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Tariffs MCQs

Option A: $100,000 units

Option B: $400,000 units

Option C: $600,000 units

Option D: $800,000 units

Correct Answer: $400,000 units


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Option A: Progressive and thus bear down on the wealthy

Option B: regressive and thus bear down on the poor

Option C: proportional and thus bear down on all consumers in the same manner

Option D: deflationary and thus result in reductions in the price of imports

Correct Answer: regressive and thus bear down on the poor


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Option A: economic downturn and recession generally result in greater protectionism

Option B: because domestic consumers outnumber domestic producer’s policy markers usually enact Free-trade policies to satisfy the consumer majority:

Option C: When domestic exporting companies are organized, policy tends to favor freer trade

Option D: Policy tends to favor freer trade in countries whose imports are inputs into critical industries

Correct Answer: because domestic consumers outnumber domestic producer’s policy markers usually enact Free-trade policies to satisfy the consumer majority:


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Option A: be less than 12 percent and can be negative

Option B: be less than 12 percent but must be greater than zero

Option C: equal 6 percent

Option D: exceed 30 percent

Correct Answer: be less than 12 percent and can be negative


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Option A: specific tariff

Option B: ad valorem tariff

Option C: compound tariff

Option D: effective tariff

Correct Answer: compound tariff


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Option A: 5 percent

Option B: 10 percent

Option C: 15 percent

Option D: 20 percent

Correct Answer: 10 percent


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Option A: only on imports

Option B: only on exports

Option C: on both imports and exports

Option D: on imports exports and nontraded goods

Correct Answer: only on imports


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Option A: $50,000

Option B: $75,000

Option C: $120,000

Option D: $150,000

Correct Answer: $75,000


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Option A: $75,000

Option B: $100,000

Option C: $125,000

Option D: $150,000

Correct Answer: $100,000


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Option A: 5 percent

Option B: 10 percent

Option C: 15 percent

Option D: 20 percent

Correct Answer: 20 percent


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Option A: never

Option B: sometimes

Option C: always

Option D: None of these

Correct Answer: sometimes


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Option A: the domestic price of the product will increase by more than the tariff itself

Option B: The domestic price of the product will increase by the same amount as the tariff

Option C: The domestic price of the product will increase by less than the tariff

Option D: None of the above

Correct Answer: The domestic price of the product will increase by less than the tariff


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Option A: scientific tariff argument

Option B: infant industry argument

Option C: beggar they neighbor argument

Option D: foreign dumping argument

Correct Answer: infant industry argument


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Option A: a revenue effect and redistribution effect

Option B: revenue effect and protection effect

Option C: consumption effect and protection effect

Option D: redistribution effect and consumption effect

Correct Answer: consumption effect and protection effect


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Option A: distinguishes between tariffs that are effective and those that are ineffective

Option B: is the minimum level at Which a tariff becomes effective in limiting imports?

Option C: shows how effective a tariff is in raising revenue for the government

Option D: shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms

Correct Answer: shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms


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Option A: fixed amount of money per unit traded

Option B: a percentage of money per unit traded

Option C: a percentage of the quantity of imports

Option D: All of the above

Correct Answer: fixed amount of money per unit traded


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Option A: valid for stereos, but nor for most products imported by Pakistan

Option B: valid for most products imported by Pakistan but not for stereos

Option C: deceiving since Koreans eventually spend the dollars on Pakistani goods

Option D: deceiving since the dollars spent on a stereo built in the Pakistan eventually wind up overseas

Correct Answer: deceiving since Koreans eventually spend the dollars on Pakistani goods


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Option A: equals to tariffs on imported manufactured goods

Option B: lower than tariffs on imported manufactured goods

Option C: higher than tariffs on imported manufactured goods

Option D: The highest of all tariffs

Correct Answer: lower than tariffs on imported manufactured goods


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Option A: Ad valorem tariff

Option B: Specific tariff

Option C: Effective tariff

Option D: Compound tariff

Correct Answer: Ad valorem tariff


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Option A: The purpose is to maintain protection for an indefinite time period

Option B: The industry is characterized by increasing returns to scale

Option C: The economy operates during a recession

Option D: The protected industry provides invaluable goods during periods of war

Correct Answer: The protected industry provides invaluable goods during periods of war


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Option A: nominal tariff rate on the final product equals the effective tariff rate on the product

Option B: nominal tariff rate on the final product is greater than the effective rate on the product

Option C: nominal tariff rate on the final product is less than the effective tariff rate on the final product

Option D: None of the above

Correct Answer: nominal tariff rate on the final product equals the effective tariff rate on the product


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Option A: cause foreign assemblers of computers to use more computer components that are supplied by countries other than the United States

Option B: Increase the Price of computers to consumers in the United States

Option C: Increase the Production of computers in the United States

Option D: Increase the production of computer components in the United States

Correct Answer: Increase the production of computer components in the United States


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Option A: will always

Option B: will never

Option C: can sometimes

Option D: None of the above

Correct Answer: can sometimes


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Option A: the country is a small country rather than a larger country

Option B: its terms of trade improve enough

Option C: The tariff enhances the welfare of its trading partners

Option D: Its government’s tax revenue increases because of the tariff

Correct Answer: its terms of trade improve enough


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Option A: improve

Option B: worsen

Option C: not change

Option D: any of these

Correct Answer: not change


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Option A: $10

Option B: $15

Option C: $20

Option D: $25

Correct Answer: $15


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Option A: $10,000

Option B: $25,000

Option C: $50,000

Option D: $75,000

Correct Answer: $50,000


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Option A: 12,000 units

Option B: 20,000 units

Option C: 30,000 units

Option D: 42,000 units

Correct Answer: 20,000 units


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Option A: 10,000 units

Option B: 40,000 units

Option C: 42,000 units

Option D: 50,000 units

Correct Answer: 40,000 units


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Option A: highest of all

Option B: higher than on manufactured goods

Option C: equal to tariffs on manufactured goods

Option D: lower than on manufactured goods

Correct Answer: lower than on manufactured goods


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Option A: consumer surplus

Option B: producer surplus

Option C: deadweight costs

Option D: deadweight surplus

Correct Answer: consumer surplus


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Option A: producer surplus

Option B: deadweight surplus

Option C: government surplus

Option D: consumer surplus

Correct Answer: consumer surplus


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Option A: The price of autos within the nation will rise by 10 percent

Option B: The price of autos within the nation will rise by less than 10 percent

Option C: The price of autos within the nation will rise by more than 10 percent

Option D: The price of autos will not rise because of internal competition

Correct Answer: The price of autos within the nation will rise by 10 percent


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Option A: a regional area within which trade with foreign nations is allowed

Option B: a free trade agreement among several nations

Option C: designed to limit exports of manufactured goods by placing export taxes on goods made within the zone

Option D: designed to promote exports by deferring imports duties on intermediate inputs and waving such duties if the final product is re-exported rather than sold domestically

Correct Answer: designed to promote exports by deferring imports duties on intermediate inputs and waving such duties if the final product is re-exported rather than sold domestically


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Option A: only revenue effects

Option B: only protective effects

Option C: Both protective and revenue effects

Option D: neither protective or revenue effects

Correct Answer: Both protective and revenue effects


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Option A: fixed amounts of money per unit traded

Option B: a percentage of the price of the product

Option C: a percentage of the quantity of imports

Option D: All of the above

Correct Answer: a percentage of the price of the product


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Option A: In the interest of the U.S as a whole but not in the interest of the state of Pennsylvania where steel mills are located

Option B: In the interest of the U.S as a whole and in the interest of the state of Pennsylvania

Option C: Not in the interest of the U.S as a whole, but it might be in the interest of the state of Pennsylvania

Option D: Not in the interest of the U.S as a whole, nor in the interest of the state of Pennsylvania

Correct Answer: Not in the interest of the U.S as a whole, but it might be in the interest of the state of Pennsylvania


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Option A: Compound tariff

Option B: Effective tariff

Option C: Ad valorem tariff

Option D: Specific tariff

Correct Answer: Specific tariff


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