Janna Chap 4

Front 1

The imposition of tariffs on imports results in deadweight welfare losses for the home economy. These losses consist of the:

Back 1

Protective effect plus consumption effect

Front 2

A lower tariff on imported aluminum would most likely benefit:

Back 2

Domestic consumers of aluminum

Front 3

When a government allows raw materials and other intermediate products to enter a country duty free, its tariff policy generally results in a:

Back 3

Nominal tariff rate less than the effective tariff rate

Front 4

Of the many arguments in favor of tariffs, the one that has enjoyed the most significant economic justification has been the:

Back 4

Infant industry argument

Front 5

The redistribution effect of an import tariff is the transfer of income from the domestic:

Back 5

Buyers to domestic producers of the good

Front 6

Which of the following is true concerning a specific tariff?

Back 6

It affords less protection to home producers during eras of rising prices.

Front 7

The principal benefit of tariff protection goes to:

Back 7

Domestic producers of the good produced

Front 8

When the production of a commodity does not utilize imported inputs, the effective tariff rate on the commodity:

Back 8

Equals the nominal tariff rate on the commodity

Front 9

Developing nations often maintain that industrial countries permit raw materials to be imported at very low tariff rates while maintaining high tariff rates on manufactured imports. Which of the following refers to the above statement?

Back 9

Tariff escalation effect

Front 10

Should the home country be "large" relative to the world, its imposition of a tariff on imports would lead to an increase in domestic welfare if the terms-of-trade effect exceeds the sum of the:

Back 10

Protective effect plus consumption effect

Front 11

Should Canada impose a tariff on imports, one would expect Canada's:

Back 11

Terms of trade to improve and volume of trade to decrease

Front 12

A problem encountered when implementing an "infant industry" tariff is that:

Back 12

Political pressure may prevent the tariff's removal when the industry matures

Front 13

The deadweight loss of a tariff:

Back 13

Is a social loss since it promotes inefficient production

Front 14

A tax of 20 cents per unit of imported cheese would be an example of:

Back 14

Specific tariff

Front 15

A tax of 15 percent per imported item would be an example of:

Back 15

Ad valorem tariff

Front 16

The most vocal political pressure for tariffs is generally made by:

Back 16

Producers lobbying for import tariffs

Front 17

If we consider the interests of both consumers and producers, then a policy of tariff reduction in the U.S. auto industry is:

Back 17

In the interest of the United States as a whole, but not in the interest of auto-producing states

Front 18

Free traders point out that:

Back 18

There is usually an efficiency loss from having tariffs

Front 19

A decrease in the import tariff will result in:

Back 19

An increase in imports but a decrease in domestic production

Front 20

Consider Figure 4.1. In the absence of trade, Mexico produces and consumes:

Back 20

60 calculators

Front 21

Consider Figure 4.1. In the absence of trade, Mexico's producer surplus and consumer surplus respectively equal:

Back 21

$180, $180

Front 22

Consider Figure 4.1. With free trade, Mexico imports:

Back 22

100 calculators

Front 23

Consider Figure 4.1. With free trade, Mexico's producer surplus and consumer surplus respectively equal:

Back 23

$5, $605

Front 24

Consider Figure 4.1. With a per-unit tariff of $3, the quantity of imports decreases to:

Back 24

40 calculators

Front 25

According to Figure 4.1, the tariff results in the Mexican government collecting:

Back 25

$120

Front 26

According to Figure 4.1, the deadweight cost of the tariff totals:

Back 26

$90

Front 27

Consider Figure 4.1. The tariff would be prohibitive (i.e., eliminate imports) if it equaled:

Back 27

$5

Front 28

Consider Figure 4.2. With free trade, the United States achieves market equilibrium at a price of $____. At this price, ____ tons of steel are produced by U.S. firms, ____ tons are bought by U.S. buyers, and ____ tons are imported.

Back 28

$475, 10 tons, 50 tons, 40 tons

Front 29

Consider Figure 4.2. Suppose the United States imposes a tariff of $100 on each ton of steel imported. With the tariff, the price of steel rises to $____ and imports fall to ____ tons.

Back 29

$550, 20 tons

Front 30

Consider Figure 4.2. Of the $100 tariff, $____ is passed on to the U.S. consumer via a higher price, while $____ is borne by the foreign exporter; the U.S. terms of trade:

Back 30

$75, $25, improve

Front 31

Referring to Figure 4.2, the tariff's deadweight welfare loss to the United States totals:

Back 31

$750

Front 32

According to Figure 4.2, the tariff's terms-of-trade effect equals:

Back 32

$500

Front 33

According to Figure 4.2, the tariff leads to the overall welfare of the United States:

Back 33

Falling by $250

Front 34

Suppose that the production of $500,000 worth of steel in the United States requires $100,000 worth of iron ore. The U.S. nominal tariff rates for importing these goods are 15 percent for steel and 5 percent for iron ore. Given this information, the effective rate of protection for the U.S. steel industry is approximately:

Back 34

18 percent

Front 35

Suppose that the production of a $30,000 automobile in Canada requires $10,000 worth of steel. The Canadian nominal tariff rates for importing these goods are 25 percent for automobiles and 10 percent for steel. Given this information, the effective rate of protection for the Canadian automobile industry is approximately:

Back 35

32 percent

Front 36

A compound tariff is a combination of a (an):

Back 36

Specific tariff and an ad valorem tariff

Front 37

When a tariff on imported inputs exceeds that on the finished good

Back 37

The nominal tariff rate on the finished product would tend to overstate its protective effect

Front 38

The offshore assembly provision in the U.S.

Back 38

Provides favorable treatment to products assembled abroad from U.S. manufactured components

Front 39

Arguments for U.S. trade restrictions include all of the following except

Back 39

Improving incomes for developing countries

Front 40

For the United States, a foreign trade zone (FTZ) is

Back 40

A site within the United States

Front 41

To protect domestic producers from foreign competition, the U.S. government levies both import tariffs and export tariffs.

Back 41

False

Front 42

With a compound tariff, a domestic importer of an automobile might be required to pay a duty of $200 plus 4 percent of the value of the automobile.

Back 42

True

Front 43

With a specific tariff, the degree of protection afforded domestic producers varies directly with changes in import prices.

Back 43

False

Front 44

During a business recession, when cheaper products are purchased, a specific tariff provides domestic producers a greater amount of protection against import-competing goods.

Back 44

False

Front 45

A ad valorem tariff provides domestic producers a declining degree of protection against import-competing goods during periods of changing prices.

Back 45

False

Front 46

The nominal tariff rate signifies the total increase in domestic productive activities compared to what would occur under free-trade conditions.

Back 46

False

Front 47

According to the tariff escalation effect, industrial countries apply low tariffs to imports of finished goods and high tariffs to imports of raw materials.

Back 47

False

Front 48

Bonded warehouses and foreign trade zones have the effect of allowing domestic importers to postpone and prorate over time their import duty obligations.

Back 48

True

Front 49

A nation whose imports constitute a very small portion of the world market supply is a price taker, facing a constant world price for its import commodity.

Back 49

True

Front 50

For a "small" country, a tariff raises the domestic price of an imported product by the full amount of the duty.

Back 50

True

Front 51

Although an import tariff provides the domestic government additional tax revenue, it benefits domestic consumers at the expense of domestic producers.

Back 51

False

Front 52

An import tariff reduces the welfare of a "small" country by an amount equal to the redistribution effect plus the revenue effect.

Back 52

False

Front 53

The deadweight losses of an import tariff consist of the protection effect plus the consumption effect.

Back 53

True