1.

Question : Student Answer:

Which of the following is evidence that tariffs have curbed international specialization? Production is less specialized across cities within a country than across countries. There have been few efforts to reduce tariffs in the last 50 years. Tariffs on agricultural products generally exceed tariffs on manufactured goods. Production is more specialized across regions of the US than between the US and Canada. None of the above.

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2. Question : Student Answer:

Customs revenues represent what percent of US government revenue? less than 1% 5% 7% 10% 25%

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3. Question : Student Answer:

Since the early 1930's U.S. tariff rates have decreased around 90%. 67%. 33%. 20%.

10%. Points Received: Comments: 2 of 2

4. Question : Student Answer:

Average tariffs on manufactured goods are around what level? less than 1% 3% 10% 25% 40%

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5. Question : Student Answer:

In the 1930s, the world volume of trade decreased, chiefly as a result of the Smoot-Hawley Act. a decline in world-wide tariffs. the Great Depression. all of the above. a) and (c).

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6. Question : Student Answer:

A reduction in tariffs leads to a terms of trade loss to the exporter, if the importer is large. a terms of trade gain for a small country.

a terms of trade loss for a small country. a terms of trade gain to the exporter, if the importer is large. none of the above. Points Received: Comments: 2 of 2

7. Question : Student Answer:

Reciprocal tariff cutting must lead to all countries gaining. must lead to one country gaining at another's expense. is never consistent with the political economy of tariffs. may lead to a deterioration in all countries terms of trade. none of the above.

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8. Question :

During the last 40 years tariff barriers were substantially reduced. What happened to nontariff barriers in developed countries over the same period? They were reduced more than tariffs. They were reduced, but less than tariffs. They remained relatively constant. They increased significantly. There are no clear studies of the trend on nontariff barriers.

Student Answer:

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9. Question : Student Answer:

The Tokyo Round of GATT talks was concerned with a cut in tariffs of about 35 percent. reductions in non-tariff barriers to trade. increased tariffs on agricultural products. establishment of the World Trade Organization. improved monitoring of trade disputes.

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10. Question : Student Answer:

The Uruguay Round of GATT talks established policies for tariff cuts of around 40 percent. protection of intellectual property rights. reductions in non-tariff barriers to trade. the establishment of the World Trade Organization. all of the above.

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11. Question : Student Answer:

NAFTA is an example of a voluntary export restraint. common market. free-trade area. customs union. economic union.

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12. Question : Student Answer:

Which of the following are true for the "gravity model" of trade? It is intended to explain bilateral trade flows. Empirically estimates that an increase in GDP, but not in per capita GDP, will increase trade by relatively more than the increase in GDP. Empirically finds that trade and the distance between countries are negatively related. Empirically finds that poorer countries are more likely to trade with each other than are wealthier countries. All of the above.

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13. Question : Student Answer:

The volume of trade diversion can be best detected by examining changes in the share of each country's consumption supplied by domestic manufacturers. the volume of trade. the share of imports coming from exporters in partner countries. growth of national incomes. movements in prices between member countries and the rest of the world.

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14. Question :

The formation of a customs union may lead to dynamic gains in the form of

Student Answer:

scale economies. increased competition. protection of industries with learning effects. increased incentives to innovate. all of the above.

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15. Question : Student Answer:

Consider a framework where markets are monopolistic competitive. The formation of a customs union will lead to larger more efficient plants. must lead to welfare losses. will not lead to any trade diversion. will increase the rate of capital formation. will not lead to dynamic gains.

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16. Question :

Country A is considering forming a customs union with either B or C. A and C have very similar factor endowments while A and B are very different. Relative to a customs union between A and C, a customs union between A and B will lead to more trade diversion, less trade creation. less trade diversion, less trade creation. less trade diversion, more trade creation. more trade diversion with the same amount of trade creation. more trade diversion, more trade creation.

Student Answer:

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17. Question : Student Answer:

Distortions and problems generally faced by centrally planned economies include the lack of incentives for managers or plants to operate efficiently. the separation of production quantity decisions and the needs and wishes of the purchasers. the failure of final goods to be similar to what consumers would choose in a free market. the excess supply of some goods and excess demand for other goods. all of the above.

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18. Question : Student Answer:

In a centrally planned economy, prices are needed to ration goods to consumers. determine the pattern of production. allocate resources across industries. trade goods in international markets. determine patterns of comparative advantage.

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19. Question : Student Answer:

The Asian NICs include South Korea, Hong Kong, Singapore and Taiwan.

Malaysia, Indonesia and Thailand. Laos and Cambodia. a and b all of the above. Points Received: Comments: 2 of 2

20. Question : Student Answer:

In the past two decades, the Asian NICs have increased their policies of infant-industry protection. expanded their policies toward import substitution. captured less of offshore production processing activities in sectors such as footwear, clothing and electronics. none of the above. all of the above.

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21. Question : Student Answer:

Which of the following are sources of gains from trade? increased product variety specialization of production increased competition a and b all of the above.

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22. Question : Student Answer:

A movement from autarky to free trade will cause a monopolist to reduce prices and output. increase prices and output. increase prices and reduce output. reduce prices and increase output. reduce prices and not change output.

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23. Question : Student Answer:

In the absence of trade a monopolist will produce more than the competitive output. set price equal to marginal cost. produce less than the competitive output. set price below marginal cost. have zero profits.

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24. Question : Student Answer:

In the move from autarky to free trade, the price of a good produced by a monopolist could rise if the monopolist is in the _________ sector and export , the nation has a strong comparative advantage in the good. import, the nation has a strong comparative advantage in the good. import, the nation has a strong comparative disadvantage in the good. import, the move to free trade forces it to act more competitively. The price cannot rise.

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25. Question : Student Answer:

Welfare in a competitive economy without trade is lower than in a monopolistic economy without trade. higher than in a competitive economy with trade. low due to a lack of international specialization in production. higher than a monopolistic economy in a large trading world. none of the above.

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26. Question : Student Answer:

A movement from autarky to trade with export monopolists will cause the domestic price of the export good to fall. the domestic price of the export good to rise. a decrease in the output of the export good. both b and c. an ambiguous movement in the domestic price of the export good.

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27. Question : Student Answer:

Allowing a monopoly in an export sector can improve the economy's welfare if the country is small. always will lower domestic welfare. can improve domestic welfare if the industry exports a large proportion of its output.

must lower domestic welfare if the industry exports a small proportion of its output. must lower domestic welfare if there is also a monopolist in the import sector. Points Received: Comments: 2 of 2

28. Question : Student Answer:

A country importing from a monopolist will have a difficult time identifying the precisely best policy to gain some of the welfare the monopolist is keeping. can use an import duty to reduce demand for the monopolist's good. can use an import duty to reduce the foreign monopolist's price. none of the above. all of the above.

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29. Question : Student Answer:

Dumping is the practice of buying goods from the cheapest possible source. burning some goods to avoid immiserizing growth. selling good cheaply to damage foreign competitors. levying an import duty to protect against a foreign monopolist. none of the above.

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30. Question : Student Answer:

An export monopolist leads to domestic welfare losses as the price of exported goods is too high. leads to domestic welfare gains as the price of domestic goods rises. leads to some domestic welfare gains as prices of exported goods are higher. does not affect domestic welfare and reduces foreign welfare. none of the above.

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31. Question : Student Answer:

In the lobbying model of political choice, tariffs are chosen to maximize social welfare. that redistribute income from a minority to a majority. usually in the interests of consumers. to maximize tariff revenue. according to the interests of special interest groups.

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32. Question :

It is observed that tariffs generally are raised in order to protect unskilled labor, and are often raised when an industry's competitive position becomes threatened. This evidence lends support to which theory of political choice? lobbying voting model conservative social welfare function

Student Answer:

both a and c both b and c Points Received: Comments: 0 of 2

33. Question : Student Answer:

Tariff protection in the U.S. tends to favor industries that also have heavy nontariff protection. geographically dispersed industries. low-wage industries. small-scale industries. all of the above.

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34. Question :

Consider a country that is experiencing welfare losses as a result of rapid growth of its export sector. This country could counteract the effects of this growth by if they are small, putting tariffs on imports. using export subsidies. if they are large, levying export taxes. puffing tariffs on imports, regardless of country size. none of the above.

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35. Question :

A tariff improves domestic welfare as a result of

Student Answer:

changes in the terms of trade. changes in the volume of trade. changes in production. none of the above. potentially, all of the above.

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36. Question : Student Answer:

Trade with tariffs and subsidies will be preferable to autarky never. always for a large country. if there is negative net tariff revenue. if there is a small change in world prices as a result of the tariff if there is positive net tariff revenue.

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37. Question : Student Answer:

A tariff will attract foreign investment by reducing demand for foreign made products. reducing the size of domestic export production. lowering the price of imported goods. none of the above. all of the above.

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38. Question : Student Answer:

Tariffs affect employment by increasing employment in all sectors. decreasing employment in all sectors. decreasing employment in the import sector and increasing it in the export sector. increasing employment in the import sector and decreasing it in the export sector. reducing aggregate unemployment.

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39. Question :

A small country which exports food and imports only clothing levies a tariff on all clothing imports. The country then grows by 25 percent measured at domestic prices. In which of the following scenarios does the country have the highest welfare after growth? The growth is most concentrated in clothing, but both industries grow. Only the food industry expands. The growth is in the exact proportions of home prices. Only the clothing industry expands. The growth is most concentrated in food, but both industries grow.

Student Answer:

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40. Question : Student Answer:

In a specific factors model, if tariff is placed on clothing, then the owners of the factor specific to other goods will lobby for tariffs on their goods. export subsidies on their goods.

taxes on laborers in the clothing sector. all of the above. no change; the tariff will make them better off. Points Received: Comments: 0 of 2

41. Question : Student Answer:

If L = 200 and L = 10, and the world demand for food is perfectly inelastic at 100, then home must be incompletely specialized. foreign production must be incompletely specialized. foreign will produce all clothing. home will produce all food. world demand cannot be met.

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42. Question :

It is observed that in a two-country Ricardian trading world, one country is incompletely specialized and the other is not. Then the world relative price of the two goods must equal the labor input ratio in the specialized country. must lie between the two country's labor input ratios. must be equal to one. must equal the labor input ratio in the incompletely specialized country. cannot be inferred from the above information.

Student Answer:

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43. Question : Student Answer:

In the Ricardian model, equilibrium relative wages depend on world demand for each good. labor's productivity in each good it actually produces. world relative prices. none of the above. all of the above.

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44. Question : Student Answer:

Consider a two-country world with trade where both countries are completely specialized. An increase in the price of clothing must decrease nominal wages in the clothing producing country. increase nominal wages in the clothing producing country. increase nominal wages in the food producing country. decrease nominal wages in the food producing country. will not change nominal wages in either country.

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45. Question : Student Answer:

Compensation to labor is $16 in the US and $2.40 in Mexico. This can be explained by technology differences. better trained workers in the US. more capital in the US. better capital in the US. all of the above.

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46. Question :

Consider if home produces goods 1 and 2 and the foreign country produces good 3. An improvement in the technology for producing good 1 with no change in the price of good 3 will lead to p1 declining, w increasing and w falling. p1 declining, w increasing and no change in w. p1 increasing and no changes in wages. p1 declining and no changes in wages. p1 declining, w increasing and no change in w.

Student Answer:

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47. Question :

Consider if home produces goods 1 and 2 and the foreign country produces good 3. An improvement in the technology for producing good 1 with a decline in the price of good 3 will lead to unambiguous welfare gains for the foreign country. wages falling both at home and in the foreign country. unambiguous home welfare gains and foreign welfare losses. unambiguous home welfare gains and falling foreign wages. falling home wages and foreign welfare losses.

Student Answer:

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48. Question : Student Answer:

Tariffs reduce welfare by reallocating resources into goods people don't want.

equating marginal rates of substitution across countries. shifting demand from imports to exported goods. creating a difference between the domestic valuation of commodities and the cost of obtaining them via trade. increasing government revenue, which is then wasted. Points Received: Comments: 2 of 2

49. Question : Student Answer:

An export tax will increase domestic employment. will increase domestic welfare. will have ambiguous effects on domestic employment. will have ambiguous effects on domestic welfare. will have effects that differ from that of a tariff.

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50. Question : Student Answer:

If a country can influence world prices by levying a tariff on its import, it is a small country. it is a large country. any tariff will improve its welfare. it can only decrease, but not increase the world price of its import good. b and d.

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