D Question 4 Which statement is correct about prohibitive tariff 0 It is not the most extreme form of protective tariff O Prohibitive tariff would increase welfare if the tariff imposing country is a small open economy 0 Prohibitive tariff cannot completely eliminate imports from foreign country 0 In a 2-goods and 2-country model, prohibitive tariff would eliminate both exports and imports 2pts D Question 12 In the SOE general equilibrium analysis of government policy as a determinant of trade, consumption tax on Y will ------- and production tax on Ywill ------- . 0 increase export of Y. encourage production of Y 0 decrease export of Y, discourage production of Y 0 decrease export of Y, encourage production on 0 increase export of Y. discourage production of Y D Question 13 2 pts Trade created by ------ is not necessary welfare improving for a given small open economy. 0 differences in technology across countries 0 differences in resource endowment across countries 0 increasing returns to scale 0 differences in domestic government policy {such as tax and subsidy} across countries Question 15 2 pts Suppose that the home country in the two-sector (manufacturing and agriculture) specic-factors model has a comparative advantage in agricultural output. Will workers be better or worse off following the opening of trade with other countries? 0 Workers may be better off or worse off because the real wage in terms of the agricultural good rises and the real wage in terms of the manufactured good falls. 0 Workers will be worse off because the nominal wage decreases. 0 Workers may be better off or worse off because the real wage in terms of the agricultural good falls and the real wage in terms of the manufactured good rises. 0 Workers will be better off because the nominal wage increases. D Question 19 Which statement is true regarding quota and tariff? 0 while quota affects price directly. tariff affects price indirectly O quota and tariff will have equivalent impact if and only if there is change in economic growth and price. 0 while tariff affects quantity directly, quota affects it indirectly. 0 While quota destroys market contestability, tariffs leave markets contestable