ECO 336 Final Exam Questions with Correct Answers Latest Update 2025
Sixty years after the signing of GATT and following eight completed round of trade negotiations,
A.
trade barrier have actually increased.
B.
there has been no real change in trade barrier.
C.
trade barriers are no longer an issue.
D.
trade barriers have been successfully reduced. - Answers D
Which of the following is NOT a reason people tolerate tariffs and quotas?
A.
Ignorance
B.
Their personal jobs depend on tariffs and quotas.
C.
Costs may be hidden and hard to quantify.
D.
Costs of the policy are spread over a large number of people.
E.
The marginal expenses to fight the protection outweigh the personal marginal costs of the protection. -
Answers B
Historically, one of the most common reasons for countries to impose tariffs was
A.
to counter inflation.
B.
,to raise revenue for the government.
C.
to eliminate unemployment.
D.
to protect their national security. - Answers B
"Cheap foreign wages" is a poor argument for protection because it fails to recognize the importance of
productivity. Which of the following does NOT contribute to increasing productivity?
A.
Capital
B.
Infrastructure
C.
Education and training
D.
Government subsidies - Answers D
If a country faces action under Section 301 of the U.S. Trade Act of 1974, it means that the country has
A.
tariffs that are above the legal limit.
B.
been charged by the WTO with violating its trade obligations.
C.
exceeded average import growth by more than 50 percent.
D.
been charged by the United States with systematically engaging in unfair trade practices. - Answers D
When comparing the U.S. and Mexican car assembly industries, the disadvantage of higher U.S. wages is
offset by
,A.
trade adjustment assistance in the United States.
B.
Mexican trade barriers.
C.
a lower opportunity cost in Mexico.
D.
higher productivity in the United States. - Answers D
A major difficulty with the infant industry argument for protection is that
A.
it requires the nation to fall into the large country case for tariff protection.
B.
government revenue will fall with a tariff.
C.
the measurement of production externalities is hard and uncertain.
D.
effective rates of protection are usually greater than nominal rates. - Answers C
One reason why producers have an incentive to organize in favor of protection is because
A.
producer gains are spread across so many firms that no one gets a large share of the benefits.
B.
producer gains outweigh consumer losses.
C.
producer gains are relatively concentrated.
D.
, there is no real cost to the economy. - Answers C
Developed countries have lost comparative advantage in
A.
capital-intensive industries.
B.
labor-intensive industries.
C.
high-tech industries.
D.
agricultural industries. - Answers B
The pattern of protection in industrial countries is particularly harmful to the interests of
A.
European nations.
B.
high-income industrial countries.
C.
Asian nations.
D.
low-income developing countries. - Answers D
Dumping occurs when a firm
A.
sells in a foreign country at prices that are below fair value.
B.
sells in a foreign market at prices that are below the prices charged by firms based in the foreign market.
C.
Sixty years after the signing of GATT and following eight completed round of trade negotiations,
A.
trade barrier have actually increased.
B.
there has been no real change in trade barrier.
C.
trade barriers are no longer an issue.
D.
trade barriers have been successfully reduced. - Answers D
Which of the following is NOT a reason people tolerate tariffs and quotas?
A.
Ignorance
B.
Their personal jobs depend on tariffs and quotas.
C.
Costs may be hidden and hard to quantify.
D.
Costs of the policy are spread over a large number of people.
E.
The marginal expenses to fight the protection outweigh the personal marginal costs of the protection. -
Answers B
Historically, one of the most common reasons for countries to impose tariffs was
A.
to counter inflation.
B.
,to raise revenue for the government.
C.
to eliminate unemployment.
D.
to protect their national security. - Answers B
"Cheap foreign wages" is a poor argument for protection because it fails to recognize the importance of
productivity. Which of the following does NOT contribute to increasing productivity?
A.
Capital
B.
Infrastructure
C.
Education and training
D.
Government subsidies - Answers D
If a country faces action under Section 301 of the U.S. Trade Act of 1974, it means that the country has
A.
tariffs that are above the legal limit.
B.
been charged by the WTO with violating its trade obligations.
C.
exceeded average import growth by more than 50 percent.
D.
been charged by the United States with systematically engaging in unfair trade practices. - Answers D
When comparing the U.S. and Mexican car assembly industries, the disadvantage of higher U.S. wages is
offset by
,A.
trade adjustment assistance in the United States.
B.
Mexican trade barriers.
C.
a lower opportunity cost in Mexico.
D.
higher productivity in the United States. - Answers D
A major difficulty with the infant industry argument for protection is that
A.
it requires the nation to fall into the large country case for tariff protection.
B.
government revenue will fall with a tariff.
C.
the measurement of production externalities is hard and uncertain.
D.
effective rates of protection are usually greater than nominal rates. - Answers C
One reason why producers have an incentive to organize in favor of protection is because
A.
producer gains are spread across so many firms that no one gets a large share of the benefits.
B.
producer gains outweigh consumer losses.
C.
producer gains are relatively concentrated.
D.
, there is no real cost to the economy. - Answers C
Developed countries have lost comparative advantage in
A.
capital-intensive industries.
B.
labor-intensive industries.
C.
high-tech industries.
D.
agricultural industries. - Answers B
The pattern of protection in industrial countries is particularly harmful to the interests of
A.
European nations.
B.
high-income industrial countries.
C.
Asian nations.
D.
low-income developing countries. - Answers D
Dumping occurs when a firm
A.
sells in a foreign country at prices that are below fair value.
B.
sells in a foreign market at prices that are below the prices charged by firms based in the foreign market.
C.
