tariffs MCQs – Page 2

Practise focused tariffs questions with marked answers for exam preparation and subject revision.

tariffs Mcqs
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