Quiz 2 (Chapter 7)

Which of the following groups benefits the most from the imposition of tariffs? a) Domestic producers b) Consumers c) Exporters and importers d) Foreign producers e) International bodies such as WTO

a) Domestic producers

Which of the following statements is true about import quotas? a) Import quotas benefit domestic producers by limiting import competition. b) Import quotas always lower the prices for domestically produced goods. c) Higher tariff rates are usually applied to imports within the quota than those over the quota. d) Import quotas benefit consumers by decreasing the domestic price of an imported good. e) Import quotas help foreign producers gain a competitive advantage.

a) Import quotas benefit domestic producers by limiting import competition.

Which of the following best indicates the motive for foreign firms to engage in dumping? a) Unloading excess production in foreign markets b) Cutting labor costs to reduce the costs of production c) Providing a wider range of products for consumers in foreign markets d) Meeting the voluntary export requirements imposed on it e) Obtaining subsidies from the importing country

a) Unloading excess production in foreign markets

By lowering production costs, subsidies help domestic producers to: a) gain export markets. b) meet import quotas. c) meet voluntary export restraints. d) meet the local content requirement. e) compete in the domestic market against local producers.

a) gain export markets.

Which of the following requires that some specific fraction of a good must be produced domestically? a) International allocation requirement b) Local content requirement c) Specific quota requirement d) Ad valorem portion requirement e) Domestic sales requirement

b) Local content requirement

Which of the following identifies an attribute of tariffs? a) Tariffs reduce the price of foreign goods for domestic consumers. b) Tariffs reduce the overall efficiency of the world economy. c) Tariffs increase exports from a sector. d) Tariffs increase foreign competition for domestic producers. e) Tariffs increase efficient utilization of resources.

b) Tariffs reduce the overall efficiency of the world economy.

Which of the following is a trade policy instrument that the GATT and WTO have been most successful in limiting? a) Local content requirements. b) Tariffs. c) Subsidies. d) Voluntary export restraints. e) Import quotas.

b) Tariffs.

Which of the following is the most common political argument for government intervention in international trade? a) Decreasing the prices of products in the domestic market b) Promoting strategic trade policy c) Protecting jobs and industries from unfair foreign competition d) Improving efficiency of domestic labor e) Protecting human rights

c) Protecting jobs and industries from unfair foreign competition

Which of the following refers to a quota on trade imposed by the exporting country, typically at the request of the importing country's government? a) Tariff rate quota b) Quota rent c) Voluntary export restraint (VER) d) Quota share e) Export embargo

c) Voluntary export restraint (VER)

Which of the following are bureaucratic rules designed to make it difficult for imports to enter a country? a) Voluntary export restraints b) Consumer regulations c) Subsidies d) Administrative trade policies e) Public sector regulations

d) Administrative trade policies