Question 1

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

Accepted Answer

Trade restrictions are sometimes necessary for national security, such as preventing the trade of sensitive technologies or goods to potential adversaries. This argument is often used by governments to justify the imposition of trade restrictions. A, B, and C are incorrect as they are not widely accepted arguments for trade restrictions.

Question 2

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

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

Question 3

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...

Question 4

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

The answer of If the United States threatens to impose...

Question 5

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 6

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

Accepted Answer

The observation suggests that owners of firms in young industries should be willing to bear temporary losses in order to eventually become profitable in the long run. This aligns with the idea of the infant-industry argument, which advocates for government protection and support for new and developing industries that may not yet be profitable but have the potential to become so in the future. Therefore, economists who support this argument may be less skeptical about incurring temporary losses in the short term to achieve future success.

Question 7

The infant-industry argument

Accepted Answer

The infant-industry argument is based on the belief that protecting industries when they are young will pay off later. It is a strategy used by some countries to develop their domestic industries and protect them from foreign competition. It is not supported by all economists and is often opposed by advocates of free trade.

Question 8

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 is true that foreign competition may cause some temporary unemployment in import-competing industries, the overall impact of free trade on job creation is positive. This is because when countries allow imports, it enables domestic consumers to purchase goods at lower prices, which frees up money that can then be spent on other goods and services, thus increasing demand in other industries. Additionally, businesses that export goods benefit from free trade agreements, as they are able to expand their markets and create new jobs. Overall, the benefits of free trade outweigh the costs of temporary job losses in certain industries.

Question 9

The "unfair­competition" argument might be cited by an American who believes that

Accepted Answer

The answer of The "unfair­competition" argument might be cited by...

Question 10

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

Accepted Answer

A multilateral approach to free trade involves multiple countries reducing trade restrictions at the same time. It is not just one country removing trade restrictions on its own (option A) or refusing to remove restrictions regardless of what other countries do (option C). And while option D could be a result of a multilateral approach, it is not the defining characteristic of one.

Question 11

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

Accepted Answer

The two basic approaches that a country can take as a means to achieve free trade are the unilateral approach and the multilateral approach. The unilateral approach involves a country removing its trade barriers independently, without requiring other countries to do the same. This approach is also known as a "one-sided" or "unbalanced" approach. On the other hand, the multilateral approach involves negotiations between countries to collectively reduce trade barriers, leading to a more balanced and mutually beneficial outcome. The multilateral approach is often pursued through international organizations such as the World Trade Organization (WTO). Therefore, the best choice is A, the unilateral approach and the multilateral approach.

Question 12

Countries that restrict foreign trade are likely to

Accepted Answer

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

Question 13

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 sugar producers. The quotas increase producer surplus for the United States by allowing domestic producers to sell their sugar at higher prices than they would receive in a more competitive market. However, the quotas reduce consumer surplus for the United States by increasing the price of sugar for U.S. consumers. The quotas also harm foreign sugar producers by limiting their access to the U.S. market.

Question 14

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, as it argues that free trade allows countries to specialize in producing the goods they can produce most efficiently, leading to a more efficient allocation of resources and higher overall levels of production. The other three arguments (jobs, national-security, and infant-industry) are commonly used as justifications for trade restrictions.

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

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

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

Question 17

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 18

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) are commonly used to support trade restrictions. The no-deadweight-loss argument is not a reason for restricting trade, as it suggests that trade is efficient and does not lead to any loss of economic welfare.

Question 19

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 may lead to an increase in the price of imported furniture and ultimately lead to domestic furniture producers gaining producer surplus. However, it is unlikely that such tariffs would lead to a higher rate of technological advance or more market power for domestic producers. In fact, tariffs may discourage domestic firms from innovating and could make them less competitive in the long run. Option A is likely as tariffs will increase domestic prices and reduce consumer surplus.

Question 20

Workers displaced by trade eventually find jobs in

Accepted Answer

When workers are displaced by trade, they eventually find jobs in industries in which the country has a comparative advantage. This is because trade allows countries to specialize in producing goods that they can produce most efficiently, which ultimately creates more job opportunities in those industries. Workers may need to retrain and learn new skills, but there will be employment opportunities available in the industries in which their country has a comparative advantage. Options A and B are less likely as workers who lose their jobs due to trade may have difficulty finding employment outside their own country or in the government sector, which may have limited capacity to create new jobs. Option D is also less likely as the company from which they were displaced may be facing similar challenges and may not be hiring itself.

Quiz 9: Application: International Trade

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

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

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

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

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

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

The infant-industry argument

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

The "unfaircompetition" argument might be cited by an American who believes that

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

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

Countries that restrict foreign trade are likely to

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?

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

Which of the following is the most accurate statement?

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

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

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

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?

Workers displaced by trade eventually find jobs in

Quiz 9: Application: International Trade

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

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

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

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

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

"Owners of firms in young industries should be willing to incur temporary losses if they believe that those firms will be profitable in the long run." This observation helps to explain why many economists are skeptical about the

The infant-industry argument

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

The "unfair­competition" argument might be cited by an American who believes that

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

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

Countries that restrict foreign trade are likely to

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?

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

Which of the following is the most accurate statement?

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

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

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

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?

Workers displaced by trade eventually find jobs in

The "unfaircompetition" argument might be cited by an American who believes that