Question # 1

A tax of 18 cents per unit of imported cheese would be an example of a.

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Compound tariff

Effective tariff

Ad valorem tariff

Specific tariff

The effect of the most favored nation clause is to.

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Eliminate all tariffs between countries

Increase all tariff rates between countries.

Maintain a nondiscriminatory structure of tariffs

Maintain a discriminatory structure of tariffs

According to the factor price equalization theorem, the ______ factor should oppose free trade policies in any given country.

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Abundant

scarce

Neither

Can't tell without more information

A country that is a net international debtor initially experiences a.

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Larger savings pool available finance domestic spending

Higher interest rate which leads lower domestic investment.

Loss of funds to trading partners overseas

Decrease in tis services exports to other countire.

That the division of labor is limited by the size of th market best applies to which explanation of trade.

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Factor endowment theory

Product like cycle theory

Economics of scale theory

Over lapping demand theory

The result of antidumping tariffs is to.

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increase consumer surplus in the importing country

Decrease producer surplus in the importing country

Impose a price floor on foreign prices in the importing country

Impose a price celling on foreign prices in the importing county

Trade based on comparative advantage assures that.

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Only the strongest suvrive

Some people are rich and others are poor

Each item is produced using the least amount of time needed to produce it

Each item is produced at as low a cost possible in terms of other things given up

If tastes are identical between countries then comparative advantage is determined by

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Supply conditions only

Demand conditions only

Supply and demand conditions

Can't tell without more information.

Developing countries that concentrate production in agricultural products or raw materials may face a long run decline in their international terms of trade because of.

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Inelastic demand for these products in advanced countries.

Large increase in the supplies of these products on world markets because of export expansion polices

sluggish demand for these products in advanced countries

All of the above

The organization that currently establishes rules of conduct for firms engaging in international trade is the.

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World Bank

International Trade commission

Department of Justice

World Trade Organization

A _________ is a regional trading block in which member countries eliminate intercanal trade barriers but maintain existing barriers against countries that are not members.

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Free trade area

Customs union

Common market

Monetary union

Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove payments disequilibrium.

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Dual exchange rates

Adjustable pegged exchange rates

Managed floating exchange rates

Crawling pegged exchange rates.

Intra industry trade therory.

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Explains why the United States might export autos and import clothing

Explains why the united states might export and import differentiated versions of the same product such as different type of autos.

Assumes that transport costs are very low or do not exist

Ignores seasonal considerations for agricultural goods

International trade forces domestic firms to become more completive in terms of.

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The introduction of new products

Product design and quality

Product price

All of the above

__________ policies attempt to foster industrialization by establishing high barriers to import of foreign goods to promote local production.

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absolute advantage

Comparative advantage

Export led growth

Import substitution

In the classical model of Ricardo the direction of trade is determined by

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Absolute advantage

Comparative advantage

Physical advantage

Which way the wind blows

The relationship between the exchange rate ad the prices of tradable goods is known as the.

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Purchasing power parity theory

Asset markets theory

Monetary theory

Balance of payments theory

Similar to import tariffs import quotas tend to result in.

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Higher prices ad reduced imports

Increased government revenue

Increases consumer surplus

Decreased producer surplus

Should international transpiration costs decrease the effect on international trade would include a.

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Increases in the volume of trade

Smaller gain from trade

Decline in the income of home producers

Decrease in the level of specialization in production.

A current account surplus implies that

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The country is a net lender to the rest of the world

The country is running a net capital account surplus

Foreign investment in domestic securities is at very low levels

All of the above

The national security argument for protection is more likely to be valid when

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The purpose is to maintain protection for an indefinite time period.

The industry is characterized by increasing returns to scale.

the economy operates during a recession

The protected industry provides invaluable goods during periods of war

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