an import-competing product set the product's price equal to the marginal cost of producing it. b. The government auctions the import licenses to the highest bidders. c. The quota licenses are allocated through resource-using application procedures. d. The domestic industry in the importing country is highly competitive.

C

On September 14th, 2019 drone missiles bombed two large oil installations causing significant damage in the world's leading exporter of oil. What country is the world's leading exporter of oil? A. China B. Canada C. Saudi Arabia D. Argentina

C

Suppose that the training, skills, and attitudes received by employees in the computer gaming development industry have positive spillover effects as workers leave the industry and move to other jobs. The specificity rule suggests that the best way to achieve more employment in this industry is to: a. impose a tariff on the importation of computer games. b. remove all sales taxes from the purchases of computer games. c. give computer game developing firms a subsidy tied to their level of employment. d. tax production of computer games

C

The decline of which industry contributed to increasing income inequality in America? a. Agriculture b. Finance c. Manufacturing d. Mining

C

The lower the price elasticity of foreign supply of a country's imports: a. the lower will be the prohibitive tariff imposed by this country. b. the lower will be tariff revenue of the government of the imposing country. c. the higher will be the optimum tariff imposed by this country. d. the higher will be the fluctuation in the availability of the imported goods in this country.

C

What is most likely to happen when firms in an import-competing infant industry are offered subsidies? a. The firms will suffer from diseconomies of scale. b. The firms will be able to sustain only if they charge a higher price than the foreign firms. c. The firms will be able to charge a price equal to the world price and still earn a profit. d. The firms will face a perfectly inelastic demand curve.

C

What is the total amount of tariffs that the U.S. has applied to China so far? a.$185B b.$580B c.$550B d.$700B

C

Which of the following is a plausible solution to a distortion? a. By centralizing the privately owned enterprises b. By shutting down any industry which is contributing to atmospheric pollution c. By imposing a tax or subsidy on the activity if the social marginal cost or the social marginal benefit exceeds the market price d. By imposing an importation ban on manufactured goods

C

Which of the following is an impact of tariffs on the country imposing them? a. The domestic producers of import-competing products are forced to charge a lower price for their products to retain market share. b. The supply of the domestic import-competing products declines. c. The domestic consumers pay a higher price for the imported products. d. The demand for the imported goods by the domestic consumers increases.

C

Which of the following is defined as the percentage by which the entire set of a nation's trade barriers raises an industry's value added per unit of output? a. One-dollar, one-vote metric b. Revenue effect c. Effective rate of protection d. Terms-of-trade effect

C

Which of the following is true of a quota: a. Imposition of a quota causes domestic prices to fall below world prices. b. Imposition of a quota by a country causes the world price of the good imported by this country to rise. c. A quota is a quantitative restriction on imports. d. A quota is always more efficient than a tariff.

C

Which of the following is valid for a "first-best" world? a. Social Marginal Benefit (SMB) > Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Cost (SMC) b. Social Marginal Cost (SMC) > Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Benefit (SMB) c. Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Cost (SMC) = Social Marginal Benefit (SMB) d. Social Marginal Benefit (SMB) > Social Marginal Cost (SMC)

C

Which of these pollutants is not governed by the provisions of MARPOL73/78? A. Air pollution by emissions B. Sewage pollution C. Auditory pollution D. Pollution by containerized chemicals

C

Who Enforces Intellectual Property Right Laws? a) The Senate b) The country challenging the patent c) The World Trade Organization d) Dwight Schrute

C

80% of active pharmaceutical ingredients used by U.S. manufacturers come from abroad. From which nation are they mainly imported? a. Egypt b. Germany c. Japan d. China

D

A small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T-shirt and domestic production rises to 15 million T-shirts per year. The quota on T-shirts causes domestic consumers to: a. gain $7 million. b. lose $7 million. c. lose $70 million. d. lose $77 million

D

A small country is considering imposing a tariff on imported wine at the rate of $5 per bottle. Economists have estimated the following based on this tariff amount: World price of wine (free trade): $20 per bottle Domestic production (free trade): 500,000 bottles Domestic production (after tariff): 600,000 bottles Domestic consumption (free trade): 750,000 bottles Domestic consumption (after tariff): 650,000 bottles The imposition of the tariff on wine will cause the surplus of the domestic producers to _____ by _____. a. rise; $1 million b. rise; $500,000 c. fall; $2.5 million d. rise; $2.75 million

D

How does openness to trade correlate with income inequality? a. Positive correlation b. Negative correlation c. No correlation d. Unclear

D

If a small country imposes a tariff on imported motorcycles: a. the surplus of the domestic producers of motorcycles will decline, but the surplus of the domestic consumers will increase. b. the surplus of both the domestic producers and consumers of motorcycles will decline. c. the surplus of both the domestic producers and consumers of motorcycles will increase. d. the surplus of the domestic producers of motorcycles will increase, but the surplus of the domestic consumers will decline

D

If the imposition of tariff on a commodity alters the relative prices of the imposing country's exports to its imports, it is referred to as the: a. total price effect of the tariff. b. production effect of the tariff. c. consumption effect of the tariff. d. terms-of-trade effect of the tariff.

D

In a "second-best" world: a. tariffs are economically optimal. b. private actions are dictated by government agencies. c. social marginal cost of a transaction equals social marginal benefit. d. private actions do not lead to the best possible outcomes for society.

D

Under which of the following situations will a tariff imposed by a country fail to reduce imports by as much as expected? a. The current tariff rate is less than the prohibitive tariff rate. b. The foreign export quantity supplied of the good imported by this country is more responsive to changes in the world price than was expected. c. The domestic supply of the import-competing products is more price-elastic than was expected. d. The domestic quantity demanded of the imported product is less responsive to price changes than was expected.

D

What are some general challenges to growth that Least Developed Countries face? a. Undeveloped or destroyed infrastructure b. Political turmoil c. Low foreign direct investment d. All of the above

D

What country (Youth Rebels) took responsibility for the bombings? A. United States B. China C. Saudi Arabia D. Yemen

D

What has been the main focus of tariffs enacted by the United States? a.Restore the trade balance b.Combat Chinese unfair trade practice c.Provide government revenue d.All of the above

D

When a U.S. resident increases her holdings of a foreign financial asset, this item is recorded as a: a. credit entry in the U.S. current account. b. debit entry in the U.S. current account. c. credit entry in the U.S. capital account. d. debit entry in the U.S. capital account.

D

Which of the following statements is NOT correct? a. Tariffs are likely to decrease world economic well-being. b. Tariffs can increase, decrease, or leave unchanged the economic well-being if imposed by a large country. c. Tariffs always decrease economic domestic well-being if imposed by a small country. d. Tariffs hurt producers and help consumers in the country imposing the tariff.

D

With a voluntary export restraint (VER), the economic rent created for the quantitatively limited on trade is collected by: a. the government of the importing county. b. the consumers in the importing country. c. the producers in the importing country. d. the exporting firms in the foreign countries

D

4. A foreign resident increasing her holdings of a U.S. financial asset will be recorded as a debit item in the financial account of the U.S. balance of payments. a. True b. False

False

A credit item is an item for which a country must pay. a. True b. False

False

Capital inflows are debits and capital outflows are credits. a. True b. False

False

A nation is a borrower if its current account is in deficit at a point in time a. True b. False

True

In 2013, U.S. households, businesses, and government were buying more goods and services than they were producing. a. True b. False

True

The US has had Double the Accusations that China has had since 2001 a) True b) False

True

The current account balance is equal to the difference between domestic product and national expenditure. a. True b. False

True

The net value of the flow of goods, services, income, and gifts is the current account balance. a. True b. False

True

The official settlements balance is the sum of the capital account balance and the public current account balance. a. True b. False

false