27) Which of the following is one of the main instruments of trade policy?
A) tariffs
B) credit portfolios
C) opportunity costs
D) countervailing duties
28) 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 fixed charge for each unit of a good imported.
29) Tariffs do not benefit
A) consumers.
B) domestic producers.
C) governments.
D) domestic firms.
30) 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 efficiency of the world economy.
31) Antidumping duties are often called
A) special circumstance duties.
B) positive duties.
C) retroactive duties.
D) countervailing duties.
32) Import tariffs
A) reduce the price of foreign goods.
B) create efficient utilization of resources.
C) reduce the overall efficiency of the world economy.
D) are generally pro–consumer and anti–producer.
33) In the United States, the only firms allowed to import cheese are certain trading companies,
each of which is allocated the right to import a maximum number of pounds of cheese each year.
This is an example of
A) a subsidy.
B) an import quota.
C) a local content requirement.
D) an ad valorem tariff.
34) ________ a requirement that some specific fraction of a good be produced domestically.
A) Administrative trade policies are
B) The Buy American Act is
C) A local content requirement is
D) Bureaucratic rules are
35) A company that sells its product in a foreign market below the cost of production may be
accused of
A) pandering.
B) profiteering.
C) carnivorous behavior.
D) dumping.
36) Governments use ________ to boost exports and restrict imports.
A) subsidies
B) local content requirements
C) administrative trade policies
D) formal instruments of trade policy
37) If a domestic industry lacks the capacity to meet demand, an ________ can raise prices for
both the domestically produced and the imported good.
A) import tariff
B) import quota
C) import subsidy
D) ad valorem tariff
38) By lowering production costs, ________ help domestic producers compete against foreign
imports.
A) subsidies
B) duties
C) quotas
D) tariffs
39) Which of the following observations about subsidies is true?
A) Government subsidies must be paid for, typically by taxing individuals and corporations.
B) Subsidies are used to reduce exports from a sector, often for political reasons.
C) Whether subsidies generate national benefits that exceed their national costs is debatable.
D) Subsidies help foreign producers gain a competitive advantage over domestic producers.
40) Which of the following is a consequence of subsidies?
A) Subsidies make domestic producers vulnerable to foreign competition.
B) Subsidies lead to lowered production.
C) Subsidies protect inefficient domestic producers.
D) Subsidies produce revenue for the government.
41) According to the ________ policy, subsidies can help a firm achieve a first–mover advantage
in an emerging industry.
A) strategic trade
B) antidumping
C) tariff quota
D) free trade
42) An ____ is a direct restriction on the quantity of some good that may be imported into a
country.
A) import tariff
B) import quota
C) import subsidy
D) ad valorem tariff
43) A common hybrid of a quota and a tariff is known as
A) an import tariff quota.
B) a voluntary export restraint.
C) an ad valorem tariff.
D) a tariff rate quota.
44) Who benefits from an import tariff?
A) the government
B) consumers
C) foreign producers
D) everyone
45) ________ is a quota on trade imposed by the exporting country, typically at the request of the
importing country’s government.
A) Voluntary export restraint
B) Specific tariff quota
C) Trade reconciliation
D) Ad valorem tariff
46) The Japanese government was pressured by the U.S. government to place limits on the number
of vehicles exported to the United States by Japanese automobile producers in 1981. This is an
example of
A) tariff rate quota.
B) specific tariffs.
C) voluntary export restraint.
D) ad valorem tariff.