Deck 6: Nontariff Trade Barriers and the Political Economy of Protectionism

Question 1

With which market structure is strategic trade policy typically concerned?

A)Perfect competition
B)Monopolistic competition
C)Oligopoly
D)Monopoly

Answer 1

C

Question 2

Suppose the US and Germany enter into a voluntary export agreement in which Germany imposes a voluntary quota on its own steel industry.Most of the export quota's revenue effect would tend to accrue to the:

A)US government
B)German steel producers
C)US consumers
D)US steel producers

Answer 2

B

Question 3

Which of the following is true about Strategic Trade Policies?

A)it is not difficult to identify industries that will provide large external economics in the future
B)since most leading nations undertake strategic trade policies at the same time,their efforts are largely neutralized
C)strategic trade policy pursued by a country does not hurt any of the trading partners
D)Strategic Trade Policy was the brainchild of Heckscher and was practiced as early as the 1900s.

Answer 3

B

Question 4

_________________ raised average import duties in the U.S.to the all-time high of 59%?

A)The Smoot-Hawley Tariff Act of 1930
B)The U.S.Tariff Assignment Act of 1954
C)The Trade Agreements Act of 1934
D)The Sarbanes-Oxley Act

Question 5

In order to avoid outsourcing or offshoring,the national government could provide the firm with trade protection in the form of:

A)a tariff
B)a quota
C)a subsidy
D)this is not allowed by WTO rules

Question 6

Partial exemption from U.S.tax laws on income earned from exports is provided for by:

A)the U.S.Export Tax Relief Act of 1971
B)the Sarbanes-Oxley Act
C)the U.S.Foreign Sales Corporations provisions of the U.S.tax code
D)the General Sales Tax Act of 1973

Question 7

When a firm produces some of the parts or components that it uses in its products,in its own plants abroad,the process is known as:

A)outsourcing
B)offshoring
C)globalization
D)dumping

Question 8

Which of the following is not an example of an export subsidy?

A)Tax relief to potential exporters
B)Subsidized loans to potential exporters
C)Low-interest loans to foreign buyers of the nation's exports
D)Voluntary export restraint

Question 9

Strategic trade policy is concerned with protecting,and assisting in creating comparative advantage in:

A)agricultural commodities
B)transportation related industries
C)national growth-affecting industries
D)unskilled labor-intensive industries

Question 10

In which form of dumping is a commodity sold at a lower price abroad than domestically in order to sell of a surplus of the commodity without having to reduce domestic prices?

A)Pervasive
B)Persistent
C)Predatory
D)Sporadic

Question 11

In which form of dumping does a domestic monopolist consistently maximize total profits by selling the commodity at a lower price abroad than domestically?

A)Pervasive
B)Persistent
C)Predatory
D)Sporadic

Question 12

_______________ are often imposed on imports to offset export subsidies by foreign governments.

A)Countervailing duties
B)Anti-dumping duties
C)Import subsidies
D)None of the above

Question 13

The US government introduced the trigger-price mechanism in the 1970's in response to dumping in what industry?

A)Steel
B)Cotton
C)Automobiles
D)Consumer Electronics

Question 14

Suppose one country induces another to reduce exports of a particular commodity under threat of greater consequences.This would be known as:

A)dumping
B)a voluntary export restraint
C)a quota
D)an export subsidy

Question 15

Which of the following is not a type of dumping?

A)Pervasive
B)Persistent
C)Predatory
D)Sporadic

Question 16

Under which act was the President first given authority to negotiate bilateral tariff reductions?

A)The Smoot-Hawley Tariff Act of 1930
B)The U.S.Tariff Assignment Act of 1954
C)The Trade Agreements Act of 1934
D)The Sarbanes-Oxley Act

Question 17

A(n)______________ makes the price of imports equal to domestic prices,thus allowing domestic producers to be competitive with foreign producers without becoming more efficient.

A)ad valorem tariff
B)scientific tariff
C)optimum tariff
D)specific tariff

Question 18

The purpose of the U.S.Export-Import Bank is to:

A)use predatory tactics to prevent foreign companies from trying to export products to the U.S.
B)give foreign buyers of U.S.exports low-interest loans to finance their purchases
C)subsidize producers of commodities in the U.S.for the purpose of making them competitive in the international market
D)All of the above

Question 19

In which form of dumping is a commodity sold at a lower price abroad in order to drive foreign producers out of business,after which prices are raised to take advantage of the newly acquired monopoly power abroad?

A)Pervasive
B)Persistent
C)Predatory
D)Sporadic

Question 20

Which of the following is not an example of a non-tariff barrier?

A)A tax composed of a fixed percentage and a fixed sum per unit of the commodity being traded
B)Voluntary export restraints
C)Quota
D)Export subsidy

Question 21

The Smoot-Hawley Tariff Act of 1930 has often been associated with:

A)tariff reductions
B)increasing volume of trade for the US
C)decreasing exports and imports in the US
D)reduction of non-tariff barriers

Question 22

The Uruguay Round provided that GATT would be replaced by the:

A)Bureau of Economic Analysis
B)The World Bank
C)The World Trade Organization
D)the US Export/Import Bank

Question 23

Upon which of these policies was GATT founded?

A)Conditional acceptance of the most-favored-nation principle
B)Protection of the right to impose nontariff trade restrictions
C)A laissez-faire policy in the resolution of trade disputes
D)None of the above

Question 24

Over the last four decades:

A)Non-tariff barriers (NTB's)and tariffs have both increased in importance and use
B)NTB's and tariffs have both decreased in importance and use
C)NTB's have increased and tariffs have decreased in importance and use
D)NTB's have decreased and tariffs have increased in importance and use

Question 25

________________ replaced the product-by-product approach of the Trade agreements Act with across-the-board reduction power.

A)The Trade Expansion Act of 1962 and the Kennedy Round
B)The Trade Reform Act of 1974 and the Tokyo Round
C)The Trade and Tariff Act of 1984
D)The Omnibus Trade and Competitiveness Act of 1988

Question 26

Suppose the president negotiates lower tariffs on imported pianos.The domestic piano industry can appeal that decision under the:

A)escape clause,if they can prove they are substantially injured by the increased volume of piano imports
B)infant industry clause,if the lower tariffs cause unemployment to increase in the domestic piano industry
C)escape clause,if the lower tariffs cause unemployment to increase in the domestic piano industry
D)infant industry clause,if they can prove they are substantially injured by the increased volume of piano imports

Question 27

Which of the following is not one of the problems being addressed in the latest round of trade negotiations,the Doha Round?

A)The persistence of high agricultural tariffs and subsidies
B)The need to establish environmental and labor standards
C)The inability of the world to divide itself into major trading blocs
D)Trade disputes between the US and the EU regarding tax breaks to corporations on income earned from exports

Question 28

The Uruguay Round provided that the volume of _______________ is to be reduced by 21 percent over a six-year period?

A)import tariffs
B)import quotas
C)manufacturing export subsidies
D)agricultural export subsidies

Question 29

The Uruguay Round provides for tougher and quicker action to resolve disputes resulting from the use of __________,but does not ban their use.

A)Tariffs
B)Anti-dumping laws
C)Quotas
D)Subsidies

Question 30

Countervailing duties are intended to neutralize any unfair advantage that foreign exporters might gain over domestic producers because of foreign:

A)tariffs
B)subsidies
C)quotas
D)voluntary export agreements

Question 31

A specified quantitative limit on a good that will be allowed to enter the country over a given period of time is referred to as:

A)a domestic subsidy
B)an import quota
C)an export subsidy
D)an import tariff

Question 32

In the Uruguay Round,_______________ were reduced from an average of 4.7 percent to 3 percent.

A)tariffs on industrial products
B)agricultural export subsidies
C)quotas on manufactured goods
D)tariffs on intellectual property

Question 33

In which act was the most-favored-nations principle further developed?

A)The Smoot-Hawley Tariff Act of 1930
B)The U.S.Tariff Assignment Act of 1954
C)The Trade Agreements Act of 1934
D)The Sarbanes-Oxley Act

Question 34

The World Trade Organization was established by the _______________ of multilateral trade negotiations.

A)Kennedy Round
B)Tokyo Round
C)Uruguay Round
D)Doha Round

Question 35

The World Trade Organization provides for all of the following except:

A)the use of the most-favored-nation clause
B)assistance in the settlement of trade disputes
C)multilateral tariff reductions
D)bilateral tariff reductions

Question 36

Which of the following called on the US Trade Representative to set a tight schedule for negotiating reductions in trade barriers with countries that restricted U.S.exports?

A)The Trade Expansion Act of 1962 and the Kennedy Round
B)The Trade Reform Act of 1974 and the Tokyo Round
C)The Trade and Tariff Act of 1984
D)The Omnibus Trade and Competitiveness Act of 1988

Question 37

The Export-Import Bank of the US assists firms in selling overseas by providing direct loans to foreign purchasers of US goods.This serves as a(n)__________________ to US firms.

A)specific subsidy
B)import subsidy
C)domestic subsidy
D)export subsidy

Question 38

At which round of international trade negotiations were there numerous disagreements between the US and the EU on reducing agricultural subsidies?

A)The Uruguay Round
B)The Kennedy Round
C)The Tokyo Round
D)The Doha Round

Question 39

Under the original provisions of the Trade Agreements Act,the president of the United States was authorized to negotiate tariff reductions up to:

A)5 percent
B)50 percent
C)100 percent
D)The president was not authorized to negotiate reductions

Question 40

If Japan is accused of dumping umbrellas into the US market,it is believed that Japan is:

A)selling umbrellas in the US for a price above production costs
B)selling umbrellas in the US for a price below production costs
C)producing umbrellas cheaper than the US can produce them
D)producing umbrellas at a higher cost than the US produces them

Question 41

An elimination of non-tariff barriers on computers would tend to increase computer imports,reduce profits of import-competing computer producers,and generate job losses for domestic apple workers.

Question 42

GATT established several provisions for the purpose of establishing freer trade.Some of these were known as peril point provisions.

Question 43

The purpose of the trade promotion authority that has been granted to the President of the U.S.was to give the government more time to deliberate on trade agreements that have been negotiated with the government.

Question 44

Non-tariff barriers are also known as "new protectionism".

Question 45

The infant-industry argument states that temporary trade protection is needed to protect a new industry against competition from more established and efficient foreign firms.

Question 46

When it comes to quota and tariff,how are the effects on the economy different?

Question 47

GATT was an international organization composed of nations that would ultimately become known as the EU.

Question 48

An import quota is a physical restriction on the quantity of goods that may be imported during a specified time period.

Question 49

Scientific Tariff seems to be a good thing.What are the problems with it?

Question 50

Strategic trade policy argues that an activist trade policy in oligopolistic markets subject to extensive external economies can increase a nation's welfare.

Question 51

Most of the benefits from international trade and openness (globalization)now seem to flow primarily to some of the most dynamic emerging market economies.

Question 52

Industrial policies stimulate the development and growth of high-tech industries,in most cases,in an industrial nation.

Question 53

Under the most-favored-nations principle,the Senate has the power to negotiate mutual tariff reductions of up to 65% with other nations.

Question 54

Trade-related investment measures introduce the requirement that foreign investors buy supplies locally or export as much as they import.

Question 55

Briefly discuss the four major rounds of international trade negotiations held under the direction of the General Agreement on Tariffs and Trade.Include discussion of the primary outcomes of each round.