International Economics Unit 2 Set 1
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This set of International Economics Multiple Choice Questions & Answers (MCQs) focuses on International Economics Unit 2 Set 1
Q1 | A(n) __________ is an example of a quota where foreigners hold quota licenses.
- Export quota
- Embargo
- Auction quota
- Tariff quota
Q2 | International dumping may involve
- selling goods to foreigners at a price below that charged domestic consumers
- selling goods to foreigners at a price below the cost of production
- antidumping duties being levied on the imported, dumped goods
- all of the above
Q3 | Nontariff trade barriers could include all of the following except
- Domestic content laws
- Government procurement policies
- Health, safety, and environmental standards
- Antidumping/countervailing duties applied to imports
Q4 | A production subsidy that is granted to a producer of an import-competing good
- Does not require governmental taxes to finance it
- Yields the same deadweight welfare loss as an import tariff or import quota
- Has only a consumption effect deadweight loss
- Has only a protective effect deadweight loss
Q5 | A tariff-rate quota is essentially a
- Two-tier tariff applied to a country's imports
- Three-tier tariff applied to a country's imports
- Two-tier quota applied to a country's exports
- Three-tier quota applied to a country's exports
Q6 | A tax of 20 cents per unit of imported cheese would be an example of a (an):
- Compound tariff
- Effective tariff
- Ad valorem tariff
- Specific tariff
Q7 | A sudden shift from import tariffs to free trade may induce short-term unemploymentin:
- Import-competing industries
- Industries that are only exporters
- Industries that sell domestically as well as export
- Industries that neither import nor export
Q8 | The movement to free international trade is most likely to generate short-termunemployment in which industries?
- Industries in which there are neither imports nor exports
- Import-competing industries
- Industries that sell to domestic and foreign buyers
- Industries that sell to only foreign buyers
Q9 | Suppose the government grants a subsidy to domestic producers of an import-competing good. The subsidy tends to result in deadweight losses for the domestic economy in the form of the:
- Consumption effect
- Redistribution effect
- Revenue effect
- Protective effect
Q10 | Tariffs and quotas on imports tend to involve larger sacrifices in national welfare than would occur under domestic subsidies. This is because, unlike domestic subsidies, import tariffs and quotas:
- Permit less efficient home production
- Distort choices for domestic consumers
- Result in higher tax rates for domestic residents
- Redistribute revenue from domestic producers to consumers
Q11 | Suppose the government grants a subsidy to its export firms that permits them to charge lower prices on goods sold abroad. The export revenue of these firms would rise if the foreign demand is:
- Elastic in response to the price reduction
- Inelastic in response to the price reduction
- Unit elastic in response to the price reduction
- None of the above
Q12 | Because export subsidies tend to result in domestic exporters charging lower prices ontheir goods sold overseas, the home country’s:
- Export revenues will decrease
- Export revenues will rise
- Terms of trade will worsen
- Terms of trade will improve
Q13 | Which trade restriction stipulates the percentage of a product’s total value that must beproduced domestically in order for that product to be sold domestically?
- Import quota
- Orderly marketing agreement
- Local content requirement
- Government procurement policy
Q14 | The imposition of a domestic content requirement by the United States would cause consumer surplus for Americans to:
- Rise
- Fall
- Remain unchanged
- None of the above
Q15 | Domestic content legislation applied to autos would tend to:
- Support wage levels of American autoworkers
- Lower auto prices for American autoworkers
- Encourage American automakers to locate production overseas
- Increase profits of American auto companies
Q16 | Compared to an import quota, an equivalent tariff may provide a less certain amount ofprotection for home producers since:
- A tariff has no deadweight loss in terms of production and consumption
- Foreign firms may absorb the tariff by offering exports at lower prices
- Tariffs are effective only if home demand is perfectly elastic
- Quotas do not result in increases in the price of the imported good
Q17 | A tariff:
- Increases the volume of trade
- Reduces the volume of trade
- Has no effect on volume of trade
- (a) and (c) of above
Q18 | A tariff is:
- A restriction on the number of export firms
- Limit on the amount of imported goods
- Tax and imports
- and (c) of above
Q19 | It is drawback of protection:
- Consumers have to pay higher prices
- Producerrs get higher profits
- Quality of goods may be affected
- All of the above
Q20 | It is drawback of free trade:
- Prices of local goods rise
- Government looses income from custom duties
- National resources are underutilized
- (a) and (b) of above
Q21 | Free traders maintain that an open economy is advantageous in that it provides all of thefollowing except:
- Increased competition for world producers
- A wider selection of products for consumers
- The utilization of the most efficient production methods
- Relatively high wage levels for all domestic workers
Q22 | Recent pressures for protectionism in the United States have been motivated by all ofthe following except:
- U.S. firms shipping component production overseas
- High profit levels for American corporations
- Sluggish rates of productivity growth in the United States
- High unemployment rates among American workers
Q23 | A sudden shift from import tariffs to free trade may induce short-term unemploymentin:
- Import-competing industries
- Industries that are only exporters
- Industries that sell domestically as well as export
- Industries that neither import nor export
Q24 | Which of the following statements is correct?
- In a customs union, member nations apply a uniform external tariff
- in a free-trade area, member nations harmonize their monetary and fiscal policies
- within a customs union there is unrestricted factor movement
- a customs union is a higher form of economic integration than a common market
Q25 | A customs union that allows for the free movement of labor and capital among its member nations is called a:
- preferential trade arrangement
- free-trade area
- common market
- all of the above