Econ1B03-q2Ch4 - C HAPTER FOUR Regulating International...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER FOUR Regulating International Trade — Trade Policies and Their Effects True/False 1. The regulation of textile imports to the U.S. is so complex that it involves almost 75% of U.S. International Trade Administration employees. Ans: True Dif: E 2. U.S. ITA officials can legally inspect foreign manufacturing facilities to ensure that the facility is producing only what it claims. Ans: True Dif: E 3. The purpose of most trade barriers is to raise money for the government. Ans: False Dif: E 4. Tariffs are taxes applied to imported goods and services. Ans: True Dif: E 5. Tariffs do not affect consumers who purchase only domestically produced products. Ans: False Dif: M 6. The imposition of a sales tax on shoes causes a shift in the demand curve for shoes. Ans: False Dif: M 7. The government imposes a sales tax on retailers. The retailers then charge a higher price to consumers. This is an example of a backward shifted tax. Ans: False Dif: E 8. The government imposes a sales tax on retailers. The retailers then pay a lower price to product manufacturers. This is an example of a backward shifted tax. Ans: True Dif: E 202
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
203 Chapter 4 — Test Bank 9. The government imposes a sales tax on retailers. The final price to consumers increases as a result of the tax, but the price does not rise by the full amount of the tax. This implies the tax is both forward and backward shifted. Ans: True Dif: M 10. Applying a specific percentage tariff amount to each import is called a specific tariff. Ans: False Dif: E 11. The text defines a small country as one where the consumption and production decisions of its residents do not affect the international price of a given good or service. Ans: True Dif: E 12. Specific tariffs and ad valorem tariffs are allowed, but combination tariffs are illegal under GATT. Ans: False Dif: E 13. Your firm imports high quality leather at an average cost of $200 a unit and produces and sells luxury leather items in the U.S. Your business would be affected more by an ad valorem tariff of 10% on leather imports rather than a specific tariff of $15 a unit. Ans: True Dif: E 14. In a small country setting the imposition of a tariff results in 0% backward shifting to domestic producers and 100% forward shifting to domestic consumers. Ans: True Dif: M 15. Losses of consumer and producer surplus that are shifted to the government due to the imposition of a trade barrier are called deadweight losses. Ans: False Dif: M 16. A country imposes a tariff on imported beef. As a result, the domestic price of beef rises by 60% of the tariff. This country must be large enough that its production and consumption decisions affect the global price of goods and services. Ans: True
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 12

Econ1B03-q2Ch4 - C HAPTER FOUR Regulating International...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online