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Unformatted text preview: IR 330, 2007 PREPARATION FOR THE MID-TERM EXAM Please bring blue books and pens. You will need to write the exam without notes, as usual. You will have eighty minutes and will need to write one essay and answer several questions requiring short answers. You will have some choice among questions in each section. An excellent short answer can be communicated in roughly half a page in a blue book, writing on every line in average handwriting. All questions will be taken from the following list. POSSIBLE SHORT-ANSWER QUESTIONS. In each case we will be looking for evidence that you learned something specific from reading and attending class. What are the four perspectives in international political economy identified by J. Frieden and D. Lake? What are the basic principles of a true gold standard? How does the classical gold standard in the late 19 th century and early 20 th century differ from a true gold standard? Identify three explanations for the cause of the US Smoot-Hawley Tariff Act of 1930. Identify and illustrate three of the various forms of trade barriers. Tariffs Tariffs are simply taxes imposed on goods entering a country from abroad which results in higher prices. Such taxes have been the most common form of protection for domestic producers. Tariffs have been popular with governments because it appears that the tax is being paid by the foreigners who wish to sell their goods in the home economy and because the tariff revenue can be used to finance government services or reduce other taxes. An example of a tariff would be the Smoot-Hawley Tariff Act of 1930. The act imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the U.S. As a result of its implementation, in 1932, tariff revenue as a percentage of total imports was 19.6 percent. Quotas A quota is a sensible alternative to a tariff when the intention is to restrict a foreign producers’ access to the domestic market. Importers are typically limited to a maximum number of products that they can sell in the home market over specific periods. A quota like a tariff would cause prices to increase in the home market. This induces domestic producers to increase production and consumers to reduce consumption. The difference between a quota and a tariff is that a quota generates a revenue gain to the owner of import licenses and not for the government. An example of a quota would be an orderly market agreement. In such an agreement, the domestic government asks the foreign government to restrict the quantity of exports of a good to the domestic country. The agreement can be seen as a demand, like U.S.-Japan automobile agreement in the 1980s, agreement can be seen as a demand, like U....
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This note was uploaded on 03/25/2008 for the course IR 330 taught by Professor Zhang during the Fall '07 term at USC.

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