Deck 4: Understanding Tariffs and Trade Policies

Question 1

The actual exchange ratio between two countries will depend upon the

A)Supply
B)Price
C)Reciprocal demand
D)All of the above

Answer 1

Reciprocal demand

Question 2

In world markets, the actual gain is always less than the potential gain since there is always

A)Perfect completion
B)Imperfect completion
C)Stability
D)None of the above

Answer 2

Imperfect completion

Question 3

The theory of gains from trade was at the core of the

A)Technical progress
B)Change in employment
C)Modern theory of international trade
D)Classical theory of international trade

Answer 3

Classical theory of international trade

Question 4

Prof. Ronald Findlay modified Ricardo's measure of gains from trade using

A)A straight line
B)Balance of payments
C)The community indifference curve
D)Short-term and long-term lendings and borrowings

Question 5

The income terms of trade is called the

A)Capacity to export
B)Capacity to import
C)Capacity to change
D)Capacity to remain constant

Question 6

The tariff that maximizes a country's welfare is called the

A)Double column tariff
B)Maximum and minimum tariff
C)Optimum tariff
D)None of the above

Question 7

Ad valorem tariffs are

A)Duties levied per physical unit of the commodity imported
B)Duties levied as fixed percentage of the value of the imported commodity
C)Duties which tend to vary with the prices of the imported commodities
D)None of the above

Question 8

On the basis of origin and destination of goods, tariff may be classified into

A)Specific duties, ad valorem duties and compound duties
B)Single-column tariff, double-column tariff and triple column tariff
C)Export duties, import duties and transit duties
D)All of the above

Question 9

Specific tariffs are assessed

A)On the value of product
B)On the basis of subsidies
C)On the basis of physical weight
D)On the basis rate fixed by the government

Question 10

A quota which established thorough mutual agreements or negotiation between countries is

A)Allocated quota
B)Unilateral quota
C)Import-export quota
D)Bilateral quota

Question 11

Effects of tariffs included

A)Income effect
B)Effect on demand
C)Effect on supply
D)All of the above

Question 12

When a uniform rate of duty is imposed on all similar commodities irrespective of the country from which they are imported, it is called

A)Single-column tariff
B)Protective tariff
C)Conventional tariff
D)Double-column tariff

Question 13

A quota system which allows a certain specified quantity of a commodity to be imported duty free or at a low rate of import duty is

A)Bilateral quota
B)Global quota
C)Tariff or custom quota
D)Unilateral quota

Question 14

The tariff rates which are based on trade agreements or treaties with other countries is known as

A)Revenue tariffs
B)Protective tariffs
C)Multiple column tariff
D)Conventional tariff

Question 15

Which of the following is not included in the effects of quotas

A)Price effect
B)Consumption effect
C)Income effect
D)Protective effect

Question 16

imposition of a tariff improves the terms of trade of the imposing country but reduces its

A)Commodity prices
B)Volume of trade
C)Cost of production
D)None of the above

Question 17

A tariff results in an improvement in terms of trade on one hand and on the other hand, increases the

A)Demand of the commodity
B)Price of the commodity
C)Level of welfare
D)Gains from trade

Question 18

The positive effect of a tariff is, when there is an increase in the welfare of a country due to

A)An improvement in the terms of trade
B)An increase in its volume of trade
C)A reduction in its volume of trade
D)A decrease in its volume of trade

Question 19

There is an improvement in the welfare of country only when the

A)Positive effect of a tariff is lesser than its negative effect
B)Positive effect is larger than its negative effect
C)Positive effect of a tariff is equal to its negative effect
D)None of the above

Question 20

A trade policy without tariffs and other quantitative restrictions blocking the movement of goods between countries is

A)Import policy
B)Export policy
C)Free trade policy
D)Exim policy

Question 21

Protection refers to a policy where

A)Export industries are to be protected from competition
B)Domestic industries are to be protected from foreign competition
C)Optimum utilization of resources takes place
D)There is optimization of consumption

Question 22

A tax or duty levied on goods when it enters or leave the national boundary of a country is called

A)Tariff
B)Quotas
C)External economics
D)Balance of payment

Question 23

When government levies import duties which varies with prices of commodities imported , it is called

A)Ad valorem duty
B)Specific duty
C)Compound duty
D)Sliding scale duty

Question 24

Which of the following is not the effect of tariff?

A)Balance of payments effect
B)Terms of trade effect
C)competive effect
D)none of the above

Question 25

Prof. Kindleberger calls the combined protective and consumption effect as

A)Cost of the tariff
B)Trade effect
C)Income effect
D)Revenue effect