Impact of Trade Policies on Surplus, Revenue, and Welfare

Import Quota Effects

3) An import quota will increase producer surplus, decrease consumer surplus, have no effect on government revenue, and have an ambiguous effect on overall domestic national welfare.

C) increase; decrease; have no effect on; have an ambiguous effect on

Voluntary Export Restraint Effects

4) A voluntary export restraint will increase producer surplus, decrease consumer surplus, have no effect on government revenue, and decrease overall domestic national welfare.

D) increase; decrease; have no effect on; decrease

Export Tariff Effects with Imperfect Competition

1) If an import-competing firm is imperfectly competitive, then under free trade an export tariff will increase domestic market price, have no effect on producer surplus, decrease consumer surplus, increase government revenue, and decrease overall domestic national welfare.

A) increase; have no effect on; decrease; increase; decrease

Import Quota Effects with Imperfect Competition

2) If an import-competing firm is imperfectly competitive, then under free trade an import quota will increase domestic market price, increase producer surplus, decrease consumer surplus, have no effect on government revenue, and decrease overall domestic national welfare.

A) increase; increase; decrease; have no effect on; decrease

Replacing Export Tariff with Import Quota

3) Suppose an import-competing firm is imperfectly competitive. Replacement of an export tariff with an import quota that yields the same level of imports will increase market price, increase producer surplus, decrease consumer surplus, decrease government revenue, and decrease overall domestic national welfare.

A) increase; increase; decrease; decrease; decrease

Transition from Autarky to Free Trade

4) If an import-competing firm is the only domestic producer of a good, then a transition from autarky to free trade will decrease domestic price, decrease producer surplus, increase consumer surplus, and increase overall domestic national welfare.

A) decrease; decrease; increase; increase

Chapter 14: Exchange Rates and Currency Effects

Currency Appreciation

12) An appreciation of a country's currency:

D) raises the relative price of its exports and lowers the relative price of its imports.

Currency Depreciation

14) A(n) depreciation of a nation's currency will cause imports to decrease and exports to increase, all other things held constant.

C) depreciation; decrease; increase

Interest Rates and Exchange Rates

1) Which one of the following statements is the MOST accurate?

D) For a given euro interest rate and constant expected exchange rate, a rise in the interest rate offered by dollar deposits causes the dollar to appreciate.