Question 1

A quota on sugar harms domestic producers of sugar.

Accepted Answer

A quota on sugar typically benefits domestic producers of sugar by limiting imports and increasing demand for domestically-produced sugar. Therefore, such a quota would not harm domestic producers of sugar.

Question 2

Tariffs, quotas, and exports subsidies all increase domestic production.

Accepted Answer

Tariffs, quotas, and export subsidies all limit imports, making domestic production relatively cheaper and more attractive. As a result, domestic producers increase their output to meet the local demand, leading to an increase in domestic production.

Question 3

The average tariff on imports into the United States is less than 5 percent.

Accepted Answer

According to the Office of the United States Trade Representative, the average tariff on imports into the United States was 1.7 percent in 2020.

Question 4

Economic ________ occurs when two or more nations join to form a free-trade zone.

Accepted Answer

Economic integration refers to the process of combining markets or trade policies between different countries, which results in the creation of a free-trade zone. Correlation means a mutual relationship or connection between two or more things. Conjugation refers to the combination or fusion of two or more things. Immigration refers to the movement of people from one country to another for the purpose of settling permanently. Therefore, the best choice to complete the sentence is A, integration.

Question 5

A quota is a tax on imports.

Accepted Answer

A quota is a limit on the quantity of imports that can enter a country, not a tax on imports. However, the result of imposing a quota on certain products can lead to higher prices for consumers, which can function similar to a tax.

Question 6

In 2003, the ________ ruled that U.S. tariffs on steel imported from the EU were unfair and allowed the EU to issue retaliatory tariffs on U.S. products.

Accepted Answer

The World Trade Organization (WTO) is responsible for regulating international trade between nations, and in 2003, it ruled that U.S. tariffs on steel imported from the European Union (EU) were unfair. The WTO allowed the EU to retaliate against the U.S. with tariffs on American products.

Question 7

Quotas generate tariff revenues for the government.

Accepted Answer

Quotas restrict the quantity of goods that can be imported, rather than imposing a tax on them, so they do not generate tariff revenues for the government.

Question 8

Tariffs tend to increase the domestic price of the product.

Accepted Answer

Tariffs are a tax on imported goods, which increase their price. This makes domestic goods relatively cheaper and incentivizes consumers to buy domestic products, leading to an increase in their price as well.

Question 9

An export subsidy raises the domestic price of the product.

Accepted Answer

The answer of An export subsidy raises the domestic price...

Question 10

In 1991, the European Union began the process of forming the

Accepted Answer

In 1991, the European Union began the process of creating the largest free-trade zone in the world with the goal of promoting economic integration among member countries. This eventually led to the establishment of the European Single Market, allowing for the free movement of goods, services, people, and capital between member states.

Question 11

A quota is a restriction that allows women and minorities to import a certain percentage of imports.

Accepted Answer

A quota is a limit or restriction on the quantity of goods imported or exported, not specifically related to allowing women and minorities a certain percentage.

Question 12

The idea of the U.S.-Canadian Free-Trade Agreement that ________ barriers to trade including tariffs and quotas between the United States and Canada by 1998 was to increase the amount that the United States exports to Canada and the amount that the United States imports from Canada.

Accepted Answer

The U.S.-Canadian Free-Trade Agreement aimed to remove all barriers to trade including tariffs and quotas between the United States and Canada by 1998. This means that all obstacles to trade were eliminated, which would have resulted in an increase in both the amount that the United States exports to Canada and the amount that the United States imports from Canada.

Question 13

Trade barriers are forms of protection that shield some sector of the economy from foreign competition.

Accepted Answer

Trade barriers such as tariffs, quotas, and subsidies are implemented to protect domestic industries from foreign competition.

Question 14

The Smoot-Hawley tariff increased the average tariff rate to ________ percent.

Accepted Answer

The Smoot-Hawley tariff increased the average tariff rate to 60 percent.

Question 15

If a nation has ________ status conferred on it, then exports from that country are taxed at the lowest negotiated tariff rates.

Accepted Answer

Most-favored-nation (MFN) status means that a country will receive the lowest possible tariffs on their exported goods to another country. MFN status is granted through trade agreements and ensures that countries are not playing favorites with their trading partners.

Question 16

Dumping refers to a country selling its exports at a price lower than its selling price at home.

Accepted Answer

The answer of Dumping refers to a country selling its...

Question 17

The free-trade agreement signed by Canada, Mexico, and the United States in 1992 is known as

Accepted Answer

The free-trade agreement signed by Canada, Mexico, and the United States in 1992 is known as NAFTA (North American Free Trade Agreement). GATT (General Agreement on Tariffs and Trade) was a multilateral trade agreement created in 1948, which was replaced by the WTO (World Trade Organization) in 1995. DOHA refers to the Doha Development Round of trade negotiations under the WTO, which began in 2001.

Question 18

Related to the Economics in Practice on p. 664: When a country imposes a quota, imports to that country generally ________ and the price of the affected product in that country generally ________.

Accepted Answer

When a country imposes a quota, imports to that country generally decrease as the limited supply of imports induces domestic consumers to switch to domestically produced goods. The price of the affected product in that country generally rises because the quantity demanded of the product exceeds the quantity supplied at the lower price level. This leads to upward pressure on the price to a level where the quantity demanded equals the quantity supplied.

Question 19

Related to the Economics in Practice on p. 663: When a country opens its markets to free trade, competition ________ and efficiency ________.

Accepted Answer

When a country opens its markets to free trade, domestic firms face competition from foreign firms. This increased competition leads to a more efficient allocation of resources as domestic firms strive to improve their productivity and quality to remain competitive. Therefore, competition grows and efficiency improves.

Question 20

A tariff is a tax on imports.

Accepted Answer

A tariff is a tax applied to goods imported into a country.

Quiz 33: International Trade, Comparative Advantage, and Protectionism