Deck 10: Introduction to Exchange Rates and the Foreign Exchange Market

Question 1

Recently the WTO heard complaints about the United States
And Europe in the areas of ______ production and ______
Production, which were being subsidized by their
Governments.

A)cotton; sugar
B)tires; dairy products
C)wheat and other grain; wine
D)industrial steel; jute

Answer 1

A

Question 2

Which of the following was a major disagreement during
The Doha Round?

A)tariffs in developed countries
B)agricultural subsidies
C)production subsidies to agriculture in land­poor developing countries
D)tariffs on agricultural imports in developed countries

Answer 2

B

Question 3

The term used to describe a tax on exports is an:

A)export tariff.
B)export stipend.
C)export restriction.
D)export quota.

Answer 3

A

Question 4

Where are subsidies on agricultural products particularly
High?

A)the European Union
B)the United States
C)Japan
D)In the European Union, the United States, and Japan

Question 5

In Europe, the Common Agricultural Policy:

A)taxes European agricultural products sold in Europe.
B)allows European farmers to sell their output at above world prices in the European market.
C)is a form of export subsidy, since prices of European farm products sold on the world market are below prices
Charged in the European market.
D)is a form of export subsidy, since it allows European farmers to sell output at above world prices in the European
Market and at world prices in the export market.

Question 6

Which of the following contributes to the low price of food
On world markets?
I)export subsidies by developed countries
II)food aid to developing countries
III)tariffs on food imports in some large countries

A)I
B)II
C)III
D)I, II, and III

Question 7

An export subsidy works to _______________ the price of
Exported products for producers to encourage
_______________ production.

A)lower; less
B)lower; more
C)raise; more
D)raise; less

Question 8

In general, an export subsidy:

A)discourages foreign sales exporters in favor of domestic sales.
B)encourages firms to export rather than sell domestically.
C)penalizes producers that export.
D)justifies government involvement in helping firms export.

Question 9

Under rules of the GATT, exporting countries can expect
Importing countries to impose _______ to offset their
Export subsidies.

A)antidumping duties
B)countervailing duties
C)safeguard duties
D)quotas

Question 10

Which two products are among the MOST heavily subsidized
In the United States?

A)sugar and cotton
B)corn and honey
C)oranges and tomatoes
D)wine and beer

Question 11

Why do economists disparage food aid and export subsidies
For low­income nations?

A)They really have to pay in other ways.
B)It always involves middlemen who profit from the transactions.
C)The aid must be paid for by the governments of the poor nations.
D)It prevents their own firms from producing the same products because they cannot compete with foreign low
Prices; therefore, the most efficient producer is not the
Seller of the product.

Question 12

Why is food aid to poor nations seen to be an "indirect
Subsidy" by the WTO?

A)It always has to be brokered by a third party.
B)Poor nations have to pay for it in other ways.
C)It enables firms to increase exports, partially paid for by the government.
D)It only works with small farmers rather than large agribusiness.

Question 13

WTO negotiations in 2005 covered agricultural subsidies.
What progress was made at these meetings in Hong Kong?

A)Higher­income nations pushed for an end to agricultural subsidies, but did not get them.
B)No progress was made on lower­income nations' demands for an end to agricultural subsidies, but some
Concessions were made in light manufactured goods
Imports from poor nations.
C)The Hong Kong meetings were disrupted by protesters and had to be called off.
D)The WTO members agreed to eliminate all subsidies for every nation.

Question 14

A payment to a firm for every unit exported is called an:

A)export tariff.
B)export stipend.
C)export restriction.
D)export subsidy.

Question 15

The European Common Agriculture Policy has resulted in
A(n):

A)increase in European imports from the rest of the world.
B)decrease in European exports of sugar to the rest of the world.
C)increase in world agriculture exports to Europe.
D)increase in European agriculture exports.

Question 16

Under the GATT, which trade remedy can importing
Countries use to offset export subsidies?

A)antidumping duties
B)safeguard duties
C)quotas
D)countervailing duties

Question 17

Food aid is a(n):

A)in­kind gift of food.
B)benefit concert to support the third world.
C)type of export subsidy.
D)type of countervailing duty.

Question 18

Which of the following will happen when a small country
Enacts an export subsidy?
I)The country will be able to sell more abroad.
II)The domestic price of the subsidized export will increase.
III)The country's demand for the subsidized product will
Increase.

A)I
B)I and II
C)I and III
D)I, II, and III

Question 19

What do developing nations expect from wealthy nations in
Exchange for gradually opening their market to services
Exports?

A)food aid
B)eased immigration regulations
C)higher agricultural export subsidies
D)higher tariffs on industrial goods

Question 20

In Europe, the Common Agricultural Policy is a form of:

A)tax on domestic production of agricultural products.
B)regulation and supervision by the WTO in assuring that it is applied fairly.
C)a purchase program whereby government buys unusable products.
D)export subsidy, because farmers in the European Union can sell domestically at very high prices.

Question 21

When assessing the welfare effect of an export subsidy on a
Small nation, it can be shown that the subsidy:

A)increases national welfare.
B)can be paid for out of increased revenues.
C)hurts producers and helps consumers.
D)is just the same as a tariff on imports: it raises domestic price, increases domestic production, and involves the same
Efficiency and consumption losses.

Question 22

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, when the home country provides a subsidy of
_______, exports will increase by _____ units.

A)$50; 40
B)$175; 120
C)$125; 100
D)$175; 100

Question 23

Suppose that the world price of sugar is $100 per ton.If a
Small country gives its sugar exporters a subsidy of $50 per
Ton, then domestic consumption of sugar will:

A)fall.
B)rise.
C)remain unchanged.
D)first fall, then rise.

Question 24

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, an export subsidy of $50 results in a(n) ________ in
Producer surplus by the amount of ______.

A)reduction; $6,500
B)reduction; $5,000
C)increase; $5,500
D)increase; $4,000

Question 25

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, at the world price there is a ________ of ____ in
The home market, which is ____.

A)surplus; 60; imported
B)shortage; 60; imported
C)surplus; 60; exported
D)shortage; 100; exported

Question 26

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, how many units of the product will domestic
Consumers demand when the world price is $125?

A)120
B)100
C)20
D)40

Question 27

Suppose that the world price of sugar is $100 per ton.If a
Small country gives its sugar exporters a subsidy of $50 per
Ton, then the world price of sugar will:

A)rise to $150 per ton.
B)fall to $50 per ton.
C)remain at $100 per ton.
D)first rise to $150 per ton, then fall to $100 per ton.

Question 28

SCENARIO: SUGAR TRADE IN BIRDONIA
In autarky, suppose that equilibrium sugar price is $100 per
Ton in Birdonia, a small agricultural nation.Now, suppose
Birdonia engages in free trade with the rest of the world.
The world price of sugar is $125 per ton.
Reference: Ref 10­1
(Scenario: Sugar Trade in Birdonia) Now suppose that the
Government of Birdonia gives an export subsidy of $50 per
Ton to its sugar producers.What will happen to the
Domestic price of sugar in Birdonia?

A)It will not change.
B)It will rise to $175 per ton.
C)It will rise to $150 per ton.
D)It will rise to between $125 and $175 per ton.

Question 29

SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply
Schedule for a small­country producer of iron ore.It sells
Output in its home market and on the world market at the
World price of $70 per ton.
(Scenario: Demand and Supply for Iron Ore) At the world
Price of $70 per ton, how many units will be sold
Domestically?

A)80 tons
B)70 tons
C)40 tons
D)30 tons

Question 30

SCENARIO: SUGAR TRADE IN BIRDONIA
In autarky, suppose that equilibrium sugar price is $100 per
Ton in Birdonia, a small agricultural nation.Now, suppose
Birdonia engages in free trade with the rest of the world.
The world price of sugar is $125 per ton.
Reference: Ref 10­1
(Scenario: Sugar Trade in Birdonia) What action must the
Government of Birdonia take to ensure that Birdonians do
Not import sugar at the world price of $125?

A)It must place a $25 per ton tax on Birdonian sugar exports.
B)It must levy a countervailing duty of $50 a ton on Birdonian sugar exports.
C)It must agree to voluntarily restrain its exports to $125 per ton.
D)It must levy a tariff of $50 per ton on imported sugar.

Question 31

SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply
Schedule for a small­country producer of iron ore.It sells
Output in its home market and on the world market at the
World price of $70 per ton.
(Scenario: Demand and Supply for Iron Ore) At the world
Price of $70 per ton, how many units will it export?

A)80 tons
B)70 tons
C)40 tons
D)30 tons

Question 32

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, the deadweight loss from the $50 export subsidy is:

A)$500.
B)$1,000.
C)$1,500.
D)$2,500.

Question 33

SCENARIO: SUGAR TRADE IN BIRDONIA
In autarky, suppose that equilibrium sugar price is $100 per
Ton in Birdonia, a small agricultural nation.Now, suppose
Birdonia engages in free trade with the rest of the world.
The world price of sugar is $125 per ton.
Reference: Ref 10­1
(Scenario: Sugar Trade in Birdonia) What will happen to the
Domestic price of sugar in Birdonia?

A)It will rise to $125 per ton.
B)It will fall by $25 per ton.
C)It will remain $100 per ton.
D)It will first rise to $125 per ton, then fall to $100 per ton.

Question 34

Suppose that the world price of sugar is $100 per ton.If a
Small country gives its sugar exporters a subsidy of $50 per
Ton, then its exporters will receive:

A)$150 per ton.
B)$50 per ton.
C)$100 per ton.
D)first $150 per ton, then $100 per ton.

Question 35

SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply
Schedule for a small­country producer of iron ore.It sells
Output in its home market and on the world market at the
World price of $70 per ton.

(Scenario: Demand and Supply for Iron Ore) What price will
Domestic iron ore consumers pay for their iron ore
Purchases when there is a $10­per­ton export subsidy?

A)$10 per ton
B)$60 per ton
C)$70 per ton
D)$80 per ton

Question 36

SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply
Schedule for a small­country producer of iron ore.It sells
Output in its home market and on the world market at the
World price of $70 per ton.
(Scenario: Demand and Supply for Iron Ore) Suppose that
The country's government offers its iron ore producers an
Export subsidy of $10 per ton.How many tons will the
Country now export?

A)80 tons
B)70 tons
C)60 tons
D)50 tons

Question 37

SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply
Schedule for a small­country producer of iron ore.It sells
Output in its home market and on the world market at the
World price of $70 per ton.
(Scenario: Demand and Supply for Iron Ore) How many
Tons will be sold domestically when exporters receive a
$10­per­ton export subsidy?

A)10 tons
B)20 tons
C)30 tons
D)40 tons

Question 38

SCENARIO: DEMAND AND SUPPLY FOR IRON ORE
The table supplied represents a demand and supply
Schedule for a small­country producer of iron ore.It sells
Output in its home market and on the world market at the
World price of $70 per ton.
(Scenario: Demand and Supply for Iron Ore) What is the
Total value of the export subsidy that exporters receive?

A)$500
B)$800
C)$400
D)$100

Question 39

Suppose that the world price of sugar is $100 per ton.If a
Small country gives its sugar exporters a subsidy of $50 per
Ton, then its domestic price of sugar will:

A)fall by $50 per ton.
B)rise by $50 per ton.
C)remain unchanged at $100 per ton.
D)first fall to $50 per ton, then rise to $100 per ton.

Question 40

Figure: Home's Exporting Industry I
The graph shows information about a home exporter.
(Figure: Home's Exporting Industry I) According to the
Graph, an export subsidy of $50 per unit results in a(n)
________ of government revenue by the amount of
______.

A)increase; $5,000
B)increase; $2,500
C)decrease; $5,000
D)decrease; $21,000

Question 41

Figure: Home's Exporting Industry II
The graph shows the effect of a subsidy on a large country.
(Figure: Home's Exporting Industry II) According to the
Graph, which of the following will help the large country
Avoid the deadweight loss from the subsidy?

A)Impose a tariff.
B)Impose a quota.
C)Provide cash to developing countries to purchase the product from the home country.
D)Impose trade restrictions.

Question 42

Suppose that the U.S.federal government decides to
Increase its cigarette excise tax by $1 per pack and also
Apply the increase to U.S.cigarette exports.What will
Happen to the price of cigarettes in the U.S.and abroad?

A)They will both rise by $1 per pack.
B)The U.S.price will rise by $1 per pack, and the foreign price will rise by less than $1 per pack.
C)The foreign price will rise by $1 per pack, and the U.S. price will rise by less than $1 per pack.
D)Both will rise by less than $1 per pack.

Question 43

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) Calculate the value of the
Deadweight losses associated with the $15 per unit export
Subsidy.

A)$37.50
B)$75.00
C)$112.50
D)$150.00

Question 44

Figure: Home's Exporting Industry II
The graph shows the effect of a subsidy on a large country.
(Figure: Home's Exporting Industry II) According to the
Figure, if the world price of the product is $100, the home
Demand for the product is _____ and the exports are
______.

A)25; 125
B)25; 25
C)50; 75
D)25; 75

Question 45

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) Is the subsidy paid to
Freedonias's widget exporters considered part of the
Deadweight losses of the subsidy?

A)Yes: they are a payment to Freedonian exporters.
B)Yes: they are paid by Freedonian exporters that supply the domestic market.
C)No; they are a redistribution of income within the Freedonian economy.
D)No; consumers of Freedonian widget exports pay the subsidies.

Question 46

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) In the absence of trade,
What is the equilibrium price and quantity in Freedonia's
Widget market?

A)$25 and 75 units
B)$75 and 25 units
C)$25 and 25 units
D)$75 and 75 units

Question 47

An export subsidy has a similar effect as a tariff for a small
Nation.What is the effect of an export subsidy for a large
Nation?

A)Losses are greater for the large nation than for the small nation because of the cost of the subsidy to the home
Government.
B)Losses are lower for the large nation than for the small nation.
C)It is beneficial for the large nation but not for the small nation.
D)It is beneficial for consumers but harmful for firms in the large nation.

Question 48

Suppose that the world price of sugar is $100 per ton.If a
Small­country exporter gives its sugar exporters a subsidy
Of $50 per ton, then the country will:

A)suffer deadweight production and consumption losses.
B)enjoy deadweight production and consumption gains.
C)suffer deadweight production losses only.
D)suffer deadweight consumption losses only.

Question 49

If a large nation subsidizes its exports, it will increase its
Supply to the world and:

A)will prosper through increased jobs for workers and profits for its firms.
B)the world price will fall.
C)consumers in the home nation will benefit through lower prices.
D)the nation will increase its imports as well.

Question 50

Figure: Home's Exporting Industry II
The graph shows the effect of a subsidy on a large country.
(Figure: Home's Exporting Industry II) According to the
Graph, what happens to the nation's consumer surplus as a
Result of the $100 export subsidy?

A)It increases by $2,500.
B)It decreases by $1,875.
C)It increases by $1,875.
D)It decreases by $2,500.

Question 51

Suppose that the world price of sugar is $100 per ton.If a
Large country gives its sugar exporters a subsidy of $50 per
Ton, then its exporters will receive:

A)$150 per ton.
B)$50 per ton.
C)more than $100 but less than $150 per ton.
D)$100 per ton.

Question 52

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) Now let the government of
Freedonia give a $15 per unit subsidy on each widget
Exported.What will be the new price and quantity
Consumed in the Freedonia domestic market?

A)$20 and 60 units
B)$55 and 15 units
C)$40 and 15 units
D)$25 and 25 units

Question 53

FTihgeu grera:p Hho smhoew'ss Ethxep oerffteinctg o If nad suusbtsriyd yI Ion a large country. (Figure: Home's Exporting Industry II) According to the
Graph, what is the deadweight loss due to the subsidy?

A)$12,500
B)$625
C)$1,250
D)$5,000

Question 54

What happens to the large country's domestic price of
Widgets when a large country gives a subsidy of X dollars
For each unit exported?

A)The domestic price will rise by X dollars.
B)The domestic price will rise by more than X dollars
C)The domestic price will rise by less than X dollars.
D)The domestic price will not change.

Question 55

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) What is the value of total
Subsidy payments to Freedonia's widget exporters?

A)$825
B)$600
C)$225
D)$125

Question 56

SCENARIO: FREEDONIAN EXPORTS
In the small country of Freedonia, the domestic demand for
Widgets is represented by P = 100 - 3Q; the home supply
Of widgets is represented by P = 1Q.
Reference: Ref 10­4
(Scenario: Freedonian Exports) Freedonia engages in
International trade in widgets.The world price is $40.How
Many widgets will be consumed domestically and how many
Will be exported?

A)It will consume 20 domestically and export 20.
B)It will consume 20 domestically and export 40.
C)It will consume 40 domestically and export 20.
D)It will consume zero domestically and export 20.

Question 57

A large nation's export subsidy ____ a small trading partner
Nation's terms of trade.

A)improves
B)does not affect
C)worsens
D)strengthens its bargaining power for improving

Question 58

Figure: Home's Exporting Industry II
The graph shows the effect of a subsidy on a large country.
(Figure: Home's Exporting Industry II) According to the
Graph, what is the revenue cost for the government from
The export subsidy?

A)$1,250
B)$12,500
C)$150
D)$1,500

Question 59

Suppose that the world price of sugar is $100 per ton.If a
Large country gives its sugar exporters a subsidy of $50 per
Ton, then domestic consumption of sugar will:

A)fall.
B)rise.
C)remain unchanged.
D)first fall, then rise.

Question 60

Suppose that the world price of sugar is $100 per ton.If a
Large country gives its sugar exporters a subsidy of $50 per
Ton, then its domestic price of sugar will:

A)fall by $50 per ton.
B)rise by $50 per ton.
C)remain unchanged at $100 per ton.
D)rise by less than $50 per ton.

Question 61

Suppose that the world price of sugar is $100 per ton.If a
Large country gives its sugar exporters a subsidy of $50 per
Ton, then there will be:

A)no change in its consumer surplus.
B)a loss in consumer surplus.
C)a gain in consumer surplus.
D)an increase in domestic consumption.

Question 62

Why do countries subsidize exports when they suffer net
Welfare losses from these subsidies?

A)Exporters receiving the subsidy engage in rent­seeking activities.
B)Exports generate positive externalities.
C)Exports provide foreign currency.
D)Exports provide jobs.

Question 63

Which nations will be harmed the most if the WTO
Eliminates agricultural subsidies?

A)agricultural exporters in smaller nations without subsidy programs because world food prices will rise
B)agricultural consumers all over the world because prices will be higher
C)agricultural producers in nations that subsidize their production
D)governments of rich nations that will have to provide support to farmers who are hurt

Question 64

Suppose that a large country decides to reduce its
Agricultural export subsidies by 50%.Will the country gain
Or lose?

A)The country will always gain by reducing its subsidies.
B)The country will always lose by reducing its subsidies.
C)The country will gain if the reduction in its deadweight losses exceeds its terms­of­trade gains.
D)The country will gain if its terms­of­trade gains exceed the reduction in its deadweight losses.

Question 65

For a small nation employing a production subsidy,
Domestic producers get a payment for every good
Produced, and domestic consumers:

A)purchase the product at the world price the same as before the subsidy.
B)pay a higher price for the product.
C)pay a reduced price for the product.
D)purchase more of the product.

Question 66

For a small nation employing a production subsidy, if the
Consumers face the same price as before, the additional
Production generated by the subsidy will be purchased by:

A)new domestic consumers.
B)the export sector.
C)the financial sector.
D)the government.

Question 67

The WTO/GATT provides that production subsidies be:

A)eliminated at all costs.
B)increased in low­income nations and decreased in high­ income nations.
C)disregarded in making trade decisions.
D)disclosed to trading partners and reduced to a minimum.

Question 68

Who will gain if WTO members agree to eliminate or to
Substantially reduce agricultural export subsidies?

A)consumers in industrialized countries who import agricultural products
B)farmers in developing countries who currently do not receive export subsidies
C)farmers in industrialized countries who currently receive export subsidies
D)consumers in developing countries who import agricultural products

Question 69

Compared with an export subsidy, for a small nation, a
Production subsidy increases exports by:

A)the same amount as an export subsidy.
B)less than with an export subsidy.
C)more than with an export subsidy.
D)undercutting world price.

Question 70

When a country provides a home producer a subsidy, it:

A)causes the consumer surplus to decline.
B)causes the producer surplus to decline.
C)causes government cost to decline.
D)causes no change in the consumer surplus.

Question 71

Is an export subsidy a good way for a large nation to help a
Poor nation by exporting products to them at lower prices?

A)Yes, and it is a method recommended by the WTO.
B)It can help in some cases.
C)No; it creates inefficiency in production, and it hurts firms (especially small farmers) who cannot compete.
D)Yes; but it can get tricky when the importers demand even more quantity at lower prices.

Question 72

Because of the harm caused to low­income nations from
Subsidized exports of food, high­income nations are looking
At other ways to help.The preferred way is:

A)free food, because this does not involve any payments.
B)cash, because cash does not distort market prices.
C)low­interest loans.
D)technical aid that helps poor nations increase their own production.

Question 73

A large nation's export subsidy ________ importing
Countries' terms of trade; a small nation's export subsidy
_________ importing countries' terms of trade.

A)improves; worsens
B)worsens; improves
C)improves; improves
D)improves; does not affect

Question 74

What are reasons why U.S.food aid may actually hurt
Recipient nations?

A)Their farmers are put out of business and food production is decreased.
B)Local prices are depressed.
C)It may cause food shortages, as these nations become dependent on food aid.
D)All of these are reasons why U.S.food aid may actually hurt recipient nations.

Question 75

How is a production subsidy different from an export
Subsidy?

A)It is applied only to production sold within the nation.
B)It is applied to all production and imports-everything consumed in the nation.
C)It is a payment from government to all domestic production-not only to units exported.
D)It kicks in when the export subsidy runs out.

Question 76

Export subsidies applied by a large country create
___________ for importing countries in the rest of the
World by _________ their import prices.

A)losses; increasing
B)gains; increasing
C)gains; decreasing
D)losses; decreasing

Question 77

The WTO/GATT:

A)prefers that countries use export subsidies rather than production subsidies on its agricultural production.
B)prefers that countries use production subsidies rather than export subsidies on its agricultural production.
C)has no preference between export subsidies and production subsidies on countries' agricultural production.
D)wants export subsidies to replace production subsidies.

Question 78

The G8 group of industrialized countries recently announced
A change in its focus on food aid to farming in developing
Countries.What is this change?

A)G8 countries agreed to double their food aid to developing countries.
B)G8 countries agreed to eliminate direct subsidies on agricultural exports to developing countries.
C)G8 countries agreed to eliminate indirect subsidies on agricultural exports to developing countries.
D)G8 countries agreed to shift their focus from food aid to long­term investments in increasing agricultural output in
Developing countries.

Question 79

If agricultural subsidies are eliminated by the WTO's target
Date, which nations will benefit the most?

A)agricultural exporters in smaller nations without subsidy programs because world food prices will rise
B)agricultural consumers all over the world because more farmers will find it profitable to produce
C)agricultural importing nations, which will be able to import more food
D)governments of rich nations, which will no longer have to pay the subsidies

Question 80

Suppose that the world price of sugar is $100 per ton.If a
Large country gives its sugar exporters a subsidy of $50 per
Ton, then it will:

A)enjoy a gain in its total welfare.
B)have neither a loss nor a gain in its total welfare.
C)suffer a loss in its total welfare.
D)have an increase in its consumer surplus only.