Deck 18: International Trade Policy

Question 1

___________occurs when a foreign firm sells its exports at a lower price than its cost of production.

A)Dumping
B)The trickle-down effect
C)Nontariff barrier protection
D)Tariff avoidance
E)Rent seeking

Answer 1

Dumping

Question 2

When a nation exports a good or service, employment in that industry

A)stays the same.
B)decreases.
C)increases.
D)might change, but more information about what else the country exports is needed to determine if employment increases, decreases, or does not change.
E)might change, but more information about what the country imports is needed to determine if employment increases, decreases, or does not change.

Answer 2

C

Question 3

-In the figure above, with international trade U.S. consumers buy
At per T-shirt.

A)40; $8
B)60; $11
C)20; $5
D)40; $5
E)60; $5

Answer 3

60; $5

Question 4

If a tariff is imposed on imports of shrimp into the United States, U.S. consumers
Producers _ _.

A)lose; lose
B)gain; gain
C)gain; are unaffected
D)gain; lose
E)lose; gain

Question 5

The figure above shows the U.S. demand and U.S. supply curves for cherries.

-The figure above shows the U.S. demand and U.S. supply curves for cherries. In the absence of
International trade, cherry farmers would receive per pound of cherries.

A)$1.00
B)$0.50
C)$2.00
D)$1.50
E)$2.50

Question 6

If the United States exports planes to Brazil and imports ethanol from Brazil, the price received by
U.S. producers of planes _______and the price received by Brazilian producers of ethanol______
.

A)rises; falls
B)falls; falls
C)does not change; does not change
D)falls; rises
E)rises; rises

Question 7

A tax on a good that is imposed when it is imported is called

A)an import quota.
B)a tariff.
C)a VER.
D)a border tax.
E)a sanction.

Question 8

If the United States imports purses, then the quantity of purses produced in the United States will_________And the quantity of purses purchased by consumers in the United States will _____.

A)increase; decrease
B)increase; increase
C)decrease; decrease
D)decrease; increase
E)not change; increase

Question 9

Which of the following is NOT a major argument for restricting international trade?

A)the prevention of dumping argument
B)saves U.S. jobs argument
C)the infant industry argument
D)the promotion of dumping in America
E)the national security argument

Question 10

The above figure shows the U.S. market for flip-flops.

-The above figure shows the U.S. market for flip-flops.
Imports flip-flops.

A)500,000
B)0 because the United States exports flip-flops
C)700,000
D)400,000
E)300,000

Question 11

The figure above shows the U.S. demand and U.S.

-supply curves for cherries. In the absence of international trade, how many pounds of cherries would U.S. farmers produce?

A)800,000 pounds
B)200,000 pounds
C)600,000 pounds
D)400,000 pounds
E)0 pounds

Question 12

What is the dumping argument for protection from international trade?

A)Any firm necessary in wartime must be protected.
B)Domestic firms must be protected until they gain a comparative advantage.
C)Foreigners selling products in the economy limit the nation's diversity and stability.
D)Foreign producers selling below cost to drive domestic firms bankrupt must be stopped.
E)Domestic jobs must be protected from competition from low-paid foreign workers.

Question 13

The above figure shows the U.S. market for 1 carat diamonds.

-With free trade, U.S. production ofdiamonds is equal to _ diamonds. When the quota illustrated in the figure is in place, U.S. production is equal to diamonds.

A)300,000; 100,000
B)300,000; 500,000
C)100,000; 500,000
D)100,000; 300,000
E)900,000; 700,000

Question 14

In the 1950s, crude oil and natural gas imports were restricted to keep the domestic industries viable in case of a war. The rationale for this protection is the_______ argument for protection.

A)national security
B)anti-dumping
C)infant-industry
D)save domestic jobs
E)penalizing lax environmental standards

Question 15

The fundamental force that generates international trade is

A)the existence of tariffs.
B)comparative advantage.
C)the need for more goods and services.
D)absolute advantage.
E)the sea rule.

Question 16

If the U.S. government imposes a tariff on imported steel, who else besides U.S. steel producers gains from the tariff?

A)U.S. importers of steel
B)the U.S. government
C)U.S. steel consumers
D)the foreign government
E)foreign exporters of steel

Question 17

The above figure shows the U.S. market for wheat.

-With international trade, the price of wheat in
The United States is per ton and the United States _ wheat.

A)$14; does not trade
B)$16; imports
C)$14; exports
D)$14; imports
E)$16; exports

Question 18

The country with a comparative advantage in the production of a good has a

A)higher opportunity cost of production.
B)vertical production possibilities frontier.
C)lower opportunity cost of production.
D)linear production possibilities frontier.
E)horizontal production possibilities frontier.

Question 19

The above figure shows the U.S. market for flip-flops.

- With no international trade, the price in theUnited States for flip-flops is . With international trade, the price in the United States for
Flip-flops is .

A)$500; $700
B)$14; $12
C)$12; $14
D)$700; $300
E)$500; $300

Question 20

The above figure shows the U.S. market for 1 carat diamonds.

-With free trade, the United States produces ___________diamonds and imports_________ diamonds.

A)500,000; 400,000
B)0; 900,000
C)100,000; 800,000
D)100,000; 900,000
E)300,000; 600,000

Question 21

If the United States starts to import a good that had previously been produced in the United States, the market price of the good in the United States

A)remains constant.
B)falls.
C)either remains constant or rises, depending on how whether the supply of the good stays the same or increases.
D)rises.
E)There is not enough information to answer the question because we need to know if the market price in the United States had been above or below the world market price before trade began.

Question 22

If an import quota is imposed on imports of shrimp into the United States, U.S. producers
And the U.S. economy will _________ .

A)gain; lose
B)lose; lose
C)gain; be unaffected
D)gain; gain
E)lose; gain

Question 23

The figure above shows the U.S. demand and U.S.

-supply curves for cherries. At a world price of $2 per pound, the production of cherries in the United States will equal

A)600,000 pounds.
B)0 pounds.
C)400,000 pounds.
D)800,000 pounds.
E)200,000 pounds.

Question 24

If supporters of restrictions on imports argue that protection is needed to preserve a strategic industry, which of the following is being used?

A)National security argument
B)Protecting national culture argument
C)Dumping argument
D)Infant-industry argument
E)Save domestic jobs argument

Question 25

When the United States imposes a tariff on an imported good, the

A)amount imported increases.
B)quantity of the good purchased in the United States decreases.
C)price of the good in the United States falls.
D)outcome becomes more efficient.
E)quantity of the good produced in the United States decreases.

Question 26

What is the national security argument to support protection from international trade?

A)Foreign producers selling below cost to drive domestic firms bankrupt must be stopped.
B)Foreigners selling products in the economy limit the nation's diversity and stability.
C)Domestic firms must be protected until they gain a comparative advantage.
D)Any firm necessary in wartime must be protected.
E)Domestic jobs must be protected from competition from low-paid foreign workers.

Question 27

One of the major reasons why the United States exports jet airplanes is because Boeing faces__________Opportunity cost than firms in other nations in the production of such aircraft.

A)an unrelated
B)a lower
C)a nonexistent
D)a higher
E)an identical

Question 28

As a result of importing a good, domestic producers______ the quantity produced and the price of the good_________ .

A)decrease; does not change
B)decrease; rises
C)increase; rises
D)increase; falls
E)decrease; falls

Question 29

When politicians debated the North American Free Trade Agreement (NAFTA), some told stories
Of U.S. workers whose jobs would be moved to Mexico. Which of the following arguments in favor
Of protection was being used?

A)Save domestic jobs argument
B)Infant-industry argument
C)Anti-dumping argument
D)National security argument
E)Diversity and stability argument

Question 30

When a country exports a good, the ______to consumers is _______ the ______to producers.

A)loss; larger than; gain
B)gain; smaller than; loss
C)loss; smaller than; gain
D)gain; larger than; loss
E)gain; equal to; loss

Question 31

$\begin{array} { c c c } \hline \begin{array} { c } \text { Price } \\\text { (dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity demanded } \\\text { (units per day) }\end{array} & \begin{array} { c } \text { Quantity supplied } \\\text { (units per day) }\end{array} \\\hline 2 & 20 & 14 \\4 & 19 & 16 \\6 & 18 & 18 \\8 & 17 & 20 \\10 & 16 & 22 \\12 & 15 & 24 \\\hline\end{array}$

-According to the above table, the country will import the good if the world price is less than_________
And will export the good if the world price is more than _______________.

A)$4; $4
B)$6; $6
C)$8; $4
D)$4; $8
E)$10; $10

Question 32

Which of the following chain of events occurs when a tariff is imposed on a good?

A)Domestic prices fall, shifting the demand curve rightward, and consumers buy more of the good.
B)Domestic prices rise, shifting the demand curve leftward and the domestic supply curve rightward.
C)Domestic prices fall, decreasing the domestic quantity supplied and increasing the quantity demanded.
D)Domestic prices rise, shifting the domestic supply curve rightward.
E)Domestic prices rise, decreasing the quantity demanded and increasing the domestic quantity supplied.

Question 33

When a tariff supporter argues that foreign producers are selling their products for prices below the costs of production, which of the following is being used?

A)Diversity and stability argument
B)Dumping argument
C)Save domestic jobs argument
D)Infant-industry argument
E)National security argument

Question 34

The figure above shows the U.S. demand and U.S.

-supply curves for cherries. At a world price of $2 per pound, the total imports of cherries to the United States from other nations equals

A)200,000 pounds.
B)400,000 pounds.
C)800,000 pounds.
D)600,000 pounds.
E)0 pounds.

Question 35

Why are the losers from free international trade not fully compensated for their losses?

A)No one actually loses from international trade.
B)The losers are foreigners.
C)The people who claim to lose are also the same ones who benefit.
D)The amount of compensation needed would bankrupt the government.
E)Identifying all losers and the size of their losses is extremely difficult.

Question 36

A major reason why it is difficult to lower the barriers to free trade is

A)the inability to compensate losers from free trade.
B)that the barriers allow us to compete with cheap foreign labor.
C)the loss of jobs without any gain of jobs from free trade.
D)the uneven distribution of gains and losses from free trade.
E)that total benefits are less than total costs from free trade.

Question 37

When a country imports a good, the________to consumers is _________ the_____to producers.

A)gain; larger than; loss
B)gain; equal to; loss
C)loss; larger than; gain
D)loss; smaller than; gain
E)gain; smaller than; loss

Question 38

The national security argument is used by those who assert they want to

A)increase imports as a way of strengthening their country.
B)increase exports as a way of earning money to strengthen their country.
C)limit all imports.
D)limit exports to control the flow of technology to third world nations.
E)limit imports that compete with domestic producers important for national defense.

Question 39

Airlines in other countries buy airplanes from Boeing because

A)these nations must buy something from the United States.
B)it is illegal to produce airplanes in many other countries.
C)trade treaties require such purchases.
D)Boeing's prices are less than what the airlines would pay for planes built in their own country.
E)None of the above answers is correct.

Question 40

Looking at the average tariff rate in the United States since 1930, we see that

A)tariffs have trended downward for most of the period.
B)tariff levels have remained high, at over 50 percent throughout the period.
C)at first tariffs declined, but have recently risen.
D)tariffs were made illegal in the United States in 1955.
E)while we talk about free trade, tariff levels have risen over the last 30 years.

Question 41

A country exports a good if

A)it has a high opportunity cost of production.
B)it cannot import the good.
C)the world price of the good is above the country's no-trade equilibrium price.
D)the world price of the good is below the country's no-trade equilibrium price.
E)the quantity demanded of the good in the country is greater than the quantity supplied at the world price.

Question 42

The two main reasons why international trade is restricted is because restricting trade means that governments can _____ and because domestic businesses_______________ .

A)prevent dumping; want to dump
B)create jobs; earn profits
C)rent seek; want to dump
D)obtain revenue; rent seek
E)rent seek; obtain revenue

Question 43

When the United States imports goods from the rest of the world, which of the following parties is harmed?
I. domestic producers of the good ii. domestic consumers of the good iii. foreign producers of the good

A)ii only
B)iii only
C)i, ii, and iii
D)i and iii
E)i only

Question 44

Of the following, who gains with a quota?

A)the foreign exporter of the good or service
B)domestic buyers of the good or service
C)the importer of the good or service
D)the government of the exporting nation
E)the government of the importing nation

Question 45

A tariff is

A)price dumping by a firm engaging in international trade.
B)the world price of a good or service.
C)a tax on an imported good imposed by the importing country.
D)the domestic price charged by an exporting firm.
E)a licensing regulation that limits imports.

Question 46

In the wake of worsening relations with China, some Americans called for an increase in tariffs on Chinese products coming into America. If higher tariffs are imposed on clothing produced in China, the price of clothing in America would

A)increase.
B)decrease.
C)first increase then decrease.
D)first decrease then increase.
E)not change.

Question 47

The above figure shows the U.S. market for wheat.

-With no international trade, the price of wheat in the United States is ___________per ton. With international trade, the price of wheat in the United States is ___________ per ton.

A)$16; $14
B)$500; $300
C)$14; $16
D)$500; $700
E)$700; $300

Question 48

The figure above shows the U.S. demand and U.S.

-supply curves for cherries. At a world price of $2 per pound, the total exports of cherries from the United States to other nations equals

A)600,000 pounds.
B)400,000 pounds.
C)0 pounds.
D)200,000 pounds.
E)800,000 pounds.

Question 49

What is the best hope for reducing environmental pollution in less-developed nations?

A)strong international standards for pollution control
B)free international trade that raises incomes in less-developed nations
C)producing the goods in advanced, economically developed nations
D)limiting international trade
E)boycott of polluting nation's products

Question 50

A tariff is a tax

A)on an exported good.
B)imposed on the difference between the value of the goods a firm imports and the value of the goods it exports.
C)on an imported good.
D)imposed on all traded goods.
E)imposed on people's income.

Question 51

A tariff is

A)a tax imposed on imports.
B)a subsidy granted to imports.
C)any non-tax action used to restrict trade.
D)a tax imposed on exports.
E)any non-subsidy used to increase trade.

Question 52

$\begin{array} { c c c } \hline \begin{array} { c } \text { Price } \\\text { (dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity demanded } \\\text { (units per day) }\end{array} & \begin{array} { c } \text { Quantity supplied } \\\text { (units per day) }\end{array} \\\hline 2 & 20 & 14 \\4 & 19 & 16 \\6 & 18 & 18 \\8 & 17 & 20 \\10 & 16 & 22 \\12 & 15 & 24 \\\hline\end{array}$ The table above has the domestic demand and domestic supply schedules for a good.

- If the world price of the good is $10, then according to the table

A)domestic production is higher before trade than after trade.
B)the country imports 6 units a day.
C)the country exports 22 units a day.
D)the country exports 6 units a day.
E)the country imports 16 units a day.

Question 53

If the United States imposes a tariff on a good, then

A)the government makes less revenue than it would have gained if it imposed a quota.
B)domestic production of the good decreases.
C)foreign production of the good increases.
D)foreign consumption of the good decreases.
E)domestic consumption of the good decreases.

Question 54

When a nation starts importing a good or service, the domestic production of the good or service

A)increases.
B)decreases.
C)stays the same.
D)might change, but more information about what the country exports is needed to determine if production increases, decreases, or does not change.
E)might change, but more information about what else the country imports is needed to determine if production increases, decreases, or does not change.

Question 55

The above figure shows the U.S. market for replacement cell phone batteries.

- With free trade, the United States imports ________batteries and once the tariff illustrated in the figure is imposed, the United States imports___________ batteries.

A)900,000; 700,000
B)700,000; 300,000
C)300,000; 100,000
D)900,000; 100,000
E)800,000; 400,000

Question 56

The above figure shows the U.S. market for replacement cell phone batteries.

-Suppose the U.S. government imposes the tariff illustrated in the figure. The tariff is equal to__________ and the price U.S. consumers pay _______compared to the price paid when there was free trade.

A)$2; increases
B)$12; increases
C)$14; increases
D)$2; decreases
E)$14; decreases

Question 57

Which of the following is true?
I. When the world price of a good is lower than the price that balances domestic supply and
Demand, a country gains from exporting the good.
Ii. Compared to a no-trade situation, imports make consumers better off. iii. Quotas raise the domestic price of imported goods.

A)Only ii
B)Only iii
C)ii and iii
D)i and ii
E)Only i

Question 58

The United States imports t-shirts because

A)the United States must import goods and services from other countries so that they can develop economically.
B)the United States has a lower opportunity cost of production.
C)foreign nations have a lower opportunity cost of production.
D)it is a dangerous job to produce them.
E)foreign economies have an absolute advantage in their production.

Question 59

Of the following, who gains with a tariff?

A)domestic buyers of the good or service
B)the government of the exporting nation
C)the foreign exporter of the good or service
D)the government of the importing nation
E)the importer of the good or service

Question 60

The above figure shows the U.S. market for flip-flops.

- When there is no international trade, the U.S. price is ______per flip-flop and the U.S. quantity is __________flip-flops.

A)$14; 500,000
B)$12; 700,000
C)$14; 300,000
D)$14; 700,000
E)$12; 300,000

Question 61

The above figure shows the U.S. market for 1 carat diamonds.

- With free trade, Americans buy_________
Diamonds and pay a price of __________per diamond.

A)700,000; $3,000
B)300,000; $3,000
C)300,000; $4,000
D)500,000; $4,000
E)900,000; $2,000

Question 62

Trade is often restricted because the

A)gain per producer is less than the loss per consumer.
B)total gain to all producers is larger than the total loss to all consumers.
C)gain per producer is larger than the loss per consumer.
D)gain per consumer is larger than the loss per producer.
E)total gain to all producers is smaller than the total loss to all consumers.

Question 63

Most t-shirts bought by Americans are made in Asia. U.S. consumers of t-shirts buy these t-shirts because

A)they pay a lower price for t-shirts made in Asia than they would for similar shirts made in the United States.
B)they must buy some goods or services produced in Asia.
C)they know that the United States has a comparative advantage in wearing t-shirts.
D)they pay a higher price for t-shirts made in Asia than they would for similar shirts made in the United States.
E)by so doing they are helping preserve U.S. jobs producing t-shirts.

Question 64

When a tariff is imposed on a good, the_________

A)quantity imported
B)domestic quantity produced
C)quantity exported
D)domestic quantity purchased
E)world price

Question 65

The argument that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets is known as the

A)infant-industry argument.
B)diversity argument.
C)national youth protection argument.
D)national security argument.
E)environmental protection argument.

Question 66

If a tariff is imposed on imports of shrimp into the United States, U.S. producers_______ and U.S. economy will _________.

A)gain; lose
B)gain; gain
C)lose; gain
D)gain; be unaffected
E)lose; lose

Question 67

When a nation exports a good or service in which it has a comparative advantage, production of
The good or service

A)decreases.
B)increases.
C)stays the same.
D)might change, but more information about what the country imports is needed to determine if production increases, decreases, or does not change.
E)might change, but more information about what else the country exports is needed to determine if production increases, decreases, or does not change.

Question 68

What is the infant-industry argument for protection from international trade?

A)Foreigners selling products in the economy limit the nation's diversity and stability.
B)Domestic firms must be protected until they gain a comparative advantage.
C)Domestic jobs must be protected from competition from low-paid foreign workers.
D)Any firm necessary in wartime must be protected.
E)Foreign producers selling below cost to drive domestic firms bankrupt must be stopped.

Question 69

Suppose the world price of a shirt is $10. If the United States imposes a tariff of $5 a shirt, then the
Price of a shirt in the

A)world falls to $5.
B)United States falls to $5.
C)world rises to $15
D)world rises to $5.
E)United States rises to $15.

Question 70

Since the mid-1970s, the average U.S. tariff rate is

A)larger than 36 percent.
B)between 26 percent and 35 percent.
C)less than 5 percent.
D)between 6 percent and 15 percent.
E)between 16 percent and 25 percent.

Question 71

After a nation starts importing a good from overseas, the domestic price of the good

A)rises.
B)stays the same.
C)falls.
D)might change, but more information about what the country exports is needed to determine if the price rises, falls, or does not change.
E)might change, but more information about what else the country imports is needed to determine if the price rises, falls, or does not change.

Question 72

If you buy a DVD player produced in Japan, a

A)service was imported by Japan and exported by the United States.
B)good was exported by Japan and by the United States.
C)service was exported by Japan and imported by the United States.
D)good was imported by Japan and by the United States.
E)good was exported by Japan and imported by the United States.

Question 73

Who gains from international trade?

A)both the importing and the exporting nations
B)neither the importing nor the exporting nations
C)only the importing nation
D)only the exporting nation
E)The gains depend on which nation gets to keep the total revenue from the sale.

Question 74

A quota is a

A)restriction on how much a customer can buy of a scarce good imposed by the seller.
B)quantitative restriction on an import imposed by the importing country.
C)quantitative restriction on an import imposed by the exporting country.
D)trade barrier that does not harm domestic consumers of the good or service.
E)tax that is imposed on a good when it crosses an international boundary.

Question 75

Which of the following is the national security argument against free trade?

A)A country must protect its consumers from foreign influences.
B)A country must protect new industries to give them a chance to mature before facing foreign competition.
C)A country must protect industries that produce defense equipment and armaments.
D)A country must protect firms from dumping by foreign companies.
E)A country must preserve its jobs.

Question 76

A flawed argument for protection from foreign trade is that i. tariffs save domestic jobs.
Ii. tariffs protect the national culture.
Iii. quotas bring about diversity and stability.

A)ii only
B)i, ii, and iii
C)i only
D)i and ii
E)iii only

Question 77

Most t-shirts bought by Americans are made in Asia. As a result of free trade, the production of t-shirts in America

A)has decreased.
B)has stayed the same.
C)has increased.
D)has been taken over by the government.
E)might change, but more information about what else the United States imports is needed to determine if U.S. production increased, decreased, or did not change.

Question 78

When a country exports a good because the world price is higher than the no-trade domestic price,
Domestic purchases of the good ____and domestic production of the good ______.

A)increase; increases
B)decrease; increases
C)increase; decreases
D)decrease; decreases
E)do not change; increases

Question 79

When governments specify the maximum amount of a good that may be imported in a given period of time, they are establishing a

A)dynamic tariff.
B)tariff.
C)tax.
D)quota.
E)dumping limit.

Question 80

The above figure shows the U.S. market for replacement cell phone batteries.

- With free trade, U.S. production is equal to batteries per year. When a $2 tariff is in place, U.S. production is equal to_______ batteries per year.When a $2 tariff is in place, U.S. production is equal to __________ batteries per year.

A)100,000; 300,000
B)100,000; 500,000
C)900,000; 700,000
D)300,000; 500,000
E)300,000; 100,000