INTERNATIONAL QUESTIONS: Part 1
TRUE/FALSE
1. A tariff is a limitation on the amount of a good that can be imported.
2. A quota ordinarily specifies both minimum and maximum amounts of goods that can come into a
country.
3. An export subsidy helps reduce the selling price of a product by allowing individual producers to
charge less and still cover all of their production costs.
MULTIPLE GUESS
4. Tariffs are different from quotas because they
a. / increase government revenue.b. / increase profits.
c. / increase the quantity traded.
d. / place all the burden on foreigners.
5. The effect of a tariff or a quota is to
a. / raise the price of a commodity in the exporting country above the price in an importing country.b. / raise the price of a commodity in an importing country above the price in the exporting country.
c. / lower the price of the commodity in all countries.
d. / raise the price of the commodity in all countries.
6. If the United States imposed a 25 percent tariff on imports of minivans, the effect would be to
a. / raise the price and reduce the quantity of imports.b. / raise the price and the quantity of imports.
c. / lower the price and the quantity of imports.
d. / raise the quantity and reduce the price of imports.
7. The two primary reasons to adopt measures to restrict trade are that
a. / they help keep real wages high in the importing country, and they also permit small businesses to compete in international markets.b. / they may help the importing country improve its educational system, and they keep high-technology products from being stolen by foreign competitors.
c. / they may help the importing country get better prices for its goods, and they protect certain industries from foreign competition.
d. / they may help advance the political goals of the nation, and they encourage productivity in domestic industries.
8. Is the call for protection on the basis of "infant industry" or “national defense” valid?
a. / No, because protection has no place in industrial development.b. / No, protection is always improper.
c. / Uncertain, economic theory has no answer to this question.
d. / Yes, although it can be overstated and abused.
ANSWERS TO INTERNATIONAL: Part 1
1. F
2. F
3. T
4. A
5. B
6. A
7. C
8. D