BUSINESS 3001 Chapter 06 The Political Economy of International Trade,100% CORRECT
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BUSINESS 3001
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BUSINESS 3001
BUSINESS 3001 Chapter 06 The Political Economy of International Trade
True / False Questions
1. Subsidies are a trade policy instrument. True False
2. Tariffs are the most complex instrument of trade policy. True False
3. Tariffs are the instrument that the GATT and WTO have b...
business 3001 chapter 06 the political economy of international trade
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Chapter 06 - The Political Economy of International Trade
BUSINESS 3001 Chapter 06 The Political Economy of
International Trade
True / False Questions
1. Subsidies are a trade policy instrument.
True False
2. Tariffs are the most complex instrument of trade policy.
True False
3. Tariffs are the instrument that the GATT and WTO have been most successful in limiting.
True False
4. In recent decades, a fall in subsidies, quotas, and voluntary export restraints has been
accompanied by a corresponding fall in nontariff barriers.
True False
5. Nontariff barriers include subsidies, quotas, voluntary export restraints, and antidumping
duties.
True False
6. Specific tariffs are levied as a proportion of the value of the imported good.
True False
7. Ad valorem tariffs reduce the cost of imported products relative to domestic products.
True False
6-1
,Chapter 06 - The Political Economy of International Trade
8. Tariffs are largely pro-producer and anti-consumer.
True False
9. Tariffs increase the overall efficiency of the world economy because a protective tariff
encourages domestic firms to produce products more efficiently at home that, in theory, could
be produced abroad.
True False
10. Export tariffs are far less common than import tariffs.
True False
11. The main gains from subsidies accrue to importers, whose international competitiveness is
increased as a result of these subsidies.
True False
12. Japan has a long history of supporting inefficient domestic producers with farm subsidies.
True False
13. A direct restriction on the quantity of some good that may be imported into a country is a
quota rent.
True False
14. Quotas benefit consumers the most.
True False
6-2
,Chapter 06 - The Political Economy of International Trade
15. The Buy America Act specifies that government agencies must give preference to
American products when putting contracts for equipment out for bid unless the foreign
products have a significant advantage.
True False
16. Administrative trade policies are bureaucratic rules that are designed to make it easy for
imports to enter a country.
True False
17. Dumping 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.
True False
18. Antidumping policies are designed to punish foreign firms that engage in dumping
industrial waste into the environment.
True False
19. The fair market value of a good is normally judged to be lesser than the costs of producing
that good.
True False
20. Countries sometimes argue that it is necessary to protect certain industries because they
are important for national security.
True False
21. Protecting consumers from "dangerous" products and furthering the goals of foreign
policy are types of economic arguments for intervention.
True False
6-3
, Chapter 06 - The Political Economy of International Trade
22. The relationship between pollution and income levels follows a linear pattern.
True False
23. The infant industry argument is the oldest economic argument for government
intervention.
True False
24. Until the early 1980s, most economists saw little benefit in government intervention and
strongly advocated a free trade policy.
True False
25. Brazil's auto industry, once the world's tenth-largest and built behind tariff barriers and
quotas, has been proven as one of the world's most inefficient.
True False
26. Protection of manufacturing from foreign competition does no good unless the protection
helps make the industry efficient.
True False
27. The roots of strategic trade policy arguments can be traced back to the late 18th century
and the works of Adam Smith and David Ricardo.
True False
28. Several economists, including Paul Krugman, point out that although free trade policy
looks appealing in theory, in practice it may be unworkable.
True False
6-4
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