Question 1

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

Accepted Answer

The statement "A multilateral approach requires the agreement of two or more nations" is true, but it is not an advantage of a multilateral approach over a unilateral approach. In fact, it is a potential disadvantage because it can be more difficult to achieve agreement between multiple nations than to implement policy unilaterally. Therefore, C is the correct answer. A, B, and D are all advantages of a multilateral approach over a unilateral approach.

Question 2

At present,the United States uses a system of quotas to limit the amount of sugar imported into the country.Which of the following statements is most likely true?

Accepted Answer

The quotas are most likely the result of lobbying from U.S. producers of sugar, as they benefit from reduced competition from foreign producers. The quotas increase producer surplus for the United States, as domestic producers can charge higher prices, but reduce consumer surplus for the United States, as consumers must pay higher prices. The quotas harm foreign sugar producers, as they are limited in the amount of sugar they can export to the United States.

Question 3

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies,the United States will be

Accepted Answer

If Honduras does not give in to the threat and does not remove agricultural subsidies, the United States will be worse off because they will not be able to impose the tariff and protect their domestic blueberry industry. If Honduras gives in and removes agricultural subsidies, the United States will be better off as they can avoid imposing the tariff and continue to have access to Honduran blueberries. However, if the United States imposes the tariff without any response from Honduras, it may lead to retaliation from Honduras and potentially harm other areas of trade between the two countries.

Question 4

The "unfair-competition" argument might be cited by an American who believes that

Accepted Answer

The answer of The "unfair-competition" argument might be cited by...

Question 5

When a country takes a multilateral approach to free trade,it

Accepted Answer

A multilateral approach to free trade means that multiple countries agree to reduce trade barriers and restrictions together. Therefore, choice B is the best as it involves reducing trade restrictions while other countries do the same.

Question 6

Countries that restrict foreign trade are likely to

Accepted Answer

The answer of Countries that restrict foreign trade are likely...

Question 7

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S.minimum wage.Prohibiting such goods is likely to

Accepted Answer

The answer of Opponents of free trade often want the...

Question 8

If the Korean steel industry subsidizes the steel that it sells to the United States,the

Accepted Answer

The harm done to U.S. steel producers from subsidized Korean steel is typically less than the benefit to U.S. consumers, who gain from lower prices. This is because the overall economy benefits from cheaper inputs (like steel), which can reduce costs for a wide range of industries and lead to lower prices for consumers.

Question 9

Suppose France subsidizes French wheat farmers,while Germany offers no subsidy to German wheat farmers.As a result of the French subsidy,sales of French wheat to Germany

Accepted Answer

The answer of Suppose France subsidizes French wheat farmers,while Germany...

Question 10

Which of the following arguments for trade restrictions is often advanced?

Accepted Answer

Trade restrictions are sometimes necessary for national security. This argument is often used to justify trade restrictions on certain goods, such as military equipment or high-technology products, that could potentially pose a threat to national security if acquired by hostile foreign entities. However, this argument is not applicable to all trade restrictions, and should be used judiciously to avoid unnecessary harm to the economy.

Question 11

Congresswoman Gaga represents a state in which several firms manufacture furniture.She wants to impose tariffs on all imported furniture.Which of the following is the least likely consequence of such tariffs?

Accepted Answer

Tariffs on imported furniture would likely protect domestic furniture producers and give them more market power, thus increasing their producer surplus. However, it is unlikely that such tariffs would lead to a higher rate of technological advance for domestic producers. In fact, research has shown that trade openness and competition often lead to greater technological innovation and improved efficiency in domestic industries.

Question 12

Which of the following is not a commonly-advanced argument for trade restrictions?

Accepted Answer

The efficiency argument is actually in favor of free trade rather than trade restrictions, as it argues that free trade allows resources to be allocated to their most efficient use, leading to greater overall economic prosperity. The other three arguments listed are commonly used to justify trade restrictions.

Question 13

One should be especially wary of the national-security argument for restricting trade when that argument is made by

Accepted Answer

The answer of One should be especially wary of the...

Question 14

The two basic approaches that a country can take as a means to achieve free trade are the

Accepted Answer

The two basic approaches to achieve free trade are the unilateral approach, where a country removes trade barriers on its own, and the multilateral approach, where countries negotiate and reduce trade barriers together. The other choices are incorrect as they do not accurately describe the basic approaches to achieving free trade.

Question 15

Which of the following is the most accurate statement?

Accepted Answer

The answer of Which of the following is the most...

Question 16

Several arguments for restricting trade have been advanced.Those arguments do not include

Accepted Answer

The other three arguments, jobs, protection-as-a-bargaining-chip, and infant-industry, have been used to support trade restrictions in various situations. However, the no-deadweight-loss argument is not typically used as a rationale for trade restrictions. Deadweight loss refers to the lost economic welfare that occurs when there is a discrepancy between the price that consumers are willing to pay for a good and the price that producers require in order to supply that good. In general, free trade is thought to minimize deadweight loss by allowing goods to be produced and consumed in the most efficient way possible.

Question 17

The infant-industry argument

Accepted Answer

The infant-industry argument is based on the belief that protecting industries when they are young will allow them to mature and become competitive in the global market, ultimately benefiting the economy. This argument is generally supported by protectionists and critics of free trade.

Question 18

Workers displaced by trade eventually find jobs in

Accepted Answer

Displaced workers eventually find jobs in the industries in which their country has a comparative advantage. This is because when a country specializes in industries that it is relatively better at producing, it can produce goods more efficiently which leads to increased output, lower prices, and increased competitiveness in international markets. As a result, domestic firms in those industries will require additional labor, which will provide job opportunities for displaced workers.

Question 19

Critics of free trade sometimes argue that allowing imports from foreign countries causes a reduction in the number of domestic jobs.An economist would argue that

Accepted Answer

While it may be true that some domestic jobs may be lost due to foreign competition, an economist would argue that the overall impact of free trade is positive. This is because other industries, such as those that export goods or those that benefit from cheaper imported inputs, are likely to expand and create new jobs. Additionally, free trade leads to lower prices for consumers, which increases their purchasing power and overall standard of living.

Question 20

About what percent of total world trade is accounted for by countries that belong to the World Trade Organization?

Accepted Answer

The answer of About what percent of total world trade...

Quiz 9: Application: International Trade