Deck 6: Tariffs

Question 1

If Canada imposes a tariff on bananas and if none are grown in Canada, this tariff has

A) only revenue effects.
B) only protective effects.
C) both protective and revenue effects.
D) neither protective nor revenue effects.

Answer 1

A

Question 2

The difference between what consumers have to pay for a particular and what they are willing to pay is known as

A) consumer surplus.
B) producer surplus.
C) deadweight costs.
D) deadweight surplus.

Answer 2

A

Question 3

The United States imposes tariffs

A) only on imports.
B) only on exports.
C) on both imports and exports.
D) on imports, exports, and nontraded goods.

Answer 3

A

Question 4

If a tariff on bikes causes domestic bike prices to rise by 20% and domestic value added in the domestic bike industry to rise by 30%, then

A) the nominal rate of protection of bikes is 20%.
B) the effective rate of protection of bikes is 30%.
C) the effective rate of protection is higher than the nominal rate.
D) All of the above.

Question 5

The increase in food prices around the world at the end of the 2000s decade led several developing countries to impose export tariffs on which of the following exports?

A) Rice.
B) Tomatoes.
C) Oil.
D) Bananas.

Question 6

A prohibitive tariff has

A) only revenue effects.
B) only protective effects.
C) both protective and revenue effects.
D) neither protective nor revenue effects.

Question 7

In today's world, many countries impose tariffs

A) only on imports.
B) only on exports.
C) on both imports and exports.
D) on imports, exports, and nontraded goods.

Question 8

Specific tariffs are collected as

A) fixed amounts of money per unit traded.
B) a percentage of the price of the product.
C) a percentage of the quantity of imports.
D) All of the above.

Question 9

A tariff can raise a country's welfare.

A) never
B) sometimes
C) always

Question 10

Tariff levels in developing countries tend to be tariff levels in developed countries.

A) lower than
B) about equal to
C) higher than
D) there is no general pattern

Question 11

If a tariff of $10 has no effect on the world price, the optimal tariff on that product

A) is $10.
B) is zero.
C) is higher than $10.
D) depends upon the amount of government revenue collected.

Question 12

Ad valorem tariffs are collected as

A) fixed amounts of money per unit traded.
B) a percentage of the price of the product.
C) a percentage of the quantity of imports.
D) All of the above.

Question 13

Following the imposition of the Smoot-Hawley tariff

A) international trade continued to expand.
B) more than 40 countries imposed higher tariffs of their own.
C) employment in the United States expanded rapidly.
D) Two of the above.

Question 14

Most tariffs have

A) only revenue effects.
B) only protective effects.
C) both protective and revenue effects.
D) neither protective nor revenue effects.

Question 15

As of 2008, with which of the following countries did the U.S. not have a preferential trade agreement?

A) Mexico.
B) Canada.
C) Russia.
D) Israel.

Question 16

gains from trade refer to the situation where, over time, international trade leads to an outward shift in a country's production possibility frontier.

A) Static
B) Dynamic
C) Political
D) Outward

Question 17

A country gains from international trade if its post-trade point lies outside its production possibility frontier.

A) production
B) autarky
C) consumption
D) All of the above

Question 18

The United States charges

A) the same tariff rates on goods from all countries.
B) lower tariff rates on goods from countries with most favored nation status.
C) low or zero tariffs on goods from certain developing countries.
D) Both B and C.

Question 19

In developed countries, tariffs on raw materials tend to be

A) highest of all.
B) higher than on manufactured goods.
C) equal to tariffs on manufactured goods.
D) lower than on manufactured goods.

Question 20

If Brazil imposes a 50% tariff on automobiles and a 25% tariff on motors, the effective rate of protection on autos is

A) higher than the nominal rate of protection on autos.
B) need more information to answer.
C) lower than the nominal rate of protection on autos.
D) equal to the nominal rate of protection on autos.

Question 21

Free trade is better than protection for a small country.

Question 22

Tariffs tend to escalate with stages of processing.

Question 23

The deadweight costs of an export tariff have similar interpretations to those of an import tariff.

Question 24

An increase in the tariff on semiconductors lowers the effective rate of protection of computer producers.

Question 25

Deadweight costs of tariffs equal the sum of net changes in consumer and producer surplus brought about by the tariff.

Question 26

Tariffs can never raise a country's standard of living. True or false? Explain carefully.

Question 27

Export tariffs are generally supported by business interests.

Question 28

Although current U.S. tariffs are quite low on average, tariffs remain high for some products.

Question 29

Write an essay on the gains from free international trade.

Question 30

In order to provide alternatives to drug-crop production, the Andean Trade Preference Act (ATPA) was created, providing Bolivia, Colombia, Ecuador, and Peru tariff free access to U.S. markets for many goods.

Question 31

Free trade is better than autarky for a small country.

Question 32

All countries tend to have about the same tariff levels.

Question 33

Examples from the United States suggest that the cost to consumers per job saved in highly protected industries is low.

Question 34

A country can never raise its standard of living by imposing a tariff.

Question 35

Static gains from trade come about because trade causes consumers and producers to face a different set of prices.