Christopher Custer P.2 (Chapter 34 Review Questions)

_____________ are numerical limitations on the quantity of products that can be imported. A. Tariffs B. Import quotas C. Taxes D. Nontariff barriers

Answer: B

Tariffs are taxes imposed on____________________. A. imported products B. exported products C. hazardous goods D. surplus goods

Answer: A

____________ means selling goods below their cost of production. A. Protectionism B. Dumping C. Import quotas D. Non-tariff barriers

Answer: B

A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________. A. a non-tariff barrier B. a quota C. a government bureaucracy D. an import quota

Answer: A

A tariff differs from a quota in that a tariff is: A. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. B. a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. C. levied on exports, whereas a quota is imposed on imports. D. levied on imports, whereas a quota is imposed on exports.

Answer: A

An import quota or tariff on French wine that raises the prices for wine will probably: A. hurt domestic wine drinkers b help domestic wineries, which will gain from the higher prices. B. hurt both domestic wine drinkers and domestic wineries, but this will be more than offset by a reduction in driving fatalities. C. hurt both wine drinkers and domestic wine producers because of a reduction in competition. D. hurt domestic wineries, which will lose business as a result of higher prices.

Answer: A

During the second half of the twentieth century, trade barriers have in general: A. declined quite substantially both in the U.S. economy and in the global economy. B. declined quite substantially in the U.S. economy but not in the global economy. C. increased quite substantially in the U.S. economy and in the global economy. D. increased quite sbstantially in the U.S. economy but not in the global economy.

Answer: A

It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________. A. National Interest Argument B. Import Limitation Argument C. Anti-Dumping Argument D. Buy-American Argument

Answer: A

The United States national minimum wage is _____________. A. $6.25/hour B. $7.25/hour C. $8.25/hour D. $9.25/hour

Answer: A

Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect? A. government tax revenues increase B. domestic production and sales by the protected industries increase C. consumers' real incomes decrease D. prices of the goods produced by protected industries increase

Answer: A

Raising an existing tariff on grapes from Argentina will: A. increase domestic production of grapes. B. increase total American consumption of grapes. C. increase American consumption of domestically produced grapes. D. increase American imports of grapes from Argentina.

Answer: C

Tariffs result in a decrease in consumer surplus because: A. the price and the quantity consumed of the protected good increases. B. the price and the quantity consumed of the protected good decreases. C. the price of the protected good increases and quantity consumed decreases. D. the price of the protected good decreases and quantity consumed increases.

Answer: C

There are nontariff barriers in the form of _______________ regulations, in which certain textiles are made in the United States, shipped to other countries, combined in making apparel with textiles made in those other countries—and then re-exported back to the United States at a lower tariff rate. A. import quota B. export quota C. "rules of origin" D. dumping

Answer: C

After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will: A. decrease. B. increase. C. remain the same. D. change in an indeterminate manner.

Answer: B

A new American import quota on imported steel would be likely to: A. increase the production of steel-using American firms. B. increase American production of steel. C. generate tax revenue to the government. D. reduce the cost of production to steel-using American firms.

Answer: B

A tariff differs from a quota in that a tariff is: A. levied on imports, whereas a quota is imposed on exports. B. levied on exports, whereas a quota is imposed on imports. C. a tax levied on export, whereas a quota is a limit on the number of units of a good that can be exported. D. a tax imposed on imports, whereas is an absolute limit to the number of units of a good at can be imported.

Answer: D

An import quota does which of the following? A. decreases the price of the imported goods to consumers B. increases the price of the domestic goods to consumers C. redistributes income away from domestic producers of those products toward domestic producers of exports D. both a) and c)

Answer: B

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) __________ advantage and toward industries where it has a(n) ___________ advantage. A. absolute; absolute B. comparative; comparative C. comparative; competitive D. comparative; absolute

Answer: B

Economists would say tariffs: A. protect domestic producers of exported goods. B. limit voluntary exchanges. C. protect foreign producers of goods. D. protect domestic consumers of goods.

Answer: B

If Japan does not have a comparative advantage in producing rice, the consequences of adopting a Japanese policy reducing or eliminating imports of rice into the country would include: A. Japan will be able to consume a combination of rice and other goods beyond their domestic production possibilities curve. B. the real incomes of Japanese rice producers would rise, but the real incomes of Japanese rice consumers would fall. C. the real incomes of Japanese rice consumers would rise, but the real incomes of Japanese rice producers would fall. D. the price of rice in Japan will fall.

Answer: B

Introducing a tariff on vitamin Z would: A. reduce exports of vitamin Z. B. increase American consumption of domestically produced vitamin Z. C. increase total American consumption of vitamin Z. D. decrease domestic production of vitamin Z.

Answer: B

Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because: A. protectionism provides a barrier to entry to the job markets that the low-wage earners want entry to. B. protectionism forces them to pay higher prices for basic necessities like clothing and food. C. protectionism will encourage foreign workers to apply for American jobs. D. protectionism will prevent them from applying for those jobs in other industries.

Answer: B

The acronym GATT stands for: A. General Association for Trade and Tariffs. B. General Agreement on Tariffs and Trade. C. General Accounting for Tariff and Trade. D. General Association on Technology and Trade.

Answer: B

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that: A. firms will be protected from subsidized foreign competition. B. domestic producers can attain the economies of scale to allow them to compete in world markets. C. there will be adequate supplies of crucial resources in case they are needed for national defence. D. it will not be subjected to a takeover from a foreign competitor.

Answer: B

The membership of the WTO includes about __________ nations. A. 15 B. 150 C. 700 D. 1500

Answer: B

Which of the following is the best example of a quota? A. a tax placed on all small cars sold in the domestic market B. a limit imposed on the number of men's suits that can be imported from a foreign country C. a subsidy from the American government to domestic manufacturers of men's suits so they can compete more effectively with foreign producers of men's suits D. a $100-per-car fee imposed on all small cars imported

Answer: B

Which of the following would be expected if the tariff on foreign-produced automobiles were increased? A. The domestic price of automobiles would fall. B. The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise. C. The number of unemployed workers in the domestic automobile industry would rise. D. The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.

Answer: B

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss? A. Many nations participate in poor planning and as a result produce a surplus of product which they sell at a loss. B. This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices. C. Many nations simply wish to keep their workers employed, no matter what the cost. D. Many nations simply produce and sell inferior goods at prices that reflect this fact.

Answer: B

__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products. A. Tariffs B. Nontariff barriers C. Quotas D. Import ceilings

Answer: B

________________________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry. A. Protectionism B. The infant industry argument C. Dumping D. Import quotas

Answer: B

Despite interlocking import quotas, tariffs, and nontariff barriers, the share of apparel sold in the United States that is imported rose from about _________ in 1999 to about ________ today. A. 10%; 25% B. 25%; 50% C. 50%; 75% D. 75%; 90%

Answer: C

Import tariffs generally ________ the output of domestic producers of the affected products and also _________ the output of domestic exporters. A. decrease; decrease B. decrease; increase C. increase; decrease D. increase; increase

Answer: C

International trade is fundamentally a ________________________. A. win-lose situation B. lose-lose situation C. win-win situation D. war which is won by the strongest

Answer: C

The race to the bottom scenario of global environmental degradation is explained roughly like this: A. Companies seek to reduce their costs of operations on plant and equipment design and this results in higher levels of pollution. B. Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution. C. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits. D. Companies seek to influence environmental legislation standards are set to the lowest possible standards in the USA in order to maximize profits.

Answer: C

If the government legislates policies that block imports of solar panels and gives domestic manufacturers a $5 billion dollar tax subsidy, the benefits to the U.S. solar panel manufacturing and distribution industry will be very visible. The bearers of the cost of the tax subsidy: A. are easy to identify. B. also fit this pattern of identifiable winners. C. will have their interests counterbalanced over time. D. are more anonymous.

Answer: D

Politicians often argue for tariff increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long-run effect is most likely to be: A. an increase in American imports, and a decrease in American exports. B. an decrease in American imports, and an increase in American exports. C. an increase in both American imports and exports. D. a decrease in both American imports and exports.

Answer: D

Suppose the government of Taiwan subsidized its watch-making industry, enabling Taiwanese producers to undersell foreign watch producers. The law of comparative advantage indicates that watch-importing nations would best take advantage of the Taiwanese subsidization policy by: A. setting a tariff high enough to just offset the subsidy granted to the Taiwanese watch-making industry. B. setting a declining quota on the import of Taiwanese watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy. C. setting a tariff such that the prices of Taiwanese and domestic watches to the consumer are equal. D. accepting the subsidy of the Taiwanese government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.

Answer: D

Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement: A. contains one error; the trade restraints do not increase the scarcity of foreign-produced goods. B. contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers. C. contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers. D. is essentially correct.

Answer: D

Which of the following is the best example of a tariff? A. a tax placed on all small cars sold in the domestic market B. a limit imposed on the number of small cars that can be imported from a foreign country C. a subsidy from the American government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars D. a $1000-per-car fee imposed on all small cars imported

Answer: D