1.The most-favoured-nation principle refers to:

a. extension to all trade partners of any reciprocal tariff reduction negotiated by the U.S.

with any of its trade partners

b. multilateral trade negotiation

c. the General Agreement on Tariffs and Trade

d. the International Trade Organization

2.If a small nation increases the tariff on its import commodity, its:

a.consumption of the commodity increases

b.production of the commodity decreases

c.imports of the commodity increase

d.domestic price of the commodity increases

3.With a_i=50%, t_i=0, and t=20%, the effective tariff rate, g is:

a.40%

b.20%

c.80%

d.0

4.The imposition of an import tariff by a small nation:

a.increases the nation's welfare

b.reduces the nation's welfare

c.leaves the nation's welfare unchanged

d.any of the above is possible

5.According to the Stolper-Samuelson theorem, the imposition of a tariff by a nation:

a.increases the real return of the nation's abundant factor

b.increases the real return of the nation's scarce factor

c.reduces the real return of the nation's scarce factor

d.any of the above is possible