Econ Chapter 21

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.

A

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

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.

B

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.

B

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)

A

An import quota or tariff on French wine that raises the prices for wine will probably: A. hurt domestic wine drinkers but 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 domestic wine drinkers and domestic wine producers because of a reduction in competition. D. hurt domestic wineries, which will lose business as a result of the higher prices.

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

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 substantially in the U.S. economy but not in the global economy.

D

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.

B

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

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

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.

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.

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

C

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.

A

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

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

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.

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.

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.