10e_Essay_Test_Bank_Ch_10_FINAL

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1、Chapter10:InternationalTradePolicyEssayQuestions1.Whathashappenedtothesizeofinternationaltrade(relativetoUSGDP)sincethelate1920's?WithwhatcountriesorregionsdoestheUnitedStatestradethemost?Answer:Therelativesizeoftotalworldtradehasbeenfluctuatingsincethelate1920s.Be

2、foretheGreatDepression,totalworldtradewasaround60%oftheU.S.'sGDP.Theratiohadfallento20%by1950.Afterthat,worldtradehasgrownrapidlyinsomeyears,andslowlyinsomeotheryears.Today,worldtradeisaround280%oftheU.S.'sGDP.Worldtradenowamountstomorethan40trilliondollars.Exports

3、toCanadaandMexicomakeupthelargestpercentageoftotalU.S.exportstoindividualcountries.ThelargestregionsthattheU.S.exportstoarethePacificRimandtheEuropeanUnion.2.Threepoliciesusedtorestricttradeare:tariffs,quotas,andregulatorytraderestrictions.Discusseachofthesepolicie

4、s.Answer:1.Atariffisataximposedbythegovernmentoninternationallytradedgoods.Tariffsarealsoknownascustomduties.Tariffsaffectthepriceofimportedgoods,whichthenaffectthequantitydemanded.Inthecaseofatariff,anincreaseindomesticdemandwillresultinanincreaseinimports.2.Quota

5、sarequantitylimitsplacedonimports.Quotasrestrictquantities,whichthenaffecttheprice.Unliketariffs,wherethegovernmentcollectsrevenues,thegovernmentcollectsnorevenuesonquotas.Thebenefitoftheincreaseinpriceduetoaquotagoestotheimporterasadditionalrevenue.Inthecaseofaquo

6、ta,anincreaseindomesticdemandwillnotresultinanincreaseinimports.Itwillsimplypushupthedomesticprice.3.Regulatorytraderestrictionsrefertogovernmentimposedproceduralrulesthatlimitimports.Forexamplethegovernmentmightprohibittheimportofvegetablesfromcountriesthatusecert

7、aintypesofpesticides.Someoftheseareimposedforlegitimatehealthreasons.Somearesimplymethodsofreducingimports.3.Eightreasonswhycountriesimposetraderestrictionsare(1).Unequalinternaldistributionofthegainsfromtrade.(2).Hagglingbycompaniesoverthegainsfromtrade.(3).Haggli

8、ngbycountriesovertraderestrictions.(4).Learningbydoingandeconomiesofscale.(5).Macroeconomicaspectsoftrade.(6).Nationalsecurity.(7).Internationalp