Econ Help

1. Which one of the following cannot be the argument for using the export tariff?

a. The export tariff will cause deadweight loss to a nation.

b. The export tariff will reduce the domestic price of the good that is to be exported and thus encourage the development of the domestic processing industries.

c. The export tariff is an important revenue source for some countries.

d. The export tariff will ensure that the domestic price is lower so that the product is affordable to people.

2. The optimal tariff rate of a large country is

a. zero.

b. negative.

c. a positive number.

d. the same as the effective rate of protection.

3. An export duty will

a. increase the export.

b. increase the domestic production of the exportable goods.

c. decrease the domestic consumption of the exportable goods.

d. decrease the export.

4. Which of the following is an argument for trade protection?

a. Free trade will lead to efficiency gains to a nation.

b. Industries in a development country need time to gain efficiency to compete in the future.

c. With trade protection, the market gets smaller.

d. There will be less technological transfer with trade protection.

5. Which one of the following correctly describes the “Dutch Disease”?

a. It is a disease that destroys the elm trees. The consequence of this disease is to lower national income and thus result in social instability.

b. When the Dutch discovered the natural gas in the North Sea, its natural gas related industry expands resulting in