Econ chapter 11/12

. An export subsidy usually:

lowers the price paid for a product by foreign buyers relative to the price that domestic consumers pay for the subsidized product.

As a result of joining a trade bloc, Country A finds that it is purchasing relatively more expensive cars from Country B, a fellow bloc member, rather than purchasing the less expensive cars from Country C, a trading bloc outsider. This phenomenon is called:

b. trade diversion.

7. _______________ occurs when a producer temporarily charges a very low price for a product in an export market for the purpose of driving foreign competitors out of business.

d. Predatory dumping

14. Which of the following is true of a common market?

d. There is free movement of capital and labor among the member countries.

12. Financial assistance that governments provide to benefit firms that sell to foreign buyers is:

d. export subsidies.

A policy by which a government offers temporary protection to a domestic industry as it adjusts to increased competition from imports is a(n):

d. safeguard policy.

3. When countries band together and agree that they can import from each other freely while imposing import barriers against countries that are not part of the group, those countries have formed a:

d. trade bloc.

6. The net volume of new trade that results from forming or joining a trade bloc is:

d. trade creation.

2. In recent years, _______________ is the world's biggest initiator of antidumping cases.

d. India

4. A basic WTO principle is that trade barriers:

b. should be lowered equally and without discrimination for all member countries.

_________ has eliminated nearly all tariffs and many nontariff barriers to trade within the U.S.- Canada-Mexico trade area.

d. NAFTA

Perishable agricultural products are good candidates for ______________ because big harvests tend to lower market prices and provide a large quantity of the product available for export.

a. seasonal dumping

31. An export subsidy can be good for a country if:

a. the subsidy allows the country's only exporting firm to capture the entire world market.

13. Which of the following features does a free trade area necessarily have?

a. Absence of trade barriers among the member nations

Which of the following is said to occur when a firm with market power uses price discrimination between markets to increase its total profit?

a. Persistent dumping

18. An export subsidy raises domestic prices for the product, so, for an export subsidy to be successful:

a. domestic demand for the product must be inelastic.

3. The U.S. Export-Import Bank (Eximbank) is a major provider of low-interest loans to:

a. exporters and their foreign customers.

17. The NAFTA is an example of a(n):

a. free-trade area.

13. Substantial export subsidies can switch a(n) ___________ product into a(n) ___________ product.

a. importable; exportable

19. The gains from trade creation is likely to be larger for a country if:

a. its import demand curve is relatively elastic.

6. The long-standing definition of _______________ is the price charged to comparable domestic buyers of a product in the home market of the producer.

a. normal value

2. Which of the following allows member countries to import from other member countries freely but imposes trade barriers against imports from outside countries?

b. A trade bloc

9. Which of the following is said to occur when a firm lowers its price to limit the decline in the quantity sold during a period of recession?

b. Cyclical dumping

18. Which of the following is on a path toward full economic union?

b. European Union (EU)

The combination of an export subsidy imposed by Japan and an equal countervailing import duty imposed by Australia will result in losses for:

b. Japan but not for Australia and the world as a whole.

16. The Southern Common Market (MERCOSUR) is actually a _____.

b. customs union

4. If an importing country can show the existence of a prohibited or actionable subsidy and harm to its industries, WTO rules permit the country to:

b. impose a countervailing duty to offset the effects of the prohibited subsidy.

5. _______________ is selling exports at a price that is less than the normal value of the exports.

c. Dumping

1. Which of the following does the World Trade Organization allow countries to impose?

c. New antidumping tariffs

In the United States, the U.S. Department of Commerce examines whether dumping has actually occurred, and the _______________ examines whether U.S. firms have been injured by the dumping.

c. U.S. International Trade Commission

Because goods produced within a free-trade area are entitled to be traded freely within the free-trade area, determining what goods are produced within the free-trade area is important and relies on:

c. rules of origin.

23. In early 2014, nearly half of all antidumping duties in effect in the United States were on ____.

c. steel products

9. An acknowledged result of NAFTA is that:

c. there was a substantial increase in trade among the United States, Canada, and Mexico.

20. The net loss from trade diversion for a country is likely to be smaller if:

the good can be produced at relatively lower cost in the bloc partners than in the outside world.