Political Economy of International Trade
Instruments of trade policy correct answers • Tariffs
• Subsidies
• Import quotas
• Voluntary export restraints
• Local content requirements
• Administrative policies
• Antidumping policies
tariff correct answers A tax levied on imports
specific tariff correct answers Levied as a fixed charge for each unit of good imported
ad valorem tariff correct answers Levied as a proportion of the value of the imported
good
subsidy correct answers a government payment to a domestic provider
foreign trade zones correct answers -designated region in which merchandise is
allowed to pass through with lower custom duties (taxes) and/or fewer customs
procedures
-purpose is to increase employment and trade within a nation
export financing correct answers when exports are financed because a firm cannot
afford to export sometimes because they are too tiny
special government agencies correct answers -organize trade missions for officials and
businesses
-operate export-promotion offices at locations abroad
-help import products the home nation does not produce
import quota correct answers a direct restriction on the quantity of a good that can be
imported into a country (licenses for only certain firms to do imports)
tariff rate quota correct answers lower tariff rates applied to imports within the quota
than those over the quota (limit imports over quota)
voluntary export restraint correct answers A quota on trade imposed from the exporting
country's side, instead of the importer's; usually imposed at the request of the importing
countries government
quota rent correct answers Extra profit producers make when supply is artificially
limited by an import quota
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