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Exam 7: Government Policy and International Trade

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Question 41

True/False

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

A) True
B) False

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Question 42

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Which of the following statements is true about import quotas?

A) Import quotas benefit domestic producers by limiting import competition.
B) Import quotas always lower the prices for domestically produced goods.
C) Higher tariff rates are usually applied to imports within the quota than those over the quota.
D) Import quotas benefit consumers by decreasing the domestic price of an imported good.
E) Import quotas help foreign producers gain a competitive advantage.

F) All of the above
G) A) and E)

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Question 43

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Which of the following identifies an attribute of tariffs?

Define local content requirements. Explain how this helps domestic firms.

Which of the following is the term for when a lower tariff rate is applied to imports within the quota than those over the quota?

What are the political arguments for government intervention into international trade? Give examples.

The threat of antidumping action:

A charge of 15-20% was levied by the government of Cadmia on the value of automobile accessories imported from a neighboring country. This increased the price of those imported car accessories for the consumers in Cadmia. Which of the following instruments of trade policy is being used by the government of Cadmia?

The strategic trade policy arguments of the new trade theorists suggest an economic justification for government intervention in international trade and this justification challenges the rationale for unrestricted free trade.

Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to:

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.

The threat of antidumping action enhances the ability of a firm to use aggressive pricing to gain market share in a country.

By lowering production costs, subsidies help domestic producers to:

Which of the following refers to a quota on trade imposed by the exporting country, typically at the request of the importing country's government?

Governments of developed nations are setting an example by unilaterally lowering their trade barriers.

One of the reasons for the trend toward greater protectionism was that many countries found ways to get around GATT regulations.

According to Alexander Hamilton, governments must temporarily support new industries until they have grown strong enough to meet international competition.

The extra profit that producers make when supply is artificially limited by an import quota is referred to as a:

Paul Krugman asserts that a strategic trade policy is almost certain to be captured by special-interest groups within the economy, who will distort it to their own needs.

The country of Argonia imposes an ad valorem tariff of 10 percent on 1 million tons of rice imports, after which an out-of-quota tariff of 80 percent is applied. Which of the following trade policy instruments is Argonia using?