Tariffs are generally pro-consumer and anti-producer.
T
F
Tariffs are generally pro-producer and anti-consumer. While they protect producers from
foreign competitors, this restriction of supply also raises domestic prices.
Mercantilist doctrine advocates unrestricted free trade between countries.
A country has an absolute advantage in the production of a product when it1/1 is more efficient than any other country in producing it.
Export tariffs are far less common than import tariffs.
Under a tariff rate quota, a higher tariff rate is applied to imports within the quota than those over the quota.
Factor endowments refer to the extent to which a country is gifted with such resources as land, labor, and capital.
Unlike other trade policies, local content regulations tend to benefit consumers and not producers.
XYZ Toys manufactures and sells small quantities of each of its products, but it can still benefit from economies of scale.
The simple model of free trade assumed away transportation costs between countries.
Antidumping policies are designed to punish foreign firms that are engaged in dumping.
According to Paul Samuelson's critique, a poor country will rapidly improve its productivity if a rich country enters into a free trade agreement with it.
Apple's iPhone was unique when it first came out, with many features that no other phones had. As such, it enjoyed great success and dominated the cell phone market. This demonstrates the first-mover advantage.
True
False
Protecting industries deemed important for national security and retaliating against unfair foreign competition are economic arguments for government intervention.
GATT has not recognized the infant industry argument as a legitimate reason for protectionism.
Trade wars benefit countries with interventionist governments.
________ are levied as a proportion of the value of the imported good.
A) Specic tariffs
B) Import quotas
C) Ad valorem tariffs
D) Tariff rate quotas
C
A ________ helps domestic producers to compete against foreign imports.
A) An ad valorem tariff
B) A specic tariff
C) An import quota
D) A subsidy
D
Which of the following is a major benefit of engaging in free trade?
A) It helps to reduce the nancial volatility in global markets.
B) It helps countries protect the jobs that are available to their citizens.
C) It gives countries access to products that they cannot produce.
D) It allows governments to exert more control on businesses.
Which of the following theories emphasizes the interplay between the proportions in which the factors of production are available in different countries and the proportions in which they are needed for producing particular goods?
A) Porter's theory
B) Smith's theory
C) Ricardo's theory
D) Heckscher-Ohlin theory
The ________ specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.
A) General Agreement on Tariffs and Trade
B) Buy America Act
C) American Reinvestment Act
D) Smoot-Hawley Act
B
Which of the following is one of the main instruments of trade policy?
A) tariffs
B) credit portfolios
C) opportunity costs
D) countervailing duties
A
Specific tariffs are
A) levied as a proportion of the value of the imported good.
B) government payment to domestic producers.
C) in the form of manufacturing or production requirements of goods.
D) levied as a xed charge for each unit of a good imported.
Tariffs do not benefit
A) consumers.
B) domestic producers.
C) governments.
D) domestic rms
________ stresses that in some cases countries specialize in the production and export of particular products because the world market can support only a limited number of firms.
A) New trade theory
B) Absolute advantage
C) The world market theory
D) Mercantilism
The principle of mercantilism views trade as a(n) ________ game.
A) advantage
B) positive-sum
C) zero-sum
D) negative-sum
The ________ argues that a large proportion of the world's new products had been developed by U.S. firms.
A) product life-cycle theory
B) Porter's diamond
C) new trade theory
D) Leontief paradox
Which of the following observations about tariffs is true?
A) Tariffs are generally anti-producer and pro-consumer.
B) Export tariffs are used to raise revenue for the government.
C) Export tariffs are far more common than import tariffs.
D) Import tariffs increase the overall eciency of the world economy.
Option 5
________ are unit cost reductions associated with a large scale of output.
A) Current account decits
B) Economies of scale
C) Current account surpluses
D) Factor endowments
Which of the following is the main principle of mercantilism?
A) Protection of domestic industries is not essential for a nation's welfare.
B) Government intervention is not required in global trade.
C) Countries should encourage absolute free trade.
D) It is in a country's best interests to maintain a trade surplus.
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