Question 28 Tariffs transfer consumer surplus to domestic producers and the gove

Question

Question 28

Tariffs transfer consumer surplus to domestic producers and the government.

True

False

2 points

Question 29

The General Agreement on Tariffs and Trade (GATT) established _______________ as a replacement for _____________.

Most favored nations; Normal trade relations

Reciprocal trade relations; Most favored nations

Normal trade relations; Most favored nations

Most favored nations; Reciprocal trade relations

2 points

Question 30

The United States is a highly educated nation; therefore, we can expect it to specialize in the production and export of ________________ products.

High-skill

Manufactured

Low-skill

Agricultural

2 points

Question 31

The process of increasing interdependence between the countries of the world and their citizens that consists of increased economic interaction via trade, immigration, foreign investment, culture, and environment is known as ___________.

Economic interdependence

Globulation

Globalization

Ethnocentrism

2 points

Question 32

The theory of comparative advantage, specifically the assertion that trade depends on relative labor productivity, is empirically valid.

True

False

2 points

Question 33

What would happen if the US reduced tariffs and other barriers to trade in exchange for other nations reducing tariffs and barriers to trade on US electronics and software?

Overall US employment would fall due to job losses in the manufacturing sector

The US economy would weaken

The price of most goods in the US would rise

Employment in the US electronics and software industry would increase

2 points

Question 34

Which of the following is false regarding trade adjustment assistance?

It can be used to provide income support to workers laid off as the result of trade deals

It can be used to provide low-interest loans to firms negatively impacted by trade deals

It can only be used to assist manufacturing and not service industries

It mainly helps older and less educated workers with no experience outside their industry

2 points

Question 35

Which of the following is not a goal of the General Agreement on Tariffs and Trade (GATT)?

Freer trade

Trade without discrimination

Increasing Western imperialism and hegemony

Predictability through binding and transparency

2 points

Question 36

Which of the following is responsible for partial specialization existing?

Increasing costs can force the cost basis of two trading nations to converge

Labor union contracts can make a firm responsible for employee benefits long after a plant is shut down

Some products cannot be traded internationally

All of the above

2 points

Question 37

Which of the following is true regarding antidumping regulations?

They are illegal under the WTO

The USDOC rarely finds that dumping has occurred

The USITC usually finds evidence of material harm

None of the above

2 points

Question 38

Which of the following is true regarding the World Trade Organization?

It was established in 1995

It acts as an official body to settle trade disputes between member nations

It oversees the majority of global trade

All of the above

2 points

Question 39

Which of the following is true regarding the World Trade Organization?

It can force member nations to change their laws

It does not authorize retaliatory tariffs

It allows for antidumping laws

All of the above

2 points

Question 40

Which of the following is true regarding the effect of NAFTA and Mexican immigration to the US?

Increased free trade most likely increased the rate of immigration growth

Mexico’s higher birth rate led to increased immigration to the US

The collapse of the peso spurred decreases in immigration to the US

All of the above

2 points

Question 41

Which of the following is true regarding the third wave of globalization and sets it apart from the previous two waves?

Increases in the speed and capacity of transportation played a major role

Significant growth occurred in developing economies

Global political cooperation played a significant role

Countries specialized in manufacturing specific products

2 points

Question 42

Which of the following is true?

Trade is a zero-sum game

Trade is based on the law of competitive advantage

America has been losing at trade to China for years

None of the above are true

2 points

Question 43

Which of the following sectors does not involve the use of global inputs?

Accounting

Customer service

Manufacturing

None of the above

2 points

Question 44

______________ allows for the USITC to create temporary protection (up to four years) of a domestic firm facing immediate import competition after trade negotiations are completed.

The escape clause

Countervailing duties

Antidumping duties

Section 301 of the Trade Act of 1974

2 points

Question 45

______________ believed that trade was based on the absolute cost of production, whereas ______________, more correctly, believed that trade was based on the relative cost of production.

Adam Smith; David Ricardo

David Hume; David Ricardo

Adam Smith; David Hume

David Ricardo; Adam Smith

2 points

Question 46

______________ subsidies are given by the government to producers of goods for export, typically agricultural producers.

Import

Export

Competitiveness

Competitiveness

Most favored nations; Normal trade relations

Reciprocal trade relations; Most favored nations

Normal trade relations; Most favored nations

Most favored nations; Reciprocal trade relations

Explanation / Answer

Q.28) True
If the price is decided by market forces then it is an equilibrium price which gives producer and consumer some welfare which is known as surplus. However, if there is any tariff or tax applied to that product or service then naturally its equilibrium price will change and that tariff will be passed on to consumer which reduce consumer surplus.
Producers will generally pass on such tariff to consumers and that reduction in consumer surplus will be shared by domestic producers as well as government.

Q.29) Most favored nations; Reciprocal trade relations
Global trade was evident in pre world war and post world war scenario and nations were realizing benefits of co-operation and trade. However, there was not framework for that and it was selective in nature. Nation used to impose tariff or quota on some countries or some products while extending liberal terms of trade to other countries. This was on the basis of reciprocal trade relations. Thus countries used to extend tariff reduction for import by countries which have reduced tariffs for exports. GATT established a common framework for that and introduced MFN status which was applicable to all signatories.

Q.30) High-skill
International trade works on the principle of comparative advantage. In globalization, each country focuses on its strength to achieve wealth and development. Europe witnessed industrial revolution in 1800s and developed manufacturing but agriculture taken a backseat as it was not efficient. However, most of the devloping countries still depend on agriculture because they lack high skilled labor or expertise. US has emerged as a economic power house in the last century and it has invested in education as well as R&D hugely. It has raised labor skills and productivity also. In such scenario it would be better if US focuses on high skill products than low margin agriculture or any other.

Q.31) Globalization
Worls is getting closer because of trade which was exist since ancient times but recent delopments in technology and other means created so many instances to exchnage ideas, views, people and goods. These relations and trade which has brought development in countries and welfare to people has raised interdependence in world. An iphone is product of a US company but its camers could be from South Korea, hard disk from Japan and it is manufactured in China while it software could be designed in India.

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