4b Flashcards

1
Q

Ad-valorem Tariff

A

A tariff expressed as a fixed percentage of the value of the imported product.

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2
Q
A
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3
Q

Beggar-thy-neighbor Policy

A

The practice of imposing protectionist policies to achieve gains from trade at the expense of other nations.

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4
Q

Bonded Warehouse

A

A storage facility operated under the lock and key of (in the case of the United States) the U.S. Customs Service.

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5
Q

Compound Tariff

A

A tariff that is a combination of a specific tariff and an ad valorem tariff.

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6
Q

Dead-weight Loss

A

The net loss of economic benefits to a domestic economy because of the protective and consumption effect of a trade barrier.

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7
Q

Effective Tariff Rate

A

Measures the total increase in domestic production that a tariff makes possible, compared to free trade.

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8
Q

Free-trade Argument

A

If each nation produces what it does best and permits trade, over the long term each party will enjoy lower prices and higher levels of output, income, and consumption than could be achieved in isolation.

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9
Q

Infant Industry Argument

A

A tariff that temporarily shields newly developing industries from foreign competition.

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10
Q

Large Nation

A

An importing nation that is large enough so that changes in the quantity of its imports, by means of tariff policy, influence the world price of the product.

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11
Q

Nominal Tariff Rate

A

The tariff rate published in a country’s tariff schedule.

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12
Q

Tariff

A

tax on import. It is taxed on domestic consumers. Most common type of trade restriction; major source of revenue for developing countries.

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13
Q

Protective Tariff

A

tariff meant to protect domestic producers.

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14
Q

Revenue Tariff

A

tariff meant to generate revenue.

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15
Q

Difference between import and export tariff?

A

import tariffs tax goods coming in and export tariffs tax goods going out to foreign countries. Export tariffs are illegal in the US.

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16
Q

Specific Tariff

A

calls for a dollar amount of tax per unit of import good.

17
Q

Equivalent Tariff

A

a specific tariff and ad valorem tariff with different terms that make the amount taxed on imports the same.

18
Q

Protective Effect

A

Area A

19
Q

Redistributive Effect

A

Area B

20
Q

Revenue Effect

A

Area C

21
Q

Consumer Effect

A

Area D

22
Q

When a small country levies a tariff, can total surplus change be positive?

A

No.

23
Q

Monopsony Power

A

the ability of a country to sway market price with action. Not restricted to int’l markets.

24
Q

(T/F) When a country lifts its tariff on a good, demand for the country’s exports will decrease?

A

False, demand increases.

25
Q

Terms of Trade Effect

A

Area e, the welfare that is robbed of other countries by the large country imposing a tariff.

26
Q

Job Protection Argument

A
  • restricting trade seems like it would protect jobs.
  • takes away jobs in other industries and has no long-term effect on unemployment.
  • the cost of protecting the job exceeds the salary of the laborer.
27
Q

Infant Industry Argument

A

young industries should be protected until they are viable and can achieve economies of scale. Codling infant industries might remove the incentive for the industry to become efficient.

28
Q

National Security Argument

A

Countries should nurture domestic industries incase trade relations break down in crisis and the country can still provide for itself.