Monash University

BFW 2104

CHAPTER 9 Nontariff Trade Barriers and the New Protectionism

Multiple Choice

1)Animport quota:increases the domestic price of the imported commodity reduces

domestic consumption

1. increases domestic production
2. all of the above

2. An increase in the demand of the imported commodity subject to a given import quota:
   1. reduces the domestic quantity demanded of the commodity
   2. increases the domestic production of the commodity
   3. reduces the domestic price of the commodity
   4. reduces the producers' surplus

3. Adjustment to any shift in the domestic demand or supply of an importable commodity occurs:
   1. in domestic price with an import quota
   2. in the quantity of imports with a tariff
   3. through the market mechanism with an import tariff but not with an import quota
   4. all of the above

4. An international cartel refers to:
   1. dumping
   2. an organization of exporters
   3. an international commodity agreement
   4. voluntary export restraints

5. The temporary sale of a commodity at below cost or at a lower price abroad in order to drive foreign producers out of business is called:
   1. predatory dumping
   2. sporadic dumping
   3. continuous dumping

1. 4. voluntary export restraints

6. The type of dumping which would justify antidumping measures by the country subject to the dumping is:
   1. predatory dumping
   2. sporadic dumping
   3. continuous dumping
   4. all of the above

7. A fallacious argument for protection is:
   1. the infant industry argument
   2. protection for national defense
   3. the scientific tariff
   4. to correct domestic distortions

8. Which of the following is true with respect to the infant-industry argument for protection?
   1. It refers to temporary protection to establish a domestic industry.
   2. To be valid, the return to the grown-up industry must be sufficiently high also to repay for the higher prices paid by domestic consumers of the commodity during the infancy period.
   3. It is inferior to an equivalent production subsidy to the infant industry.
   4. All of the above

9. Which of the following is false with respect to strategic trade policy?
   1. It postulates that a nation can gain by an activist trade policy.
   2. It is practiced to some extent by most industrial nations.
   3. It can easily be carried out.
   4. All of the above

10. Industrial policy refers to:

1. an activist policy by the government of an industrial country to stimulate the development of an industry
2. the granting of a subsidy to a domestic industry to stimulate the development of an industry
3. the granting of a subsidy to a domestic industry to counter a foreign subsidy
4. all of the above

11. Game theory refers to:

1. a method of choosing the optimal strategy in conflict situations
2. the granting of a subsidy to correct a domestic distortion
3. the theory of tariff protection
4. none of the above

12. Trade protection in the United States is usually provided to:

1. low-wage workers
2. well-organized industries with large employment
3. industries producing consumer products
4. all of the above