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Practice_questions_for_exam__2 - Practice Questions for...

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Practice Questions for Exam #2 Name: __________________________________ PID #______________________ 1. GATT is the acronym (or abbreviation) for: A) the General Agreement on Taxes and Tariffs. B) the General Agreement on Tariffs and Trade. C) the General Agreement on Trade and Taxes. D) the General Agreement on Trade and Tariffs. 2. Which organization acts as a forum for countries to come to agreement on trade policies and resolve trade policy disputes? A) the International Trade Organization B) the United Nations C) the World Trade Organization D) the United Nations Conference on Trade and Development 3. Suppose that the world price of sugar is $100 per ton. If a small country gives its sugar producer a production subsidy of $50 per ton, then the sugar producer will receive: A) $150 per ton. B) $50 per ton. C) $100 per ton. D) insufficient information. 4. When assessing the welfare effect of an export subsidy on a small nation, it can be shown: A) that the subsidy increases national welfare. B) that the subsidy can be paid for out of increased revenues. C) that the subsidy hurts producers and helps consumers. D) that the subsidy is just the same as a tariff on imports: it raises domestic price, increases domestic production, and involves the same production and consumption losses. 5. How is a production subsidy different from an export subsidy? A) It is applied only to domestic production sold within the nation. B) It is applied to all domestic production and all imports that are consumed in the nation. C) It is a payment from government to all domestic production that is sold within the nation and to foreign markets. D) It kicks in when the export subsidy runs out. Page 1
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6. For a small nation employing a production subsidy, domestic producers get a payment for every good produced, and domestic consumers: A) get to purchase the product at the world price the same as before the production subsidy. B) have to pay a higher price for the product after the production subsidy. C) get a reduced price for the product after the production subsidy. D) purchase more of the product after the production subsidy. 7. The WTO is considered a _________, whereas NAFTA and the European Union are __________. A) free-trade area; cartels B) cartel; multilateral agreements C) free-trade area; multilateral agreements D) multilateral agreement; regional trade agreements 8. Which principle of the GATT/WTO do regional trade agreements violate? A) the principle of first mover B) the targeting principle C) the most favored nation principle or normal trade relations status D) the principle of comparative advantage 9. Rules of origin are required in which form of regional trading agreement? A)
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Practice_questions_for_exam__2 - Practice Questions for...

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