ch 20

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

A

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) voluntary export restriction. import quota. protective tariff. export subsidy.

a

Other things equal, a tariff is superior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury. inferior to an import quota for Americans because a tariff increases the profits of domestic producers. superior to an import quota for Americans because a tariff increases the profits of foreign producers. inferior to an import quota for Americans because a tariff generates revenue for the U.S. Treasury.

a

Research studies indicate that : U.S. consumers lose more from tariffs than U.S. producers gain. the costs of trade restrictions are proportionately higher for high-income groups than for low-income groups. U.S. producers gain more from tariffs than U.S. consumers lose. the revenue from tariffs equals the total cost that tariffs impose on consumers.

a

The World Trade Organization was established to resolve disputes arising under world trade rules. is also known as the International Monetary Fund (IMF). is also known as NAFTA.enhances world trade by providing interest rate subsidies to foreign borrowers who buy exports on credit.

a

Trade adjustment assistance : provides cash assistance for workers displaced by imports or plant relocations abroad. guarantees jobs for all workers displaced by imports or plant relocations abroad. provides financial assistance to all unemployed workers in the United States. provides assistance to about 20 percent of unemployed U.S. workers each year.

a

Which of the following is an example of a labor-intensive commodity? : digital cameras beer gasoline aspirin tablets

a

In the theory of comparative advantage, a good should be produced in that nation where its absolute money cost of production is least. its cost is least in terms of alternative goods that might otherwise be produced. the production possibilities line lies further to the right than the trading possibilities line. its absolute cost in terms of real resources used is least.

b

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

b

Which of the following is an example of a capital-intensive commodity? :wool chemicals clothing sunflower seeds

b

A nation will neither export nor import a specific product when its :export supply curve lies above its import demand curve. export supply curve is upsloping. domestic price equals the world price .import demand curve is downsloping.

c

A nation's export supply curve for a specific product :shows the amount of the product it will export at prices below its domestic price. lies below its import demand curve for the product. is upsloping. depends on domestic supply of the product, but not on domestic demand.

c

Economists who criticize trade adjustment assistance argue that it distorts patterns of foreign trade, reducing the gains from trade. money spent on the program overstimulates aggregate demand and threatens to cause inflation. it only benefits a small fraction of all unemployed workers. benefits are too low to provide unemployed workers with a livable wage.

c

In the theory of comparative advantage, a good should be produced in that nation where :its absolute cost in terms of real resources used is least .the production possibilities line lies further to the right than the trading possibilities line. its cost is least in terms of alternative goods that might otherwise be produced .its absolute money cost of production is least.

c

U.S. exports of goods and services (on a national income account basis) are about 8 percent of U.S. GDP. 28 percent of U.S. GDP. 13 percent of U.S. GDP. 20 percent of U.S. GDP.

c

Which of the following arguments for trade protection is based on the premise that a nation should have a wide enough range of domestic industries to be self-sufficient if necessary? the cheap foreign labor argument the increased domestic employment argument the diversification-for-stability argument the infant industry argument

c

A nation's import demand curve for a specific product :lies above its export supply curve for the product. depends on domestic demand for the product, but not on domestic supply. is upsloping. shows the amount of the product it will import at prices below its domestic price.

d

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

d

The impact of increasing, as opposed to constant, costs is to intensify and prolong the comparative advantages that any nation may have initially. expand the limits of the terms of trade. cause nations to realize economies of scale in those products in which they specialize. cause the bases for further specialization to disappear as nations specialize according to comparative advantage.

d

The increased-domestic-employment argument for tariff protection holds that domestic deflation is a desirable policy goal because it stimulates imports. domestic inflation is a desirable policy goal because it stimulates exports. an increase in tariffs will reduce net exports and stimulate domestic employment. an increase in tariffs will increase net exports and stimulate domestic employment.

d

Which of the following arguments contends that certain industries need to be protected in the interest of national security? :the increased domestic employment argument the diversification-for-stability argument the cheap foreign labor argument the military self-sufficiency argument

d

Which of the following statements about the European Union (EU) is true? :All members of the EU use a common currency (the euro). Trade within the EU is liberalized, but EU nations set most of their own policies with regard to trade with non-EU nations. The EU has eliminated most barriers to the trade of goods and services among participating nations but largely restricts the movement of labor and capital. The EU has abolished most trade barriers among participating countries and has common tariffs applied to non-EU goods.

d