37. Which of the following is one of the seven main instruments utilized in trade policy?
A. Local content requirements
B. Licensing
C. Foreign direct
... [Show More] investment
D. Employment guarantees
38. While _____ tariffs are levied as a fixed charge for each unit of a good imported,
_____ tariffs are levied as a proportion of the value of the imported good.
A. ground; ceiling
B. ad hoc; nonconvertible
C. posited; floating
D. specific; ad valorem
39. Tariffs cause damage to _____ because this group must pay more for certain
imports.
A. investors
B. governments
C. consumers
D. producers
40. According to experts, which of the following groups most benefits from the
imposition of tariffs?
A. Government and producers
B. Consumers and trade associations
C. Exporters and importers
D. Producers and foreign competitors
41. A protective tariff encourages domestic firms to produce products at home that, in
theory, could be produced more efficiently abroad. This results in:
A. an establishment of a comparative advantage over firms from other countries.
B. improved productivity of the labor workforce in that country.
C. higher mobility of resources within the country.
D. an inefficient utilization of resources.
42. The U.S. government imposed an eight to thirty percent tariff on steel imports into
the United States in March 2002. This belongs to which of the following categories?
A. General
B. Ad valorem
C. Specific
D. Ad hoc
6-1
Chapter 06 - The Political Economy of International Trade
43. Tariffs:
A. reduce the price of foreign goods.
B. reduce the overall efficiency of the world economy.
C. help in efficient utilization of resources.
D. are unambiguously pro-consumer and anti-producer.
44. One of the objectives of export tariffs is to:
A. improve the efficiency of utilization of resources.
B. curb the competition offered by foreign firms to domestic firms.
C. reduce exports from a sector, often for political reasons.
D. maintain a positive trade deficit.
45. Which of the following is a government payment to a domestic producer?
A. Duty
B. Subsidy
C. Quota
D. Tariff
46. _____ take many forms including cash grants, low-interest loans, tax breaks, and
government equity participation in domestic firms.
A. Ad valorem tariffs
B. Subsidies
C. Quota rents
D. Specific tariffs
47. By lowering production costs, subsidies help domestic producers in:
A. gaining export markets.
B. curtailing exports to other countries.
C. meeting voluntary export restraints.
D. regulating the quality of services they offer.
48. _____ tend(s) to be one of the largest beneficiaries of subsidies in most countries.
A. Banks
B. Commercial airlines
C. Agriculture
D. Defense
49. By lowering production costs, _____ help domestic producers compete against
foreign imports.
A. tariffs
B. custom duties
C. quotas
D. subsidies
6-2
Chapter 06 - The Political Economy of International Trade
50. Governments typically pay for subsidies by:
A. selling junk bonds.
B. taxing individuals and corporations.
C. foreign direct investment in poorer countries.
D. privatization of public holdings.
51. Advocates of _____ believe that, subsidies can help a firm achieve a first-mover
advantage in an emerging industry.
A. strategic trade policy
B. free trade
C. open market system
D. justice theories
52. Which of the following groups would most benefit from receiving subsidies?
A. Governments
B. Consumers
C. Domestic producers
D. Importers
53. An import quota is a direct restriction on the quantity of some good that may be
__________ by a country.
A. subsidized
B. imported
C. dumped
D. produced [Show Less]