Macroeconomics, Chapter 20

Tariffs and quotas are costly to consumers because A) consumers have to switch to higher-priced domestic goods. B) import competition increases for domestic goods. C) the price of the imported good falls. D) the supply of the imported good increases.

A) consumers have to switch to higher-priced domestic goods.

A protective tariff will A) increase the price and sales of domestic producers. B) increase the sales of foreign exporters. C) create an efficiency gain in the domestic economy. D) increase the welfare of domestic consumers.

A) increase the price and sales of domestic producers.

A high tariff on imported good X might reduce domestic employment in industry Y if A) X is an inferior good. B) X is an input used domestically in producing Y. C) Y is an inferior good. D) X and Y are substitute goods.

B) X is an input used domestically in producing Y.

If a nation imposes a tariff on an imported product, then the nation will experience a(n) A) decrease in supply of, and an increase in demand for, the product. B) decrease in total supply and an increase in the price of the product. C) increase in supply of, and a decrease in demand for, the product. D) decrease in demand and a decrease in the price of the product.

B) decrease in total supply and an increase in the price of the product.

A key difference between import quotas and voluntary export restraints (VERs) is that the A) one is a tax, whereas the other is a quantity limit. B) domestic government administers the former, whereas the foreign government administers the latter. C) foreign government administers the former, whereas the domestic government administers the latter. D) one raises the price of the imported product involved, whereas the other one does not.

B) domestic government administers the former, whereas the foreign government administers the latter.

The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now A) lower in price because import competition has risen. B) higher in price because import competition has declined. C) lower in price because import competition has declined. D) higher in price because import competition has risen.

B) higher in price because import competition has declined.

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n) A) export subsidy. B) import quota. C) voluntary export restriction. D) protective tariff.

B) import quota.

Tariffs A) are also called import quotas. B) may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs). C) are excise taxes on goods exported abroad. D) are per-unit subsidies designed to promote exports.

B) may be imposed either to raise revenue (revenue tariffs) or to shield domestic

A "Buy American" policy strictly enforced is equivalent to a(n) A) voluntary export restriction. B) quota. C) tariff. D) export subsidy.

B) quota.

An excise tax on an imported good that is not produced domestically is called a(n) A) protective tariff. B) revenue tariff. C) import quota. D) voluntary export restriction.

B) revenue tariff.

Which of the following arguments for trade protection contends that new domestic industries need support to establish themselves and survive? A) the cheap foreign labor argument B) the infant industry argument C) the diversification-for-stability argument D) the increased domestic employment argument

B) the infant industry argument

Which is an example of a nontariff barrier (NTB)? A) an excise tax on the dollar value of imported goods B) an export subsidy C) box-by-box inspection requirements for imported fruit D) an excise tax on the physical volume of imported goods

C) box-by-box inspection requirements for imported fruit

Studies show that A) costs and benefits of trade barriers are about equal. B) benefits of trade barriers exceed their costs in developing nations. C) costs of trade barriers exceed their benefits, creating an efficiency loss for society. D) it is impossible to estimate the benefits of trade barriers.

C) costs of trade barriers exceed their benefits, creating an efficiency loss for society.

As it relates to international trade, dumping A) is defined as selling more goods than allowed by an import quota. B) constitutes a general case for permanent tariffs. C) is the practice of selling goods in a foreign market at less than cost. D) is a form of price discrimination illegal under U.S. antitrust laws.

C) is the practice of selling goods in a foreign market at less than cost.

In comparing a tariff and an import quota, we find that A) the quota generates revenue for the U.S. Treasury, but the tariff does not. B) neither the tariff nor the quota generates revenue for the U.S. Treasury. C) the tariff generates revenue for the U.S. Treasury, but the quota does not. D) the tariff and quota both generate the same amount of revenue for the U.S. Treasury.

C) the tariff generates revenue for the U.S. Treasury, but the quota does not.

The imposition of a tariff on a product is least likely to result in a(n) A) decrease in the real incomes of workers in other industries. B) increase in the price of the product. C) decrease in the quantity of imports. D) increase in efficiency in the domestic industry producing the product.

D) increase in efficiency in the domestic industry producing the product.

Excise taxes on imported goods that help shield domestic producers of the good are called A) voluntary export restrictions. B) revenue tariffs. C) import quotas. D) protective tariffs.

D) protective tariffs.

In effect, tariffs on imports are A) subsidies to domestic consumers. B) subsidies to foreign producers. C) special taxes on domestic producers. D) subsidies for domestic producers.

D) subsidies for domestic producers.

In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n) A) import quota. B) protective tariff. C) export subsidy. D) voluntary export restriction.

D) voluntary export restriction.

A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that A) there is no discernible relationship between wage rates and labor productivity. B) wage rates and labor productivity are inversely related. C) labor costs and product prices are not related. D) wage rates and labor productivity are directly related.

D) wage rates and labor productivity are directly related.