B) increased demand for product A will result in the diversion of resources to the production of product A and fewer resources being available for the production of other products. C) some costs of producing a product may be ignored by private decision-makers, so that too much of the product is produced or consumed. D) improved technology in one sector of the economy can improve productivity not only in that sector but also in other sectors and lead to changes in labor requirements in all affected sectors of the economy. 15
In the absence of other distortions, a government subsidy to production of a product creates its own distortion in the economy by: A) artificially increasing the amount of the product that is imported. B) increasing the incentive for domestic suppliers to produce more of the product. C) encouraging competition from products that are similar but not the subject of the subsidy. D) discouraging domestic consumption of the product. 16
The ____________________ proposes that government should spot distortions in market incentives and impose policies that correct the distortions with incentives or disincentives. A) import barrier theory B) externality theory C) tariff-or-subsidy approach D) tax-or-subsidies approach 17
The idea that it is usually more efficient to use government policy tools to act as directly as possible on the source of a market distortion is called the: A) specificity rule. B) tax-or-subsidies approach. C) externality approach. D) \ 18
The infant-industry argument asserts that A) new domestic industries are a drain on a country's resources if those new industries cannot compete with imports, so new, inefficient domestic industries should be discouraged. B) new domestic industries that compete with imports should be encouraged because they can decrease imports so that the country's balance of trade can remain positive. C) protection of new domestic industries from competition by imports has a long-term negative effect on new domestic industries because the new domestic industries never mature into competitive industries. D) a temporary tariff is justified when it reduces imports while a new domestic industry develops to the point that it can produce at low enough costs to compete
internationally. 19
____________________ is a form of government support that provides workers in import-threatened industries with job retraining and supplemental unemployment compensation. A) An import tariff B) An export subsidy C) Trade adjustment assistance D) A trade embargo 20
The ____________________ arises when the results acquired through the efforts of a group benefit others who did not contribute to the efforts to obtain those benefits. A) representative democracy effect B) free-rider problem C) market distortion problem D) one-dollar one-vote effect 十一
1 For persistent dumping to be successful, firms will maximize profits by: A) charging a higher price in the more inelastic market. B) charging a higher price in the larger market. C) charging the same price in all markets. D) only selling in the inelastic market.
2 Which of the following does the World Trade Organization allow countries to impose? A) New higher tariffs. B) New import quotas.
C) New antidumping tariffs. D) New export subsidies.
3 In recent years____________________ is the world's biggest initiator of antidumping cases. A) The European Union B) The United States C) Australia D) India
4 The U.S. Export-Import Bank (Eximbank) is a major provider of low-interest loans to: A) exporters and their foreign customers. B) importers and exporters.
C) importers and their foreign producers. D) foreign exporters.
5 The combination of an export subsidy imposed by Japan and an equal countervailing import duty imposed by Australia will result in losses for:
A) Australia but not for Japan and the world as a whole. B) Japan but not for Australia and the world as a whole. C) the world as a whole but not for Australia or Japan. D) Australia and Japan but not for the world as a whole.
6 The success of Asian apparel exports to the United States and Europe lies in: A) a great productivity failure in the United States and the European Union.
B) the fact that apparel uses capital intensively and the United States is not relatively abundant in capital.
C) the fact that apparel uses unskilled labor intensively and Asia is relatively abundant in that factor.
D) the fact that Asian countries provide export subsidies to the apparel manufacturers in their countries.
7 The United States __________________ provide government aid to American aircraft exporters. The European Union ____________________ provide aid to European aircraft exporters.
A) does; does not B) does not; does C) does; does
D) does not; does not 8 An export subsidy:
A) discourages domestic buyers from importing substitute products at lower prices than the subsidized domestic product.
B) lowers the price paid for a product by foreign buyers relative to the price that domestic consumers pay for the subsidized product.
C) increases the world price of the product, if the exporting country is large.
D) increases domestic production of the subsidized product, thereby decreasing the price of the product in domestic markets.
9 ____________________ is selling exports at a price that is less than the normal value of the exports.
A) Aggressive exporting B) Free trade C) Dumping
D) Monopolistic competition
10 The long-standing definition of ___________________ is the price charged to comparable domestic buyers of a product in the home market of the producer. A) normal value B) dumping
C) predatory pricing
D) monopolistic pricing
11 ___________________ occurs when a producer temporarily charges a very low price for a product in an export market for the purpose of driving foreign competitors out of business. A) Cyclical dumping B) Protective dumping C) Seasonal dumping
D) Predatory dumping
12 Perishable agricultural products are good candidates for __________________ since big harvests tend to lower market prices and provide a large quantity of the product available for export.
A) seasonal dumping B) cyclical dumping C) predatory dumping D) allowable dumping
13 The importing country should welcome dumping because:
A) it provides that country with an opportunity to impose trade barriers to protect itself.
B) the price of the product being imported is constant and allows importers to plan accurately for future sales.
C) it is protected from the adverse effects of dumping by WTO rules.
D) the price of the product being imported is very low allowing consumers to buy more than they would buy at a higher price.
14 Most cyclical dumping is probably the result of:
A) the normal well-functioning competitive global market. B) a desire to improve market share in the importing country. C) seasonal differences in demand for certain products. D) seasonal differences in supply of certain products.
15 In the U.S., the U.S. Department of Commerce examines whether dumping has actually occurred, and the ___________________ examines whether U.S. firms have been injured by the dumping.
A) U.S. Department of Justice B) U.S. Export-Import Bank
C) U.S. International Trade Commission D) Federal Trade Commission
16 Financial assistance that governments provide to benefit firms that sell to foreign buyers is: A) trade adjustment assistance. B) export insurance. C) foreign sales leads. D) export subsidies.
17 Substantial export subsidies can switch a(n) ____________________ product into a(n) ____________________ product. A) importable; exportable B) exportable; importable C) exportable; domestic D) non-traded; importable
18 As a result of the agreement reached at the Tokyo Round and the Uruguay Round of trade negotiations, the WTO now has:
A) difficulties requiring countries to refrain from providing export subsidies. B) a mandate to strictly enforce rules allowing export subsidies. C) a clear set of rules for subsidies that may encourage exports. D) no power to find that export subsidies violate WTO policy.