The Instruments of Trade Policy

Pages: 23 (4879 words) Published: April 17, 2014
International Economics, 9e (Krugman et al.)
Chapter 9 The Instruments of Trade Policy

9.1 Basic Tariff Analysis

1) Specific tariffs are
A) import taxes stated in specific legal statutes.
B) import taxes calculated as a fixed charge for each unit of imported goods. C) import taxes calculated as a fraction of the value of the imported goods. D) the same as import quotas.
E) import taxes calculated based solely on the origin country. Answer: B
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy

2) Ad valorem tariffs are
A) import taxes stated in ads in industry publications.
B) import taxes calculated as a fixed charge for each unit of imported goods. C) import taxes calculated as a fraction of the value of the imported goods. D) the same as import quotas.
E) import taxes calculated solely on the origin country.
Answer: C
Page Ref: 192
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy

3) The excess supply curve of a product we (H) import from foreign countries (F) increases as A) excess demand of country H increases.
B) excess demand of country F increases.
C) excess supply of country H increases.
D) excess supply of country F increases.
E) excess supply of country F decreases.
Answer: D
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy
4) Suppose the United States eliminates its tariff on ball bearings used in producing exports. Ball bearing prices in the United States would be expected to A) increase, and the foreign demand for U.S. exports would increase. B) decrease, and the foreign demand for U.S. exports would increase. C) increase, and the foreign demand for U.S. exports would decrease. D) decrease, and the foreign demand for U.S. exports would decrease. E) decrease, and the foreign demand would be unchanged.

Answer: C
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy

5) A specific tariff provides home producers more protection when A) the home market buys cheaper products rather than expensive products. B) it is applied to a commodity with many grade variations.

C) the home demand for a good is elastic with respect to price changes. D) it is levied on manufactured goods rather than primary products. E) the home supply outnumbers the foreign imports.
Answer: A
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy

6) A lower tariff on imported steel would most likely benefit A) foreign producers at the expense of domestic consumers.
B) domestic manufacturers of steel.
C) domestic consumers of steel.
D) workers in the steel industry.
E) foreign consumers of steel.
Answer: C
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy
7) A problem encountered when implementing an "infant industry" tariff is that A) domestic consumers will purchase the foreign good regardless of the tariff. B) the industry may never "mature."
C) most industries require tariff protection when they are mature. D) the tariff may hurt the industry's domestic sales.
E) the tariffs fail to protect the domestic producers.
Answer: B
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy

8) Which of the following is a fixed percentage of the value of an imported product? A) specific tariff
B) ad valorem tariff
C) nominal tariff
D) effective protection tariff
E) infant industry tariff
Answer: B
Page Ref: 192-198
Difficulty: Easy
Question Status: New
AACSB Codes: Dynamics of the Global Economy

9) A tax of 20 cents per unit of imported garlic is an example of a(n) A) specific tariff.
B) ad valorem tariff.
C) nominal tariff.
D) effective protection tariff.
E) a disadvantageous tariff.
Answer: A
Page Ref: 192-198...
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