Economically speaking, tariffs:
a. protect domestic consumers of goods.
b. protect foreign producers of goods.
c. limit voluntary exchanges.
d. protect domestic producers of exported goods.
Question 2In a proportional tax system each individual would pay the same percentage of his or her income in taxes.
a. True
b. False
Indicate whether the statement is true or false
Question 3A customs union is an organization of nations whose members:
a. have impenetrable trade barriers among themselves but impose no trade barriers on nonmembers.
b. have no trade barriers among themselves but impose common trade barriers on nonmembers.
c. have no trade barriers among themselves but each member country chooses its own trade policies toward nonmember countries.
d. retaliate each other by raising reciprocal tariffs.
e. neither have trade barriers among themselves nor impose any restriction on the nonmember countries.
Question 4A tax levied on imported goods is called a(n)
a. excise tax.
b. quota.
c. foreign profits tax.
d. tariff.
Question 5Agreements to abolish most barriers to trade among nations are known as:
a. free trade cartels.
b. discriminatory trade agreements.
c. neutral trade agreements.
d. preferential trade agreements.
e. retaliatory trade agreements.
Question 6Payroll taxes are actually regressive taxes.
a. True
b. False
Indicate whether the statement is true or false
Question 7Which of the following is the best example of a tariff?
a. a tax placed on all small cars sold in the domestic market.
b. a limit imposed on the number of small cars that can be imported from a foreign country.
c. a subsidy from the U.S. government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars.
d. a 100-per-car fee imposed on all small cars imported.
Question 8After the U.S. government had approved the feeding of hormones to U.S. beef cattle, several western European nations restricted the import of beef from the U.S. Which of the following tools of commercial policy had been put to use in this situation?
a. Tariff
b. Quota
c. Health and safety standards
d. Subsidy
e. Government procurement
Question 9The U.S. federal government relies more heavily on sales taxes, excise taxes, and customs duties than nearly any other government in the world.
a. True
b. False
Indicate whether the statement is true or false
Question 10Tariffs result in a decrease in consumer surplus because:
a. the price and the quantity consumed of the protected good increases.
b. the price and the quantity consumed of the protected good decreases.
c. the price of the protected good increases and quantity consumed decreases.
d. the price of the protected good decreases and quantity consumed increases.
Question 11In recent years, more than one quarter of federal government spending went to Social Security and income security programs.
a. True
b. False
Indicate whether the statement is true or false
Question 12As a result of the government procurement policy in the U.S.:
a. the domestic consumers are required to pay a higher price than the government for the domestically produced goods.
b. the government wields the sole authority of importing goods from abroad.
c. the government wields the sole authority of exporting goods.
d. the government is required to buy the domestic goods if the domestic price is less than the world price.
e. the government is required to sponsor research and development for the domestic firms.
Question 13A tariff can be defined simply as a
a. A tariff can be defined simply as a
b. tax on exports.
c. legal limit on imports.
d. legal limit on exports.
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