tariffs Mcqs
1. A tariff that prohibits imports has only ?
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A. a revenue effect and redistribution effect

B. consumption effect and protection effect

C. revenue effect and protection effect

D. redistribution effect and consumption effect

2. With free trade the total value of imports would equal ?
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A. $800,000 units

B. $600,000 units

C. $400,000 units

D. $100,000 units

3. If a country an imposes an import tariff, its welfare can improve if ?
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A. Its governments tax revenue increases because of the tariff

B. the country is a small country rather than a larger country

C. its terms of trade improve enough

D. The tariff enhances the welfare of its trading partners

4. With free trade the total quantity of imports would equal ?
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A. 42,000 units

B. 40,000 units

C. 10,000 units

D. 50,000 units

5. If a nation fitting the criteria for the large nation model imposes an import tariff ?
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A. None of the above

B. the domestic price of the product will increase by more than the tariff itself

C. The domestic price of the product will increase by the same amount as the tariff

D. The domestic price of the product will increase by less than the tariff
6. In developed countries, tariffs on raw materials tend to be ?
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A. equal to tariffs on manufactured goods

B. lower than on manufactured goods

C. higher than on manufactured goods

D. highest of all

7. If the world price of steel is $500 a ton a specific tariff $50 is equivalent to an ad valorem tariff of______________?
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A. 5 percent

B. 10 percent

C. 15 percent

D. 20 percent

8. Suppose that Pakistan imposes a tariff on ballpoint pens of 25 rupees per pen plus 12 percent of the pens value, this is an example of a (an) ?
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A. ad valorem tariff

B. specific tariff

C. compound tariff

D. effective tariff

9. Suppose that the offshore assembly provisions (OAP) of the United States are granted to finished computers that are imported and produced domestically This policy will tend to ?
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A. Increase the Production of computers in the United States

B. cause foreign assemblers of computers to use more computer components that are supplied by countries other than the United States

C. Increase the Price of computers to consumers in the United States

D. Increase the production of computer components in the United States
10. Suppose there is no tariff on imported inputs and the ratio of the value of imported inputs the value of the final product is 0.5 If the nominal tariff rate on the final product is 10 percent, the effective tariff rate equals ?
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A. 5 percent

B. 10 percent

C. 20 percent

D. 15 percent

11. If I purchase a stereo from South Korea, I obtain the stereo and South Korea obtains the dollars But if I purchase a stereo produced in the Pakistan I obtain the stereo and the rupees remain in Pakistan, This line of reasoning is ?
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A. valid for stereos, but nor for most products imported by Pakistan

B. deceiving since Koreans eventually spend the dollars on Pakistani goods

C. valid for most products imported by Pakistan but not for stereos

D. deceiving since the dollars spent on a stereo built in the Pakistan eventually wind up overseas

12. In todays world, most countries impose tariffs ?
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A. only on imports

B. only on exports

C. on both imports and exports

D. on imports exports and nontraded goods

13. For advanced countries such as the United States, tariffs on imported raw materials tend to be ?
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A. equals to tariffs on imported manufactured goods

B. higher than tariffs on imported manufactured goods

C. The highest of all tariffs

D. lower than tariffs on imported manufactured goods
14. A tax of 20 rupees per unit of imported cheese would be an example of a (an) ?
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A. Compound tariff

B. Effective tariff

C. Ad valorem tariff

D. Specific tariff
15. With the tariff the government collects?
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A. $125,000

B. $150,000

C. $75,000

D. $100,000
16. The difference between what consumers have to pay for a particular and what they are willing to pay is known as ?
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A. consumer surplus

B. producer surplus

C. deadweight surplus

D. deadweight costs

17. According to the _____ argument for protection, tariffs can shield new industries from import competition until they have grown strong and efficient enough to withstand the competition by foreign producers ?
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A. foreign dumping argument

B. beggar they neighbor argument

C. scientific tariff argument

D. infant industry argument
18. If no imported inputs (hard-disk drive) go into the domestic production of a final product (desktop computer) then the ?
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A. None of the above

B. nominal tariff rate on the final product equals the effective tariff rate on the product

C. nominal tariff rate on the final product is greater than the effective rate on the product

D. nominal tariff rate on the final product is less than the effective tariff rate on the final product

19. A tax of 15 percent per imported item would be an example of a (an) ?
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A. Ad valorem tariff

B. Specific tariff

C. Compound tariff

D. Effective tariff

20. The deadweight cost of the tariff equals ?
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A. $25,000

B. $50,000

C. $10,000

D. $75,000

21. Specific tariffs are collected as ?
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A. a percentage of the quantity of imports

B. All of the above

C. a percentage of money per unit traded

D. fixed amount of money per unit traded
22. If we consider the impact on both consumers and producers, then protection of the steel industry is ?
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A. In the interest of the U.S as a whole but not in the interest of the state of Pennsylvania where steel mills are located

B. In the interest of the U.S as a whole and in the interest of the state of Pennsylvania

C. Not in the interest of the U.S as a whole, nor in the interest of the state of Pennsylvania

D. Not in the interest of the U.S as a whole, but it might be in the interest of the state of Pennsylvania
23. Most tariffs have ?
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A. only revenue effects

B. only protective effects

C. Both protective and revenue effects

D. neither protective or revenue effects

24. Ad valorem tariffs are collected as ?
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A. fixed amounts of money per unit traded

B. a percentage of the quantity of imports

C. All of the above

D. a percentage of the price of the product
25. Domestic producers gain ________ because on the tariff?
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A. $120,000

B. $50,000

C. $75,000

D. $150,000

26. A tariff of ________ would be prohibitive causing imports to fall to zero?
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A. $20

B. $10

C. $15

D. $25

27. Suppose that the nominal tariff rate on finished computers is 12 percent and that the weighted average of the nominal tariff rates on the inputs used in producing computers is 18 percent. Thus, the effective rate of protection for the computer industry must ?
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A. exceed 30 percent

B. be less than 12 percent but must be greater than zero

C. equal 6 percent

D. be less than 12 percent and can be negative
28. A tariff ______ increase a country overall welfare?
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A. will never

B. can sometimes

C. None of the above

D. will always

29. Concerning a governments trade policy, all the following generally apply except ?
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A. When domestic exporting companies are organized, policy tends to favor freer trade

B. economic downturn and recession generally result in greater protectionism

C. Policy tends to favor freer trade in countries whose imports are inputs into critical industries

D. because domestic consumers outnumber domestic producers policy markers usually enact Free-trade policies to satisfy the consumer majority:
30. A foreign-trade zone (FTZ) is ?
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A. a regional area within which trade with foreign nations is allowed

B. designed to promote exports by deferring imports duties on intermediate inputs and waving such duties if the final product is re-exported rather than sold domestically

C. designed to limit exports of manufactured goods by placing export taxes on goods made within the zone

D. a free trade agreement among several nations

31. The effective rate of protection ?
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A. distinguishes between tariffs that are effective and those that are ineffective

B. is the minimum level at Which a tariff becomes effective in limiting imports?

C. shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms

D. shows how effective a tariff is in raising revenue for the government

32. The national security argument for protection is more likely to be valid when ?
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A. The industry is characterized by increasing returns to scale

B. The protected industry provides invaluable goods during periods of war

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

D. The economy operates during a recession

33. A tariff can _______ raise a countrys welfare?
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A. always

B. sometimes

C. None of these

D. never

34. If a small country imposes a tariff on an imported good, its terms of trade will ?
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A. not change

B. any of these

C. improve

D. worsen

35. With the tariff, the quantity of imports falls to ?
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A. 20,000 units

B. 42,000 units

C. 12,000 units

D. 30,000 units

36. If a nation fitting the criteria for the small nation model imposes a 10 percent tariff on imports of autos ?
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A. The price of autos within the nation will rise by more than 10 percent

B. The price of autos will not rise because of internal competition

C. The price of autos within the nation will rise by 10 percent

D. The price of autos within the nation will rise by less than 10 percent

37. _______ represents the difference between what consumer have to pay for a product and what they are willing and able to pay ?
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A. consumer surplus

B. government surplus

C. producer surplus

D. deadweight surplus

38. Concerning import tariffs of the United States empirical studies tend to conclude that these tariffs are ?
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A. deflationary and thus result in reductions in the price of imports

B. Progressive and thus bear down on the wealthy

C. proportional and thus bear down on all consumers in the same manner

D. regressive and thus bear down on the poor