Question 1

Suppose that, after negotiating with the United States, Japan is able to increase the number of automobiles exported to the United States under a VRA. Sketch a diagram showing the consequence of this new agreement, and briefly explain what happens to price.

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Question 2

A free trade area with a common external tariff is called a(n)

Accepted Answer

A customs union is a type of regional integration where member countries eliminate internal tariffs between themselves and establish a common external tariff (CET) on goods imported from non-member countries. This means that all member countries of the customs union apply the same tariff rates to goods imported from outside the union, making it easier to enforce trade regulations and avoid trade diversion.

Question 3

American movies have become very popular in France.

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The answer of American movies have become very popular in...

Question 4

An area that has no trade barriers between the countries in the area is called a

Accepted Answer

A free trade area is an area where countries have agreed to eliminate trade barriers, such as tariffs and quotas, among themselves. A customs union, on the other hand, is a group of countries that have eliminated trade barriers and also have a common external tariff on goods imported from outside the group. Duty-free, tariff-free, and quota-free areas may or may not have eliminated trade barriers, so they are not as specific as the term "free trade area."

Question 5

Explain the difference between an export subsidy and an import tariff. Under what circumstances would a country use one versus the other? Who gains and who loses under each policy?

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Question 6

The British corn laws

Accepted Answer

The British corn laws were a series of laws and tariffs enacted between 1815 and 1846 that restricted the importation of grains into Great Britain. This benefited British farmers but stymied the growth of British manufacturing. The restrictions on imports also played a role in the Irish potato famine, as many Irish farmers were growing potato crops rather than importing grains due to the high tariffs on grains. Therefore, the best choice is E, as all of these statements are true.

Question 7

The corn laws were laws that pertained to restricting imports of the vegetable corn into England.

Accepted Answer

The Corn Laws were tariffs and restrictions on imported grain (not specifically the vegetable corn, but grains such as wheat) designed to protect domestic producers in Britain during the early 19th century.

Question 8

Why is multilateral negotiation a viable alternative to unilateral disarmament?

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The answer of Why is multilateral negotiation a viable alternative...

Question 9

What is unilateral disarmament? Why is unilateral disarmament not a viable way to reduce trade barriers in developed countries?

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The answer of What is unilateral disarmament? Why is unilateral...

Question 10

Why might it not be a good idea for the government to use trade policy to protect newly emerging industries?

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The answer of Why might it not be a good...

Question 11

The British corn laws pertained to restricting

Accepted Answer

The British corn laws were a series of laws that restricted the import and export of grains such as wheat and corn into and out of Great Britain. The purpose of these laws was to protect domestic farmers from foreign competition and to ensure a stable food supply for the country.

Question 12

If reducing trade barriers is supposed to improve consumer surplus and reduce deadweight loss, why is it so difficult to reduce trade barriers?

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The answer of If reducing trade barriers is supposed to...

Question 13

Currently, unilateral disarmament is seldom used by developed countries.

Accepted Answer

This is because developed countries usually prioritize their national security and maintaining a strong military.

Question 14

Suppose the Russian government decides it needs to protect its aircraft industry for reasons of national security. Name two ways it can achieve this goal. Which policy would you recommend? Why?

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Question 15

Suppose country X imposes a tariff on imported shoes. The table below shows the import demand and export supply before and after the tariff. Quantities are in thousands.

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Question 16

The reduction of trade barriers is a concept that was first recognized by most mainstream economists during the twentieth century.

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Question 17

Graphically illustrate what happens to the price of wine in the United States if the United States negotiates a voluntary restraint agreement with France on imports of wine from France. Explain who benefits and who loses from this agreement.

Accepted Answer

The answer of Graphically illustrate what happens to the price...

Question 18

Creating regional trading areas is an increasingly popular approach to reducing trade barriers.

Accepted Answer

Creating regional trading areas, such as the European Union or NAFTA, has become a common strategy for reducing trade barriers and promoting economic integration. This approach allows countries to negotiate and implement trade agreements among themselves, leading to increased trade and investment flows within the region.

Question 19

A requirement that a fraction of the product must be produced within the area to qualify for zero tariffs between the countries in the free trade area is called a(n)

Accepted Answer

The requirement described is known as a domestic content restriction, which requires a certain percentage of the product to be produced within the free trade area in order to qualify for zero tariffs. This is often used to promote local production and protect industries within the free trade area. The other choices do not describe this type of requirement.

Question 20

Multilateral approaches have more advantages than regional trading areas have.

Accepted Answer

Multilateral approaches and regional trading areas each have their own set of advantages and disadvantages, and the benefits of one over the other can vary depending on the specific circumstances and objectives of the countries involved. Multilateral approaches can offer broader market access and standardization, while regional trading areas can allow for deeper integration and tailored agreements among neighboring countries.

Quiz 29: International Trade