1. In an inflationary environment, everything else constant, over time ...

a. A specific tariff will tend to raise more revenue than an ad valorum tariff.

b. An optimum tariff will tend to raise more revenue than an escalating tariff

c. A tariff quota will tend to raise more revenue than a specific tariff.

d. an import quota would raise more revenue than a specific tariff.

e. An ad valorum tariff will tend to raise more revenue than a specific tariff

2. An import tariff implemented on intermediate goods....

a.

Benefits the local producers of the intermediate goods but hurts the producers who use the taxed imports as intermediate goods

b.

Benefits all local producers and hurts consumers

c.

Reduces government revenues from import tariffs

d.

Does not benefit local producers due to the increase in production costs

e.

Does not generate deadweight losses

3. An import quota will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

a.

increase; decrease; have no effect on; have an ambiguous effect on

b.

increase; increase; decrease; have an ambiguous effect on

c.

increase; decrease; have no effect on; decrease

d.

increase; decrease; increase; have an ambiguous effect on

e.

increase; decrease; decrease; decrease

4. An important difference between tariffs and quotas is that tariffs

a.

are paid by foreign producers.

b.

help domestic producers.

c.

raise the price of the good

d.

stimulate international trade.

e.

generate tax revenue for the government.

5. A country's overall welfare effect of an import tariff will come down to...

a.

Production market distortion + consumption market distortion - change in the terms of trade

b.

Government revenue - the production market distortion + change in the terms of trade

c.

The difference between consumer surplus and producer surplus

d.

Production market distortion + consumption market distortion + change in the terms of trade

e.

Change in the terms of trade - production market distortion - consumption market distortion

6. An export subsidy will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare

a.

increase; decrease; have no effect on; decrease

b.

increase; decrease; have no effect on; have an ambiguous effect on

c.

Increase; decrease; increase; have an ambiguous effect on

d.

increase; decrease; decrease; decrease

e.

increase; increase; decrease; have an ambiguous effect on

7. A voluntary export restraint will ________ producer surplus, ________ consumer surplus, ________ government revenue, and ________ overall domestic national welfare.

a.

increase; decrease; have no effect on; decrease

b.

increase; decrease; have no effect on; have an ambiguous effect on

c.

increase; decrease; decrease; decrease

d.

increase; increase; decrease; have an ambiguous effect on

e.

Increase; decrease; increase; have an ambiguous effect on

8. In the exporting country, an export subsidy will

a.

help consumers but lower economic welfare of the exporting country.

b.

help consumers and have no effect on the economic welfare of the exporting country.

c.

hurt consumers but raise the overall economic welfare of the exporting country.

d.

hurt consumers and lower the overall economic welfare of the exporting country

e.

help consumers and raise the overall economic welfare of the exporting country.

9. The change in the economic welfare of a country associated with an increase in a tariff equals

a.

efficiency loss - terms of trade gain.

b.

efficiency loss + tax revenue gain + terms of trade gain

c.

efficiency gain - terms of trade loss

d.

efficiency loss - tax revenue gain

e.

efficiency loss + tax revenue gain

10. A country's overall welfare effect of an import quota will come down to...

a.

The difference between consumer surplus and producer surplus

b.

Change in the terms of trade - production market distortion - consumption market distortion

c.

Change in the terms of trade - production market distortion - consumption market distortion +/- quota rents

d.

Production market distortion + consumption market distortion +/- quota rents + change in the terms of trade

e.

Quota rents - the production market distortion + change in the terms of trade