1 To which of the following goods does the Theory of Purchasing Power Parity (PPP) apply? (A) A newly developed UV-resistant parasol. (B) The scenery along Taiwan’s north-south railway line. (C) An anniversary haircut service at the hair salon. (D) Cakes fresh out of the oven at 6:00 AM from the cake shop.

3 What is the countervailing duty? (A) The government levies a tax on imported parts or raw materials and then subsidizes the export of the finished product by an amount equal to the tax previously collected. (B) The government imposes appropriate tariffs to balance the budget. (C) The government levies a tax on a specific imported good and simultaneously subsidizes the export of the same item by an equal amount. (D) A tariff imposed by the domestic government on subsidized goods because a foreign government has provided subsidies for their export.

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