Chapter 7- Political Economy of International Trade

Question 1

you wouldn’t think it but you need a certain amount of _______ in an economy in order to prevent ______

Answer 1

unemployment

inflation

Question 2

an artificial tax placed on goods that are imported into a domestic marketplace in order to reduce the efficiency of the international marketplace

Answer 2

tariffs

Question 3

a tax placed on a specific good

Answer 3

specific tariff

Question 4

tax on the value of the goods rather than on the number of units

Answer 4

ad valorem tariff

Question 5

tariffs are now a ______ rather than a revenue raiser after the 16th amendment passed that made it legal to tax income

Answer 5

trade policy mechanism

Question 6

if you want to eliminate trade treaties then you are talking about reinstating ______

Answer 6

tariffs

Question 7

the other country putting a tariff on our goods and how that affects us (tariff war) and do you cause an unintended effect to your own economy

Answer 7

what you should worry about when deciding to do tariffs

Question 8

a sum of money granted by the government to assist an industry or business so that the price of a commodity or service may remain low or competitive; bolster an inefficient industry

Answer 8

subsidies

Question 9

a major industries in the US that are subsidized and why

Answer 9

weapons manufacturing and farming for national security reasons

Question 10

why do we subsidize things instead of putting tariffs

Answer 10

it is easier to hide subsidies and it doesn’t violate any trade treaties that we may have

Question 11

take off of the new trade theory; subsidize the domestic company in order to dominate the world market and get the first mover advantage

Answer 11

strategic trade policy

Question 12

quota on the amount of a certain good that can be imported; this causes the price to go up and the domestic product is now more competitive

Answer 12

import quotas

Question 13

what do you have to worry about when doing these things to protect domestic producers?

Answer 13

an inflationary economy

Question 14

when a foreign country decides to export less because they do not want a law or tariff created

Answer 14

voluntary export restraints

Question 15

a certain amount of the product must be made locally

Answer 15

local content requirements

Question 16

side effect of local content requirements

Answer 16

increase production and jobs domestically but raise the cost

Question 17

bureaucratic red tape that makes it very hard for an imported product to come into a country

Answer 17

administrative policies

Question 18

policies that fight getting rid of products by selling them lower than the cost of production

Answer 18

anti-dumping policies

Question 19

TRIPS Agreement

Answer 19

Trade Related Aspects of Intellectual Property Rights

Question 20

how do other countries try to combat the US subsidies

Answer 20

say that they will honor our intellectual property rights if we stop subsidizing farms

Question 21

very high duties on your goods for the next five years and you can’t complain if you prove the dumping was predatory

Answer 21

countervailing duties or anti-dumping duties