18.5 Integrative Questions
1) Assume that the state of Missouri decided to place a tariff on every product produced outside the state in an effort to increase the state’s revenue and increase employment in the state. If Missouri did so,
A) the state’s total output would definitely increase.
B) workers with jobs in new firms replacing out-of-state imports would earn high income.
C) the standard of living within Missouri would decrease.
D) other states would begin to dump in Missouri.
E) the prices of goods imported into Missouri would fall.
2) During the 1980s, Harley-Davidson, the American motorcycle maker asked Congress for tariff protection from large motorcycles imported from Japan. Harley-Davidson argued that their company needed protection so the company could reorganize and, after some time had passed, could become more competitive. Harley-Davidson’s argument is similar to the ________ argument for protection.
A) save domestic jobs
B) national security
C) anti-dumping
D) infant-industry
E) bring diversity and stability
3) In the 1950s, crude oil and natural gas imports were restricted to keep the domestic industries viable in case of a war. The rationale for this protection is the ________ argument for protection.
A) save domestic jobs
B) national security
C) anti-dumping
D) infant-industry
E) penalizing lax environmental standards
4) In the 1980s, the U.S. government forced Japanese automakers to limit their exports to the United States. The union representing the autoworkers (UAW), argued that otherwise the U.S. auto industry would have contracted. The UAW’s argument is the ________ argument for protection.
A) save domestic jobs
B) national security
C) anti-dumping
D) infant-industry
E) bringing diversity and stability
5) In 2002, President Bush imposed a tariff on imported steel. He did so in response to rent seeking by
A) domestic steel consumers.
B) domestic steel producers.
C) foreign steel consumers.
D) foreign steel producers.
E) foreign politicians.
6) Which of the following is true?
i.Comparative advantage drives international trade.
ii.Compared to a no-trade situation, imports make domestic producers better off.
iii.Tariffs lower the domestic price of imported goods.
A) Only i
B) Only ii
C) Only iii
D) i and ii
E) i and iii
7) Which of the following is true?
i.When the world price of a good is lower than the price that balances domestic supply and demand, a country gains from exporting the good.
ii.Compared to a no-trade situation, imports make consumers better off.
iii.Quotas raise the domestic price of imported goods.
A) Only i
B) Only ii
C) Only iii
D) i and ii
E) ii and iii
8) Which of the following is true?
i.Compared to a no-trade situation, exports make consumers better off.
ii.Tariffs make consumers worse off.
iii.Trade is restricted because protection brings small losses to a large number of people and large gains to a small number of people.
A) Only i
B) Only ii
C) Only iii
D) i and iii
E) ii and iii
9) When a country imports a good or service from the rest of the world, the consumer gains because the greater the ________ in price and ________ in quantity bought, the greater is the ________ to the consumer.
A) fall, increase; gain
B) fall; increase; loss
C) fall; decrease; gain
D) rise; increase; gain
E) rise; decrease; gain
10) When the profits of firms that produce import-competing goods and services fall, these firms ________ their workforce, unemployment in these industries ________, and wages ________.
A) expand; increases; rise
B) cut; increases; fall
C) cut; decreases; fall
D) cut; increases; rise
E) cut; decreases; rise
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