,International Economics, 17e (Pugel)
Chapter 1 International Economics Is Different
1) In 2018, why did the United States impose temporary safeguard tariffs beginning at 30 percent
on imports of solar panels and up to 50 percent on imports of washing machines?
A) The United States wanted to ensure that it remained a net exporter of washing machines and
solar panels.
B) The U.S. International Trade Commission found that rising imports had harmed U.S. firms in
these industries.
C) Because of growing U.S. demand for washing machines and solar panels, the United States
government saw the opportunity to increase government revenue and imposed tariffs on these
products.
D) The United States government imposed tariffs on washing machines and solar panels in
retaliation for other countries' tariffs on U.S. exports of durable goods.
Answer: B
Difficulty: 1 Easy
Topic: Four Controversies
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) What was the rationale the United States used to justify imposing tariffs of 25 percent on
imports of steel and 10 percent on imports of aluminum in 2018?
A) The tariffs on steel and aluminum were in retaliation for China and Mexico imposing tariffs
on U.S. exports of pork and other products to those countries.
B) The United States government wanted to protect the steel and aluminum industries until firms
in those industries achieved lower production costs associated with scale economies.
C) The U.S. Department of Commerce found that imports of steel and aluminum threatened
United States national security.
D) The United States government determined that China, a major exporter of steel and aluminum
to the United States, was able to charge a lower price in the U.S. market because of government
subsidies provided to Chinese steel and aluminum producers.
Answer: C
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,3) In July 2018 President Trump acted on recommendations from the Commerce Department and
imposed 25 percent tariffs on 818 Chinese products exported to the United States in retaliation
for the Chinese government's
A) support of North Korea's nuclear weapons program.
B) nationalization of U.S. firms located in China.
C) direct foreign investment in the United States.
D) unfair policies and practices toward U.S. intellectual property such as patents, copyrights, and
trade secrets.
Answer: D
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
4) What is an effect of a tariff on steel imports to the United States?
A) Foreign consumers benefit from the effective world-wide increase in the price of steel.
B) U.S. consumers benefit from the increased production of better-quality steel in the United
States.
C) U.S. steel producers benefit as the product's price rises and domestic production increases.
D) U.S. steel workers lose because the increase in the price of steel results in decreased
production and unemployment in the steel industry.
Answer: C
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
5) If a country is concerned about protecting a particular industry for national security reasons,
which of the following policies is most effective from an economic standpoint?
A) Voluntary export restraints on countries exporting goods to the United States
B) Targeted government subsidies
C) Protectionist tariffs
D) Import licensing
Answer: B
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 6) Which of the following is NOT a key economic feature of the European Union (EU)?
A) A customs union, which imposes common tariffs on imports from non-EU
B) A common currency, the euro, used by all member countries
C) A single market that promotes free movements of goods, services, financial capital, and
people among EU member countries
D) London's dominance as Europe's financial center
Answer: B
Difficulty: 1 Easy
Topic: Four Controversies
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
7) Given the following policy options, how could China's government be most likely to
encourage higher growth of China's exports to other countries?
A) Buy its own currency, the yuan, and sell foreign currency in the foreign exchange markets
B) Sell its own currency, the yuan, and buy foreign currency in the foreign exchange markets
C) Allow its own currency, the yuan, to appreciate against foreign currencies by not intervening
in foreign exchange markets
D) Use its policy toward the exchange rate to prevent any devaluation of the yuan
Answer: B
Difficulty: 3 Hard
Topic: Four Controversies
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
8) Which of the following was NOT an argument in favor of the United Kingdom (UK) leaving
the European Union (EU)?
A) Proponents of leaving stressed that the UK needed to reestablish British sovereignty.
B) Proponents of leaving wanted greater control over immigration.
C) Proponents of leaving wanted greater access to markets in the other EU member countries.
D) Proponents of leaving believed the UK paid a disproportionate share of membership fees.
Answer: C
Difficulty: 1 Easy
Topic: Four Controversies
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1 International Economics Is Different
1) In 2018, why did the United States impose temporary safeguard tariffs beginning at 30 percent
on imports of solar panels and up to 50 percent on imports of washing machines?
A) The United States wanted to ensure that it remained a net exporter of washing machines and
solar panels.
B) The U.S. International Trade Commission found that rising imports had harmed U.S. firms in
these industries.
C) Because of growing U.S. demand for washing machines and solar panels, the United States
government saw the opportunity to increase government revenue and imposed tariffs on these
products.
D) The United States government imposed tariffs on washing machines and solar panels in
retaliation for other countries' tariffs on U.S. exports of durable goods.
Answer: B
Difficulty: 1 Easy
Topic: Four Controversies
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) What was the rationale the United States used to justify imposing tariffs of 25 percent on
imports of steel and 10 percent on imports of aluminum in 2018?
A) The tariffs on steel and aluminum were in retaliation for China and Mexico imposing tariffs
on U.S. exports of pork and other products to those countries.
B) The United States government wanted to protect the steel and aluminum industries until firms
in those industries achieved lower production costs associated with scale economies.
C) The U.S. Department of Commerce found that imports of steel and aluminum threatened
United States national security.
D) The United States government determined that China, a major exporter of steel and aluminum
to the United States, was able to charge a lower price in the U.S. market because of government
subsidies provided to Chinese steel and aluminum producers.
Answer: C
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,3) In July 2018 President Trump acted on recommendations from the Commerce Department and
imposed 25 percent tariffs on 818 Chinese products exported to the United States in retaliation
for the Chinese government's
A) support of North Korea's nuclear weapons program.
B) nationalization of U.S. firms located in China.
C) direct foreign investment in the United States.
D) unfair policies and practices toward U.S. intellectual property such as patents, copyrights, and
trade secrets.
Answer: D
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
4) What is an effect of a tariff on steel imports to the United States?
A) Foreign consumers benefit from the effective world-wide increase in the price of steel.
B) U.S. consumers benefit from the increased production of better-quality steel in the United
States.
C) U.S. steel producers benefit as the product's price rises and domestic production increases.
D) U.S. steel workers lose because the increase in the price of steel results in decreased
production and unemployment in the steel industry.
Answer: C
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
5) If a country is concerned about protecting a particular industry for national security reasons,
which of the following policies is most effective from an economic standpoint?
A) Voluntary export restraints on countries exporting goods to the United States
B) Targeted government subsidies
C) Protectionist tariffs
D) Import licensing
Answer: B
Difficulty: 2 Medium
Topic: Four Controversies
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 6) Which of the following is NOT a key economic feature of the European Union (EU)?
A) A customs union, which imposes common tariffs on imports from non-EU
B) A common currency, the euro, used by all member countries
C) A single market that promotes free movements of goods, services, financial capital, and
people among EU member countries
D) London's dominance as Europe's financial center
Answer: B
Difficulty: 1 Easy
Topic: Four Controversies
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
7) Given the following policy options, how could China's government be most likely to
encourage higher growth of China's exports to other countries?
A) Buy its own currency, the yuan, and sell foreign currency in the foreign exchange markets
B) Sell its own currency, the yuan, and buy foreign currency in the foreign exchange markets
C) Allow its own currency, the yuan, to appreciate against foreign currencies by not intervening
in foreign exchange markets
D) Use its policy toward the exchange rate to prevent any devaluation of the yuan
Answer: B
Difficulty: 3 Hard
Topic: Four Controversies
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
8) Which of the following was NOT an argument in favor of the United Kingdom (UK) leaving
the European Union (EU)?
A) Proponents of leaving stressed that the UK needed to reestablish British sovereignty.
B) Proponents of leaving wanted greater control over immigration.
C) Proponents of leaving wanted greater access to markets in the other EU member countries.
D) Proponents of leaving believed the UK paid a disproportionate share of membership fees.
Answer: C
Difficulty: 1 Easy
Topic: Four Controversies
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
