Question 1

The first major international agreement after World War II was the:

Accepted Answer

A)  General Agreement on Tariffs and Trade.
B)  North American Free Trade Area.
C)  World Trade Organization.
D)  European Union.

Question 2

The consumption possibilities curve shows the combinations of goods that can be:

Accepted Answer

A)  consumed by a nation before trade begins.
B)  consumed by a nation after trading begins.
C)  produced by a nation before trading begins.
D)  produced by a nation after trade begins.

Question 3

A possible reason a nation might impose a protectionist policy such as a tariff is to:

Accepted Answer

A)  help firms establish a world monopoly in a particular market.
B)  increase the level of imports.
C)  encourage specialization in the good in which the nation has a comparative advantage.
D)  increase the welfare of domestic consumers.

Question 4

Suppose France produces only two goods,airplanes and grapes.If France has a comparative advantage in grapes,a move toward free trade will:

Accepted Answer

A)  harm grape workers,benefit airplane workers,but benefit the nation as a whole.
B)  harm grape workers,harm airplane workers,but benefit the nation as a whole.
C)  benefit grape workers,harm airplane workers,but harm the nation as a whole.
D)  benefit grape workers,harm airplane workers,but benefit the nation as a whole.

Question 5

Which of the following situations will arise in the domestic market following the imposition of a tariff?

Accepted Answer

A)  imports decrease,domestic production increases,prices increase
B)  imports increase,domestic production increases,prices increase
C)  imports increase,domestic production decreases,prices decrease
D)  imports decrease,domestic production increases,prices decrease

Question 6

What proof does the application use to illustrate that tariffs hurt the poor more than the rich?

Accepted Answer

A)  The proportion of tariffs paid relative to expenditures is higher on the poor than the rich.
B)  The proportion of tariffs paid relative to expenditures is lower on the poor than the rich.
C)  The total amount of dollars paid by the poor in the form of import tariffs is larger than the rich.
D)  The amount of dollars paid by the poor in the form of income taxes is higher with poor individuals than rich individuals.

Question 7

Daily Output of Scotland and Poland
  Table 18.1
-Refer to Table 18.1.Scotland has a comparative advantage in:

Accepted Answer

A)  accordions.
B)  bagpipes.
C)  both accordions and bagpipes.
D)  neither accordions nor bagpipes.

Question 8

According to the application,living standards have NOT become more unequal because:

Accepted Answer

A)  the prices of goods and services that low income groups have paid have risen slower than the prices of goods and services that high income groups have paid.
B)  the prices of goods and services that low income groups have paid have risen faster than the prices of goods and services that high income groups have paid.
C)  the prices of goods and services that low income groups have paid have been dropping while the prices of goods and services that high income groups have not.
D)  the prices of goods and services that low income groups have paid have risen while the prices of goods and services that high income groups have not.

Question 9

Figure 18.3
-Refer to Figure 18.3.With free trade,the equilibrium price is:

Accepted Answer

A)  $0.
B)  $12.
C)  $10.
D)  $8.

Question 10

Do most infant industries become as efficient as their international competition?

Accepted Answer

A)  No.This rarely happens.
B)  yes,but only if they get very large protection
C)  Yes,it always happens.
D)  yes,but only after decades of protection

Question 11

Figure 18.3
-Refer to Figure 18.3.With a tariff or quota,the equilibrium quantity is:

Accepted Answer

A)  80.
B)  100.
C)  60.
D)  40.

Question 12

An import quota is the same as an import ban.

Accepted Answer

A) True 
 B)False

Question 13

According to the application,how does the Department of Commerce determine the price of the good in the foreign market?

Accepted Answer

A)  They use a "constructed value" method where it makes its own estimates of what prices in countries' own markets would be based on available data.
B)  They use dated and very crude estimates.
C)  They rely on the information supplied by the firms that bring about the charges.
D)  All of the above are correct.

Question 14

Figure 18.3
-Refer to Figure 18.3.With an import ban,domestic production is:

Accepted Answer

A)  80.
B)  100.
C)  60.
D)  0.

Question 15

Which of the following is NOT a reason to follow protectionist trade policies?

Accepted Answer

A)  to protect an infant industry from foreign competitors
B)  to help firms establish a world monopoly in a particular market
C)  to protect domestic workers from foreign competition
D)  because buying domestic goods is a patriotic act

Question 16

Voluntary export restraints are illegal under WTO rules.

Accepted Answer

A) True 
 B)False

Question 17

During the 1980s,firms from ________ were accused of dumping VCRs in Europe.

Accepted Answer

A)  Taiwan
B)  Japan
C)  Mexico
D)  Korea

Question 18

In 2002,President Bush imposed a tariff on imported steel in order to protect domestic steel producers.What was the reason why the tariff ended?

Accepted Answer

A)  the threat of retaliatory tariffs by Europe
B)  the threat of a possible recession in the U.S.
C)  the improved profitability of domestic steel firms
D)  the decrease in demand for steel by U.S.industries

Question 19

According to the data presented in the text,the effect of Japan's voluntary export restraints on cars was to:

Accepted Answer

A)  increase the price of Japanese cars in the U.S.
B)  decrease the price of Japanese cars in the U.S.
C)  increase the number of Japanese cars imported in the U.S.
D)  caused Japanese car companies to delay building plants in the U.S.

Question 20

Figure 18.3
-Refer to Figure 18.3.With free trade,domestic production is:

Accepted Answer

A)  80.
B)  100.
C)  60.
D)  0.

Exam 18: International Trade and Public Policy

During the 1980s,firms from ________ were accused of dumping VCRs in Europe.

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Suppose France produces only two goods,airplanes and grapes.If France has a comparative advantage in grapes,a move toward free trade will:

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Which of the following is NOT a reason to follow protectionist trade policies?

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An import quota is the same as an import ban.

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A possible reason a nation might impose a protectionist policy such as a tariff is to:

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According to the application,how does the Department of Commerce determine the price of the good in the foreign market?

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According to the data presented in the text,the effect of Japan's voluntary export restraints on cars was to:

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Figure 18.3 -Refer to Figure 18.3.With free trade,the equilibrium price is:

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Daily Output of Scotland and Poland Table 18.1 -Refer to Table 18.1.Scotland has a comparative advantage in:

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According to the application,living standards have NOT become more unequal because:

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Voluntary export restraints are illegal under WTO rules.

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Figure 18.3 -Refer to Figure 18.3.With a tariff or quota,the equilibrium quantity is:

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The first major international agreement after World War II was the:

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What proof does the application use to illustrate that tariffs hurt the poor more than the rich?

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Which of the following situations will arise in the domestic market following the imposition of a tariff?

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The consumption possibilities curve shows the combinations of goods that can be:

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Do most infant industries become as efficient as their international competition?

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Figure 18.3 -Refer to Figure 18.3.With an import ban,domestic production is:

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Figure 18.3 -Refer to Figure 18.3.With free trade,domestic production is:

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In 2002,President Bush imposed a tariff on imported steel in order to protect domestic steel producers.What was the reason why the tariff ended?

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