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Professor Willett
Practice Questions for International
Economics
1. Using demand and supply curves for imports, show the effects of a quota in imports and price.
2. For a given sized quo:;'
equivalent tariff.
show how a lower elasticity of import demand would affect the
3. "From the standpoint of the costs to the domestic economy, a VER is the most efficient form
of trade protection." Discuss using a graphical illustration.
4. Discuss alternative ways of allocating quotas and the resulting effects on income distribution.
5. "While there may be a case for government support of infant industries, a tariff won't be the
best way to do this." Discuss using a graphical illustration .
. 6. If a 10% tariff leads to a fall in imports of $1 billion, how great are the economic (deadweight)
costs of this tariff?
'
7. "Having oil import quotas in the 1960s helped contribute to U.S. national security." Discuss.
8. Explain the specificity rule and give an example.
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9. Explain the infant government argument for tariffs. Does it meet the specificity rule?
10. "Political economy analysis shows why consumer groups have more influence than producer
groups on trade policy." Discuss.
11. "Adjustment assistance helps the political case for free trade." Discuss.
12. "Trade protection is more likely to be given during recessions than booms." Discuss.
13. "Modem political economy analysis shows the limitations of realism as an explanation for
trade policies." Discuss.
14. "Persistent dumping can be in the economic interests of both the exporting and importing
countries." Discuss 1t5ing It gfltl'Ri881 ilht!ltf8tieft.
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16. "While in principle there is a possibility that government targeting of particular industries
can improve economic efficiency, in practice such efforts often have the opposite result."
Discuss.
17. "Political considerations may have as much or more influence than economic considerations
on whether a government's policy of supporting particular industries improves economic
efficiency." Discuss.
18. What are the major factors which will cause the trade creation effects of a customs union to
be greater or less than the trade diversion effects? Give graphical illustrations.
19. "What are the major factors which will influence whether sanctions will have a substantial
economic impact on the target county?"
20. "Since sanctions seldom work it is irrational for governments to keep using them." Discuss.
21. "Not only do sanctions often not work, they can be counterproductive."
Discuss.
22. "The current moves toward economic discrimination through trade blocs differ substantially
from those of the 1930s." Discuss.
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