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6.2   Tariffs and Export Subsidies: Simultaneous Shifts in RS and

Question : 6.2   Tariffs and Export Subsidies: Simultaneous Shifts in RS and : 1407622

 

6.2   Tariffs and Export Subsidies: Simultaneous Shifts in RS and RD

1) If the U.S. (a large country) imposes a tariff on its imported good, this will tend to

A) improve the terms of trade of the United States.

B) have no effect on terms of trade.

C) improve the terms of trade of all countries.

D) cause a deterioration of U.S. terms of trade.

E) raise the world price of the good imported by the United States.

2) If Slovenia is a small country in world trade terms, then if it imposes a large series of tariffs on many of its imports, this would

A) have no effect on its terms of trade.

B) improve its terms of trade.

C) deteriorate its terms of trade.

D) decrease its marginal propensity to consume.

E) increase its exports.

3) If Slovenia is a large country in world trade, then if it imposes a large set of tariffs on many of its imports, this would

A) improve its terms of trade.

B) have no effect on its terms of trade.

C) harm its terms of trade.

D) decrease its marginal propensity to consume.

E) increase its exports.

4) If Slovenia were a large country in world trade, then if it imposes a large set of tariffs on its imports, this must

A) decrease the internal price of imports below the world market rate.

B) cause retaliation on the part of its trade partners.

C) harm Slovenia's real income.

D) improve Slovenia's real income.

E) improve the real income of its trade partners.

5) If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must

A) harm its terms of trade.

B) have no effect on its terms of trade.

C) improve its terms of trade.

D) decrease its marginal propensity to consume.

E) harm world terms of trade.

6) If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must

A) improve the real income of its trade partners.

B) cause retaliation on the part of its trade partners.

C) harm Slovenia's real income.

D) improve Slovenia's real income.

E) increase internal prices above the world market rate.

7) An export subsidy has the opposite effect on terms of trade to the effect of an import tariff. Domestically a tariff will raise the price of the import good, deteriorating the domestic terms of trade. A production subsidy for the export product will lower the local price of the export good, lowering the domestic terms of trade for the country. Hence the export subsidy and the import tariff have the same effect. This analysis seems to contradict the first sentence in this paragraph. Discuss this paradox.

 

 

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