Question 1

Currently Belize, a country in Central America, has a small coffee industry but does not export any coffee. Suppose the government of Belize, in order to protect the new coffee industry to enable it to grow into a mature industry that can compete in world markets, places a tariff on the importation of coffee. What is the argument for placing the tariff on coffee?

Accepted Answer

A)   the infant-industry argument
B)   the dumping argument
C)   to protect Belize coffee workers
D)   to prevent rich countries from exploiting developing countriesE) A) and D)
F) B) and C)

Question 2

A major purpose of tariffs is to

Accepted Answer

A)   encourage imports.
B)   encourage exports.
C)   discourage imports.
D)   discourage exports.E) B) and D)
F) None of the above

Question 3

Explain the effects of a quota.

Accepted Answer

A quota is a quantitative restriction on...

Question 4

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

Accepted Answer

A)   no U.S. worker has actually lost a job because of free trade.
B)   most jobs lost because of free trade pay less than the poverty level.
C)   free trade creates jobs in export industries.
D)   the jobs lost are concentrated in restricted geographic areas.E) A) and B)
F) All of the above

Question 5

The reason tariffs and quotas are imposed is that

Accepted Answer

A)   their costs are spread among many people and their benefits are concentrated.
B)   their costs are concentrated and their benefits are spread among many people.
C)   they create net benefits in the long run.
D)   they reduce import dependence.E) A) and D)
F) A) and C)

Question 6

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited ________ of ethanol, each of whom gained a ________.

Accepted Answer

A)   U.S. producers; little
B)   U.S. producers; lot
C)   U.S. consumers; little
D)   U.S. consumers; lotE) A) and D)
F) A) and C) C

Question 7

A country specializes in the production of goods for which it has a comparative advantage. We find that

Accepted Answer

A)   some producers and consumers win, some lose, but overall the gains exceed the losses.
B)   all producers win.
C)   all consumers win.
D)   producers win, consumers lose, but overall the gains exceed the losses.E) A) and D)
F) B) and D)

Question 8

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

Accepted Answer

A)   tariff on imported coffee
B)   subsidy on imported coffee
C)   quota on imported coffee
D)   voluntary export restraints on coffeeE) B) and C)
F) A) and D)

Question 9

Which of the following statements is TRUE?

Accepted Answer

A)   Dumping is illegal under the rules of the WTO.
B)   Dumping occurs when a foreign firm sells its exports at a higher price than its cost of production.
C)   Both statements are true.
D)   Neither of the statements is true.E) A) and D)
F) C) and D)

Question 10

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt.
-In the figure above, with international trade ________ million shirts per year are produced in the United States.

Accepted Answer

A)   48
B)   32
C)   16
D)   20E) None of the above
F) B) and C)

Question 11

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?

Accepted Answer

The argument claims that rich nations will exploit poor nations by importing goods from the poor nations and that the workers in the poor nations are paid slave wages to produce these goods. This argument has a truly fatal flaw. Free trade increases the demand for the goods produced by workers in developing countries. Thus in order to produce more of these goods, the firms must hire more workers. Hence the demand for the labor used to produce the goods increases, which means that the wage rates paid the workers in the developing countries rises. Thus rather than exploiting the workers in the poor nations, free international trade is one of their few hopes for better lives!

Question 12

In poorer countries, free trade ________ the demand for labor in these countries and ________ the wages paid in these countries.

Accepted Answer

A)   decreases; lowers
B)   decreases; raises
C)   increases; lowers
D)   increases; raisesE) A) and D)
F) All of the above

Question 13

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

Accepted Answer

Wage rates must be weighed against produ...

Question 14

An import quota is a

Accepted Answer

A)   tariff imposed on goods that are dumped in the country.
B)   law that prevents ecologically damaging goods from being imported into a country.
C)   market-imposed balancing factor that keeps prices of imports and exports in equilibrium.
D)   government-imposed restriction on the quantity of a specific good that can be imported.E) B) and C)
F) None of the above

Question 15

in 2013 the U.S. government imposed a tariff on Chinese solar panels. The group that lobbied for this tariff was

Accepted Answer

A)   U.S. consumers of solar panels.
B)   only U.S. producers of solar panels.
C)   only Chinese producers of solar panels.
D)   Both U.S. and Chinese producers of solar panels.E) None of the above
F) A) and D) B

Question 16

Average tariff levels in the United States in the last decade are

Accepted Answer

A)   about equal to the average since 1930.
B)   above the average since 1930.
C)   positive, but below the average since 1930.
D)   zero, as there are no longer any tariffs in the United States.E) B) and C)
F) B) and D)

Question 17

A tariff is a

Accepted Answer

A)   tax on an exported good or service.
B)   tax on an imported good or service.
C)   subsidy on an exported good.
D)   subsidy on an imported good.E) A) and B)
F) A) and C)

Question 18

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor?
I.Low-wage foreigners are just as productive as U.S. workers.
II.U.S. workers have a comparative advantage in low-wage jobs.

Accepted Answer

A)   I only
B)   II only
C)   I and II
D)   Neither I nor II is correct.E) A) and C)
F) A) and B)

Question 19

The argument that protection ________.

Accepted Answer

A)   penalizes poor environmental standards is true
B)   allows us to compete with cheap foreign wages is true
C)   is necessary for infant industries is true
D)   saves jobs is flawedE) All of the above
F) A) and B)

Question 20

If the United States imposes a tariff of $1 per imported shirt, the higher tariff

Accepted Answer

A)   raises the price of a shirt to U.S. consumers.
B)   benefits U.S. shirt consumers.
C)   increases imports of shirts into the United States.
D)   none of the above.E) None of the above
F) A) and B)

Exam 15: International Trade Policy

Correct Answer
verified

A major purpose of tariffs is to

Correct Answer
verified

Explain the effects of a quota.

Correct Answer
verified
A quota is a quantitative restriction on...
View Answer

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

Correct Answer
verified

The reason tariffs and quotas are imposed is that

Correct Answer
verified

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited of ethanol, each of whom gained a .

Correct Answer
verified
C

A country specializes in the production of goods for which it has a comparative advantage. We find that

Correct Answer
verified

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

Correct Answer
verified

Which of the following statements is TRUE?

Correct Answer
verified

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. -In the figure above, with international trade ________ million shirts per year are produced in the United States.

Correct Answer
verified

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?

In poorer countries, free trade the demand for labor in these countries and the wages paid in these countries.

Correct Answer
verified

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

Correct Answer
verified
Wage rates must be weighed against produ...
View Answer

An import quota is a

Correct Answer
verified

in 2013 the U.S. government imposed a tariff on Chinese solar panels. The group that lobbied for this tariff was

Correct Answer
verified
B

Average tariff levels in the United States in the last decade are

Correct Answer
verified

A tariff is a

Correct Answer
verified

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I.Low-wage foreigners are just as productive as U.S. workers. II.U.S. workers have a comparative advantage in low-wage jobs.

Correct Answer
verified

The argument that protection ________.

Correct Answer
verified

If the United States imposes a tariff of $1 per imported shirt, the higher tariff

Correct Answer
verified

Exam 15: International Trade Policy

Correct AnswerverifiedShow Answer

A major purpose of tariffs is to

Correct AnswerverifiedShow Answer

Explain the effects of a quota.

Correct AnswerverifiedA quota is a quantitative restriction on...View AnswerShow Answer

Some observers opposing free trade argue that when we buy shoes from Brazil or shirts from Taiwan, U.S. workers lose their jobs. The fact of the matter is that

Correct AnswerverifiedShow Answer

The reason tariffs and quotas are imposed is that

Correct AnswerverifiedShow Answer

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited ________ of ethanol, each of whom gained a ________.

Correct AnswerverifiedC

A country specializes in the production of goods for which it has a comparative advantage. We find that

Correct AnswerverifiedShow Answer

During the first 6 months of 2008, the United States imported 1,655,740,870 pounds of coffee. Suppose the United States is considering placing trade restrictions on the importation of coffee. If the United States has a goal of raising tax revenue from coffee imports, what policy should they pursue?

Correct AnswerverifiedShow Answer

Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. -In the figure above, with international trade ________ million shirts per year are produced in the United States.

Correct AnswerverifiedShow Answer

Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?

In poorer countries, free trade ________ the demand for labor in these countries and ________ the wages paid in these countries.

Correct AnswerverifiedShow Answer

Because wage rates are so low in Africa, why don't Microsoft, Cisco and other major corporations close down their American operations and move to Africa?

Correct AnswerverifiedWage rates must be weighed against produ...View AnswerShow Answer

An import quota is a

Correct AnswerverifiedShow Answer

in 2013 the U.S. government imposed a tariff on Chinese solar panels. The group that lobbied for this tariff was

Correct AnswerverifiedB

Average tariff levels in the United States in the last decade are

Correct AnswerverifiedShow Answer

A tariff is a

Correct AnswerverifiedShow Answer

Which of the following are TRUE regarding the argument that trade barriers protect U.S. workers from cheap foreign labor? I.Low-wage foreigners are just as productive as U.S. workers. II.U.S. workers have a comparative advantage in low-wage jobs.

Correct AnswerverifiedShow Answer

The argument that protection ________.

Correct AnswerverifiedShow Answer

If the United States imposes a tariff of $1 per imported shirt, the higher tariff

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A quota is a quantitative restriction on...
View Answer

Correct Answer
verified

Correct Answer
verified

In 2013 the U.S. government removed its tariff on imported ethanol. Removing the tariff benefited of ethanol, each of whom gained a .

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

In poorer countries, free trade the demand for labor in these countries and the wages paid in these countries.

Correct Answer
verified

Correct Answer
verified
Wage rates must be weighed against produ...
View Answer

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified