Question 1

Discuss the differences between a tariff and a quota.Explain why quotas are considered to be a greater threat to competition than tariffs.

Accepted Answer

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Question 2

Reducing protectionism allows greater gains from free trade.
Less protectionism leads to greater specialization and therefore more output for the entire world.

Accepted Answer

According to economic theory, reducing protectionism leads to greater gains from free trade. When countries specialize in producing goods in which they have a comparative advantage, they can produce more efficiently and at a lower cost, which leads to increased output and higher welfare for all countries involved in trade. Therefore, less protectionism allows for greater specialization and more output for the whole world.

Question 3

Explain how it is possible for a country to consume a greater quantity of goods and services than it is actually capable of producing.

Accepted Answer

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Question 4

As a result of GATT,tariff rates in developed countries have decreased from 40 percent in 1948 to less than 4 percent today.
The fact that tariffs have decreased from 40 percent in 1948 to 4 percent today shows the success of GATT and other trade forums at reducing protectionism.

Accepted Answer

The statement accurately reflects the impact of GATT and other trade forums on reducing tariff rates in developed countries.

Question 5

What is the "beggar-thy-neighbor" policy,and why is it a problem for the country that caused it?

Accepted Answer

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Question 6

An embargo is a prohibition against trading particular goods.
Embargoes,such as the U.S.embargo against Cuba,prevent imports and exports with the country that is embargoed.

Accepted Answer

An embargo is indeed a prohibition against trading particular goods, and embargoes like the U.S. embargo against Cuba do prevent imports and exports with the embargoed country. Therefore, the statement is true.

Question 7

Quotas are a much greater threat to competition than are tariffs because quotas preclude additional imports at any price.
A tariff does not place a physical limit on the quantity of a good coming into the country while a quota does.

Accepted Answer

Quotas restrict the quantity of imports that can enter a country, regardless of the price, thus limiting competition and potentially leading to higher prices for consumers. Tariffs, on the other hand, add a tax to imported goods, which may increase the price for consumers but still allow for competition as long as importers are willing to pay the tariff.

Question 8

Preservation of national security is one argument in favor of trade restrictions.
Protecting key industries such as the steel industry can be justified in the name of maintaining access to important war materials.

Accepted Answer

The preservation of national security is indeed considered a valid reason to impose trade restrictions. Protecting key industries, such as the steel industry, can ensure that the country has access to important materials in times of war or other emergencies.

Question 9

Trade restrictions designed to benefit the import-competing industries will benefit the entire country.
Trade restrictions will hurt domestic consumers who will end up paying higher prices.

Accepted Answer

Trade restrictions may protect certain industries and jobs, but they often lead to higher prices for domestic consumers who have fewer options to choose from. This can ultimately hurt the overall economy and standard of living for the entire country.

Question 10

Why would the establishment of protective trade barriers be a poor way of protecting workers in domestic industries?

Accepted Answer

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Question 11

What is a multilateral trade pact? Discuss the first one that was formed and what its impact has been.

Accepted Answer

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Question 12

Describe the pressures that discourage trade.

Accepted Answer

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Quiz 19: International Trade

Discuss the differences between a tariff and a quota.Explain why quotas are considered to be a greater threat to competition than tariffs.

Reducing protectionism allows greater gains from free trade. Less protectionism leads to greater specialization and therefore more output for the entire world.

Explain how it is possible for a country to consume a greater quantity of goods and services than it is actually capable of producing.

As a result of GATT,tariff rates in developed countries have decreased from 40 percent in 1948 to less than 4 percent today. The fact that tariffs have decreased from 40 percent in 1948 to 4 percent today shows the success of GATT and other trade forums at reducing protectionism.

What is the "beggar-thy-neighbor" policy,and why is it a problem for the country that caused it?

An embargo is a prohibition against trading particular goods. Embargoes,such as the U.S.embargo against Cuba,prevent imports and exports with the country that is embargoed.

Quotas are a much greater threat to competition than are tariffs because quotas preclude additional imports at any price. A tariff does not place a physical limit on the quantity of a good coming into the country while a quota does.

Preservation of national security is one argument in favor of trade restrictions. Protecting key industries such as the steel industry can be justified in the name of maintaining access to important war materials.

Trade restrictions designed to benefit the import-competing industries will benefit the entire country. Trade restrictions will hurt domestic consumers who will end up paying higher prices.

Why would the establishment of protective trade barriers be a poor way of protecting workers in domestic industries?

What is a multilateral trade pact? Discuss the first one that was formed and what its impact has been.

Describe the pressures that discourage trade.