56) When a nation starts importing a good or service, domestic employment in that
industry
A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what else the country imports is needed to
determine if employment increases, decreases, or does not change.
E) might change, but more information about what the country exports is needed to
determine if employment increases, decreases, or does not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
57) When a nation starts importing a good or service, the domestic production of the good
or service
A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what the country exports is needed to
determine if production increases, decreases, or does not change.
E) might change, but more information about what else the country imports is needed to
determine if production increases, decreases, or does not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
58) When a nation exports a good or service in which it has a comparative advantage,
employment in that industry
A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what else the country exports is needed to
determine if employment increases, decreases, or does not change.
E) might change, but more information about what the country imports is needed to
determine if employment increases, decreases, or does not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
21
59) When a nation exports a good or service in which it has a comparative advantage,
production of the good or service
A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what the country imports is needed to
determine if production increases, decreases, or does not change.
E) might change, but more information about what else the country exports is needed to
determine if production increases, decreases, or does not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
60) When a nation exports a good or service, employment in that industry
A) decreases.
B) stays the same.
C) increases.
D) might change, but more information about what else the country exports is needed to
determine if employment increases, decreases, or does not change.
E) might change, but more information about what the country imports is needed to
determine if employment increases, decreases, or does not change.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
61) Goods and services that we buy from irms in other countries are called our
A) imports.
B) exports.
C) inputs.
D) raw materials.
E) obligations.
Skill: Level 1: Deinition
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
22
62) If the United States exports planes to Brazil and imports ethanol from Brazil, the price
received by U.S. producers of planes ________ and the price received by Brazilian producers
of ethanol ________.
A) does not change; does not change
B) rises; rises
C) rises; falls
D) falls; rises
E) falls; falls
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
63) When Italy buys Boeing jets, the price Italy pays is ________ if it produced its own jets,
and the price Boeing receives is ________ than it could receive from an additional U.S. buyer.
A) lower than; lower
B) higher than; higher
C) lower than; higher
D) higher than; lower
E) the same as; higher
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
64) A nation will import a good if its no-trade, domestic
A) price is equal to the world price.
B) price is less than the world price.
C) price is greater than the world price.
D) quantity is less than the world quantity.
E) quantity is greater than the world quantity.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
23
65) When a good is imported, the domestic production of it ________ and the domestic
consumption of it ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) increases; does not change
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
66) The United States exports a good if its no-trade U.S. price is ________ its world price.
With international trade, U.S. production of the good ________ compared to the level of no-
trade production.
A) higher than; does not change
B) higher than; increases
C) lower than; increases
D) the same as; increases
E) the same as; does not change
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
67) When a country imports a good, the ________ to consumers is ________ the ________ to
producers.
A) loss; larger than; gain
B) loss; smaller than; gain
C) gain; smaller than; loss
D) gain; equal to; loss
E) gain; larger than; loss
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
24
68) When a country exports a good, the ________ to consumers is ________ the ________ to
producers.
A) loss; larger than; gain
B) loss; smaller than; gain
C) gain; smaller than; loss
D) gain; equal to; loss
E) gain; larger than; loss
Skill: Level 2: Using deinitions
Section: Checkpoint 18.1
Status: Old
AACSB: Analytical thinking
18.2 International Trade Restrictions
1) A tarif is
A) a tax imposed on imports.
B) any non-tax action used to restrict trade.
C) a tax imposed on exports.
D) any non-subsidy used to increase trade.
E) a subsidy granted to imports.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
2) A tarif is a tax
A) on an exported good.
B) on an imported good.
C) imposed on all traded goods.
D) imposed on people’s income.
E) imposed on the diference between the value of the goods a irm imports and the value
of the goods it exports.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
25
3) A tax on a good that is imposed by the importing country is called a
A) tarif.
B) nontarif barrier.
C) quantitative restriction.
D) licensing regulation.
E) trade constraint.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
4) A tarif is
A) the domestic price charged by an exporting irm.
B) a tax on an imported good imposed by the importing country.
C) a licensing regulation that limits imports.
D) price dumping by a irm engaging in international trade.
E) the world price of a good or service.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
5) Since the mid-1970s, the average U.S. tarif rate is
A) less than 5 percent.
B) between 6 percent and 15 percent.
C) between 16 percent and 25 percent.
D) between 26 percent and 35 percent.
E) larger than 36 percent.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
26
6) Looking at the average tarif rate in the United States since 1930, we see that
A) at irst tarifs declined, but have recently risen.
B) tarifs have trended downward for most of the period.
C) tarif levels have remained high, at over 50 percent throughout the period.
D) while we talk about free trade, tarif levels have risen over the last 30 years.
E) tarifs were made illegal in the United States in 1955.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
7) During the past 70 years, the peak average tarif rate in the United States stemmed from
the
A) creation of GATT in the middle of the 1940s.
B) Kennedy Administration in the early 1960s.
C) Uruguay round of GATT in the 1980s.
D) Smoot-Hawley Tarif Act in the early 1930s.
E) Clinton-Bush tarif of 2000-2001.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
8) The agreement between the United States, Mexico, and Canada that sought to lower
trade barriers is known as
A) the General Agreement on Tarifs and Trade.
B) the North American Free Trade Agreement.
C) the World Trade Organization.
D) the Smoot-Hawley Tarif Act.
E) the New World Free Trade Agreement.
Skill: Level 1: Deinition
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
27
9) In the wake of worsening relations with China, some Americans called for an increase in
tarifs on Chinese products coming into America. If higher tarifs are imposed on clothing
produced in China, the price of clothing in America would
A) decrease.
B) increase.
C) not change.
D) irst increase then decrease.
E) irst decrease then increase.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
10) After a tarif is imposed on a good, the price of the good
A) does not change.
B) falls.
C) rises.
D) rises only if the domestic demand for the good does not change.
E) might rise, fall, or not change depending on whether the government did or did not
simultaneously impose a quota.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
11) After a tarif is imposed, consumers must pay a price equal to the
A) world market price.
B) domestic equilibrium price when there is no trade.
C) world market price plus the tarif.
D) world market price less the tarif.
E) domestic equilibrium price when there is no trade plus the tarif.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
28
12) Suppose the world price of widgets is $5 each. If a widget-importing country imposed a
$2 per widget tarif, what price would that country’s consumers pay for widgets?
A) $10
B) $7
C) $5
D) $3
E) A price that is greater than $5 and less than $7
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
13) Which of the following chain of events occurs when a tarif is imposed on a good?
A) Domestic prices rise, shifting the domestic supply curve rightward.
B) Domestic prices fall, shifting the demand curve rightward, and consumers buy more of
the good.
C) Domestic prices fall, decreasing the domestic quantity supplied and increasing the
quantity demanded.
D) Domestic prices rise, decreasing the quantity demanded and increasing the domestic
quantity supplied.
E) Domestic prices rise, shifting the demand curve leftward and the domestic supply curve
rightward.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
14) The imposition of tarifs on Korean steel has led to ________ in imports of Korean steel to
the United States and ________ the price of steel in the United States.
A) no change; raised
B) a decrease; raised
C) an increase; lowered
D) a decrease; no change in
E) an increase; raised
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
29
15) As a result of U.S. tarifs imposed on wool from New Zealand, the quantity of this wool
that is imported has
A) decreased.
B) increased a little.
C) not changed.
D) increased a lot.
E) changed but whether it has increased or decreased is ambiguous.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
16) Imposing a tarif on a good leads to a ________ in the price of the product and ________ in
imports.
A) rise; an increase
B) rise; a decrease
C) fall; an increase
D) fall; a decrease
E) rise; no change
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
17) As a result of U.S. tarifs on ishnets produced in other nations, the quantity of ishnets
purchased in the United States has
A) not been afected.
B) increased.
C) decreased but not to zero.
D) fallen to zero.
E) probably changed but whether it has increased or decreased is ambiguous.
Skill: Level 2: Using deinitions
Section: Checkpoint 18.2
Status: Old
AACSB: Analytical thinking
30