BUSHMR 2000 Exam 2
Foreign producers agree to ________ imposed by an exporting country because they
fear more damaging punitive tariffs or import quotas might follow if they do not.
voluntary export restraints
tariff rate quotas
quota rents
export bans
Dumping - ✔️✔️voluntary export restraints
High tariff barriers and subsidies in the agricultural industry ultimately lead to
the lack of overproduction of products.
an increased volume of agricultural trade.
increased prices for consumers.
stronger competition from foreign suppliers.
lower overall prices for the end-user. - ✔️✔️increased prices for consumers.
In order to encourage the agricultural industry, the French government provided low-
interest loans for the purchase of seeds and fertilizers. The government also gave cash
grants and made tax reductions. Which instrument of trade policy is being used by the
French government?
tariffs
voluntary export restraints
subsidies
local content requirements
import quotas - ✔️✔️subsidies
A(n) ________ refers to the extra profit that producers make when supply is artificially
limited by an import quota.
profit margin
net profit
import profit
trade surplus
quota rent - ✔️✔️quota rent
Italy has a direct restriction on the amount of metal products that may be imported into
the country. Which instrument of trade policy does this reflect?
,voluntary import restraint
tariff rate quota
export ban
import quota
quota rent - ✔️✔️import quota
How did the Smoot-Hawley Act affect employment?
It created more jobs domestically and abroad.
It decreased the overall wage rate.
It boosted job rates around the world.
It did not have any effect on employment.
It had a damaging effect on employment abroad. - ✔️✔️It had a damaging effect on
employment abroad.
________ 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.
Circular trade
Subsidy
Barter
Countertrade
Dumping - ✔️✔️Dumping
A tax of 32 cents is levied for each pair of eyeglasses imported into a nation. This is an
example of a(n)
quota rent.
specific tariff.
ad valorem tariff.
import quota.
local content requirement. - ✔️✔️specific tariff.
A tariff rate quota provides a lower tariff rate to
all imports in a specific industry.
imports within the quota.
only domestic producers.
agricultural products.
imports that are over the quota. - ✔️✔️imports within the quota.
A foreign government was not enforcing its intellectual property rights, which resulted in
massive copyright infringements. In turn, this was costing U.S. companies millions of
dollars in lost sales revenues. To force the country to play by the rules, the United
, States threatened to impose trade sanctions on a range of imports from the country's
businesses. The underlying motive for intervention by the U.S government was
to protect national security.
to further support foreign policy objectives.
retaliation.
to increase the trade surplus of the United States.
to protect human rights. - ✔️✔️retaliation
An implication of trade barriers for business practice is that they
reduce the cost of importing products to a country.
put a foreign firm at a competitive advantage to indigenous competitors in that country.
allow for efficient allocation of production functions.
limit a firm's ability to serve a country from locations outside of that country.
encourage governments to engage in foreign direct investment. - ✔️✔️limit a firm's
ability to serve a country from locations outside of that country.
One focus of strategic trade policy is to help domestic companies gain
more competition to lower prices.
less competition to raise prices.
monopoly status.
a first-mover advantage.
exclusive intellectual property rights. - ✔️✔️a first-mover advantage.
Paul Krugman characterizes strategic trade policy as being
similar to the infant industry argument.
a boost to national income at the expense of other countries.
the closest that countries can get to free trade.
a way to reduce the possibility of retaliatory actions by other governments.
a way to reduce administrative barriers to trade. - ✔️✔️a boost to national income at
the expense of other countries.
Subsidies and quotas are examples of ________ barriers a county might impose.
antidumping
tariff
Nontariff
content requirements
export restraint - ✔️✔️Nontariff
Foreign producers agree to ________ imposed by an exporting country because they
fear more damaging punitive tariffs or import quotas might follow if they do not.
voluntary export restraints
tariff rate quotas
quota rents
export bans
Dumping - ✔️✔️voluntary export restraints
High tariff barriers and subsidies in the agricultural industry ultimately lead to
the lack of overproduction of products.
an increased volume of agricultural trade.
increased prices for consumers.
stronger competition from foreign suppliers.
lower overall prices for the end-user. - ✔️✔️increased prices for consumers.
In order to encourage the agricultural industry, the French government provided low-
interest loans for the purchase of seeds and fertilizers. The government also gave cash
grants and made tax reductions. Which instrument of trade policy is being used by the
French government?
tariffs
voluntary export restraints
subsidies
local content requirements
import quotas - ✔️✔️subsidies
A(n) ________ refers to the extra profit that producers make when supply is artificially
limited by an import quota.
profit margin
net profit
import profit
trade surplus
quota rent - ✔️✔️quota rent
Italy has a direct restriction on the amount of metal products that may be imported into
the country. Which instrument of trade policy does this reflect?
,voluntary import restraint
tariff rate quota
export ban
import quota
quota rent - ✔️✔️import quota
How did the Smoot-Hawley Act affect employment?
It created more jobs domestically and abroad.
It decreased the overall wage rate.
It boosted job rates around the world.
It did not have any effect on employment.
It had a damaging effect on employment abroad. - ✔️✔️It had a damaging effect on
employment abroad.
________ 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.
Circular trade
Subsidy
Barter
Countertrade
Dumping - ✔️✔️Dumping
A tax of 32 cents is levied for each pair of eyeglasses imported into a nation. This is an
example of a(n)
quota rent.
specific tariff.
ad valorem tariff.
import quota.
local content requirement. - ✔️✔️specific tariff.
A tariff rate quota provides a lower tariff rate to
all imports in a specific industry.
imports within the quota.
only domestic producers.
agricultural products.
imports that are over the quota. - ✔️✔️imports within the quota.
A foreign government was not enforcing its intellectual property rights, which resulted in
massive copyright infringements. In turn, this was costing U.S. companies millions of
dollars in lost sales revenues. To force the country to play by the rules, the United
, States threatened to impose trade sanctions on a range of imports from the country's
businesses. The underlying motive for intervention by the U.S government was
to protect national security.
to further support foreign policy objectives.
retaliation.
to increase the trade surplus of the United States.
to protect human rights. - ✔️✔️retaliation
An implication of trade barriers for business practice is that they
reduce the cost of importing products to a country.
put a foreign firm at a competitive advantage to indigenous competitors in that country.
allow for efficient allocation of production functions.
limit a firm's ability to serve a country from locations outside of that country.
encourage governments to engage in foreign direct investment. - ✔️✔️limit a firm's
ability to serve a country from locations outside of that country.
One focus of strategic trade policy is to help domestic companies gain
more competition to lower prices.
less competition to raise prices.
monopoly status.
a first-mover advantage.
exclusive intellectual property rights. - ✔️✔️a first-mover advantage.
Paul Krugman characterizes strategic trade policy as being
similar to the infant industry argument.
a boost to national income at the expense of other countries.
the closest that countries can get to free trade.
a way to reduce the possibility of retaliatory actions by other governments.
a way to reduce administrative barriers to trade. - ✔️✔️a boost to national income at
the expense of other countries.
Subsidies and quotas are examples of ________ barriers a county might impose.
antidumping
tariff
Nontariff
content requirements
export restraint - ✔️✔️Nontariff
