17. since the 1930s, overall tariff rates in the US have: a. increased b.decreas

Question

17. since the 1930s, overall tariff rates in the US have:

a. increased

b.decreased

c.become very unstable, changing week to week

d.remained unchanged

18. suppose economic stability in the US increases. this will tend to cause which of the following to occur?

a. the demand for euros will rise in the foreign exchange market

b.the demand for US dollars will rise in the foreign exchange market

c.the supply of US dollars will rise in the foreign exchange market

d.nothing will change in the foreign exchange market

19. why do free proponents applaud successful trade deflection?

a. it circumvents trade restrictions within regional trade blocs

b.it decreases incentives for trade diversion

c.it promotes more rules for origin laws

d.it increases trade restrictions within regional trade blocs

27 under the gold standard, when a nation had a deficit in its balance of payments:

a. interest rates would fall which would increase foreign investment

b.gold would flow to foreign residents and the domestic money supply would decrease

c.interest rates would rise which would reduce foreign investment

d.gold would flow into the country leading to an increase in the domestic money supply

28. a reduction in a country's rate of inflation should:

a. increase its exports

b.increase its imports

c.lead to a negative trade balamce

d.lead to an outflow of SDRs

30. speicalization allows for:

a. more consumption for the trading partner with the comparative advantage

b.more consumption for all trading partners

c.more consumption for the trading partner with the absolute advantage

d.equal consumption among trading partners

Explanation / Answer

17. (B) decreased; After trade liberalization, the belief that low tariffs led to a more prosperous country are now the predominant belief with some exceptions.Presently only about 30% of all import goods are subject to tariffs in the United States, the rest are on the free list. The "average" tariffs now charged by the United States are at a historic low. The list of negotiated tariffs are listed on the Harmonized Tariff Schedule as put out by the United States International Trade Commission.

18. the demand for US dollars will rise in the foreign exchange market; due to absence of excessive fluctuations in the macroeconomy with  constant output growth and low and stable inflation, the demand for US goods would increase in the foreign market and thus the demand for its currency would rise.

19. it circumvents trade restrictions within regional trade blocs; When two or more countries form a free trade area, they do not have tariffs that are homogeneous with respect to the rest of the world. Consequently, it is possible for one country then to import all of a certain good that the other country previously imported, only to turn around and trade it to another country in its free trade area.

27. gold would flow to foreign residents and the domestic money supply would decrease

28.  increase its exports

30. (a) more consumption for the trading partner with the comparative advantage

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