Question 1

Tariffs are the most complex instrument of trade policy.

Accepted Answer

Tariffs are the oldest and simplest instrument of trade policy.

Question 2

Dumping is variously defined as selling goods in a foreign market at below their costs of production,or as selling goods in a foreign market at below their "fair" market value.

Accepted Answer

Dumping is defined as selling goods in a foreign market at below their costs of production or "fair" market value.Dumping is viewed as a method by which firms unload excess production in foreign markets.

Question 3

Ad valorem tariffs reduce the cost of imported products relative to domestic products.

Accepted Answer

Tariffs,specific and ad valorem,are placed on imports to protect domestic producers from foreign competition by raising the price of imported goods.

Question 4

Tariffs are largely pro-producer and anti-consumer.

Accepted Answer

Tariffs are pro-producer and anti-consumer.While they protect producers from foreign competitors,this restriction of supply also raises domestic prices.

Question 5

The fair market value of a good is normally judged to be lesser than the costs of producing that good.

Accepted Answer

The fair market value of a good is normally judged to be greater than the costs of producing that good as the former includes a "fair" profit margin.

Question 6

Tariffs increase the overall efficiency of the world economy because a protective tariff encourages domestic firms to produce products more efficiently at home that,in theory,could be produced abroad.

Accepted Answer

Import tariffs reduce the overall efficiency of the world economy because a protective tariff encourages domestic firms to produce products at home that,in theory,could be produced more efficiently abroad.

Question 7

Export tariffs are far less common than import tariffs.

Accepted Answer

Sometimes tariffs are levied on exports of a product from a country.Export tariffs are far less common than import tariffs.

Question 8

Quotas benefit consumers the most.

Accepted Answer

As with all restrictions on trade,quotas do not benefit consumers.An import quota or voluntary export restraint always raises the domestic price of an imported good.

Question 9

Administrative trade policies are bureaucratic rules that are designed to make it easy for imports to enter a country.

Accepted Answer

In addition to the formal instruments of trade policy,governments of all types sometimes use informal or administrative policies to restrict imports and boost exports.Administrative trade policies are bureaucratic rules designed to make it difficult for imports to enter a country.

Question 10

Antidumping policies are designed to punish foreign firms that engage in dumping industrial waste into the environment.

Accepted Answer

Dumping is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.Antidumping policies are designed to punish foreign firms that engage in dumping and thus protect domestic producers from unfair foreign competition.

Question 11

The main gains from subsidies accrue to importers,whose international competitiveness is increased as a result of these subsidies.

Accepted Answer

The main gains from subsidies accrue to domestic producers,whose international competitiveness is increased as a result.

Question 12

Japan has a long history of supporting inefficient domestic producers with farm subsidies.

Accepted Answer

Agriculture tends to be one of the largest beneficiaries of subsidies in most countries.Japan has long history of supporting inefficient domestic producers with farm subsidies.Even the European Union and the U.S.are not exempt from this rule.

Question 13

In recent decades,a fall in subsidies,quotas,and voluntary export restraints has been accompanied by a corresponding fall in nontariff barriers.

Accepted Answer

A fall in tariff barriers in recent decades has been accompanied by a rise in nontariff barriers,such as subsidies,quotas,voluntary export restraints,and antidumping duties.

Question 14

Nontariff barriers include subsidies,quotas,voluntary export restraints,and antidumping duties.

Accepted Answer

A fall in tariff barriers in recent decades has been accompanied by a rise in nontariff barriers,such as subsidies,quotas,voluntary export restraints,and antidumping duties.

Question 15

The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.

Accepted Answer

A little-known law in the United States,the Buy America Act,specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.

Question 16

Countries sometimes argue that it is necessary to protect certain industries because they are important for national security.

Accepted Answer

Countries sometimes argue that it is necessary to protect certain industries because they are important for national security.Defense-related industries often get this kind of attention (e.g. ,aerospace,advanced electronics,semiconductors,etc. ).

Question 17

Subsidies are a trade policy instrument.

Accepted Answer

Trade policy uses seven main instruments: tariffs,subsidies,import quotas,voluntary export restraints,local content requirements,administrative policies,and antidumping duties.

Question 18

Tariffs are the instrument that the GATT and WTO have been most successful in limiting.

Accepted Answer

Tariffs are the instrument of trade policy that GATT and WTO have been most successful in limiting.

Question 19

A direct restriction on the quantity of some good that may be imported into a country is a quota rent.

Accepted Answer

An import quota is a direct restriction on the quantity of some good that may be imported into a country.The restriction is usually enforced by issuing import licenses to a group of individuals or firms.

Question 20

Specific tariffs are levied as a proportion of the value of the imported good.

Accepted Answer

Specific tariffs are levied as a fixed charge for each unit of a good imported.

Quiz 6: The Political Economy of International Trade