The net loss in welfare from a quota is proportionately larger than for a tariff because:
a. it does not result in government revenue.
b. the loss in consumer surplus is greater than the gain to producers and the government.
c. it prevents nations from fully realizing their competitive advantage.
d. it brings about higher prices and revenues to domestic producers.
Question 2If 1 was equivalent to 120 Japanese yen in 2008 and 125 Japanese yen in 2010, it implies in 2010, there was:
a. a depreciation of the dollar against the yen.
b. a depreciation of the yen against the dollar.
c. an appreciation of the yen against the dollar.
d. no change in the value of yen, but the dollar had weakened.
e. no change in the value of dollar, but the yen had strengthened.
Question 3If an import tariff is reduced, the domestic quantity demanded is ____ and the quantity supplied domestically is ____, ____ the quantity of goods imported.
a. greater; lower; reducing.
b. lower; greater, reducing.
c. greater; lower; increasing.
d. lower; greater; increasing.
Question 4Preferential trade agreements have a beneficial trade-diversion effect when they reduce prices for traded goods and stimulate the volume of international trade.
a. True
b. False
Indicate whether the statement is true or false
Question 5Imposing a tariff brings about:
a. higher prices and revenues to domestic producers.
b. lower sales and revenues to foreign producers.
c. higher prices to domestic consumers.
d. all of the above
Question 6In a free trade area, member nations have no trade barriers among themselves but are free to set their own trade policies toward nonmembers.
a. True
b. False
Indicate whether the statement is true or false
Question 7A reduction in the tariff on imported steel would most likely benefit
a. workers in the steel industry.
b. the domestic consumers of steel.
c. the domestic producers of steel.
d. foreign producers at the expense of domestic consumers.
Question 8Government standards for products sold in the domestic market can have the effect of protecting domestic producers from foreign competition.
a. True
b. False
Indicate whether the statement is true or false
Question 9Dumping occurs when a foreign country sells its products at prices:
a. below their costs.
b. below the prices for which they are sold in their domestic market.
c. higher than the price for which it is sold in their domestic market.
d. both (a) and (b)
Question 10In the United States, a buy American act was passed in 1933 to create larger markets for domestic goods.
a. True
b. False
Indicate whether the statement is true or false
Question 11Politicians often argue for tariff increases in order to reduce the size of a balance of trade deficit. If tariffs are increased, the long-run effect is most likely to be:
a. a decrease in both U.S. imports and exports.
b. an increase in both U.S. imports and exports.
c. an decrease in U.S. imports, and an increase in U.S. exports.
d. an increase in U.S. imports, and a decrease in U.S. exports.
Quick Reply
