Question 1

Dumping refers to

Accepted Answer

Dumping refers to selling a product for a price below its cost of production, which can harm domestic industries and create unfair competition.

Question 2

For the U.S.steel industry,a "Buy American" provision in the 2009 stimulus bill would create gains for all of the following except

Accepted Answer

A "Buy American" provision in the 2009 stimulus bill would require the use of U.S.-made steel in infrastructure projects. This would benefit U.S. steel companies and workers by increasing demand for their products. However, foreign steel companies would be disadvantaged as they would be shut out of this market. U.S. taxpayers would also face higher costs for these projects due to the higher cost of U.S.-made steel compared to imported steel.

Question 3

In 1995,the General Agreement on Tariffs and Trade (GATT),which was established in 1948,was replaced by the World Trade Organization (WTO).Why did members of the GATT push for the establishment of the WTO?

Accepted Answer

The GATT primarily focused on trade in goods, and there was a need to create an organization that could also cover trade in services and intellectual property, leading to the establishment of the WTO.

Question 4

In general,the costs tariffs and quotas impose on consumers are

Accepted Answer

Tariffs and quotas can significantly increase the cost of imported goods, leading to higher prices for consumers. While these costs can add up to a large total amount due to the collective impact on all consumers, the additional cost per individual consumer is often relatively small, spread out over many purchases and individuals.

Question 5

Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.This statement describes the ________ argument for protectionism.

Accepted Answer

The statement describes the infant industry argument for protectionism, which suggests that a temporary protection of domestic industries is necessary to give them time to develop and gain experience, ultimately reducing unit costs and allowing them to compete successfully in international markets.

Question 6

Economists believe the most persuasive argument for protectionism is to

Accepted Answer

Economists believe the most persuasive argument for protectionism is to protect infant industries. This refers to protecting new and emerging industries that may not be able to compete with established industries in other countries. The idea is that by providing temporary protection from foreign competition, the infant industry will be able to develop, become more efficient, and eventually be able to compete on its own. This argument is based on the belief that protecting these industries will lead to long-term economic benefits, including job creation, increased competition, and economic growth.

Question 7

Many economists ________ protectionism because it ________ consumers and ________ jobs in domestic industries that use protected products.

Accepted Answer

The sentence mentions that economists are critical of protectionism because it causes losses to consumers and eliminates jobs in domestic industries that use protected products, indicating that economists are against protectionism. Option A and C both suggest that economists support protectionism, which contradicts the given information. Option D suggests that protectionism unfairly rewards and relocates, but this statement is incomplete and does not provide the full explanation given in the sentence. Therefore, option B is the best choice.

Question 8

All but one of the following statements is used to justify protectionism.Which statement is not used to justify protectionism?

Accepted Answer

This statement does not justify protectionism as it argues against free trade instead of advocating for protectionism.

Question 9

The Smoot-Hawley Tariff

Accepted Answer

The Smoot-Hawley Tariff, passed in 1930, raised average tariff rates in the United States by over 50 percent. This led to retaliation by other countries and a reduction in international trade, worsening the Great Depression.

Question 10

A "Buy American" provision in the 2009 stimulus bill would ________ consumer surplus and ________ producer surplus for industries that produce protected products in the United States.

Accepted Answer

The answer of A "Buy American" provision in the 2009...

Question 11

The World Trade Organization (WTO)promotes foreign trade and investment,or globalization.In recent years opposition to globalization has led to violent protests at meetings of the WTO.All of the following are reasons for these anti-globalization protests except

Accepted Answer

The correct answer is D because the loss of intellectual property due to foreign trade and investment is generally a concern of content creators and industries, not a typical focus of anti-globalization protests. These protests are more often concerned with issues like economic inequality, cultural erosion, and the impact of globalization on local economies and environments, as outlined in options A, B, and C.

Question 12

Which of the following describes the national security argument for protectionism?

Accepted Answer

The national security argument for protectionism posits that certain industries that are critical to national defense or security should be protected from foreign competition to ensure an adequate supply of these goods in the event of an international conflict. This argument holds that a dependence on foreign sources for crucial goods could harm a country's ability to defend itself in times of crisis.

Question 13

Prior to the 1998 World Cup,France banned the use of all soccer balls made by child workers.Several economists criticized the ban.Which of the following is an argument these economists used to justify the use of child labor in some countries?

Accepted Answer

The economists argued that banning the use of soccer balls made by child labor would harm the children as they would need to turn to more dangerous and harmful alternatives such as begging and prostitution to support themselves and their families.

Question 14

Your roommate Hansen argues that American producers cannot compete with foreign producers because wages are lower in foreign countries than in the United States.Hansen

Accepted Answer

Hansen's argument is incorrect because free trade actually benefits everyone by increasing economic efficiency and raising living standards. While it is true that foreign producers may have an advantage in terms of lower wages, this does not mean that American producers cannot compete. In fact, American producers can focus on producing higher quality goods or goods that require skilled labor, which can justify higher prices and offset the disadvantage of higher wages. Additionally, free trade can lead to innovation and specialization, leading to more efficient production processes and ultimately benefitting consumers.

Question 15

The General Agreement on Tariffs and Trade (GATT)was formed to replace the World Trade Organization (WTO)because the WTO was empowered only to reduce barriers to trade in goods.The GATT is an agreement to reduce barriers to trade in goods,services and intellectual property.

Accepted Answer

The statement is incorrect. GATT was formed before the WTO and was replaced by the WTO, not the other way around. Additionally, although the main focus of GATT was on reducing barriers to trade in goods, it did not cover services and intellectual property to the extent that the WTO does.

Question 16

In 1930,the U.S.government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff.In response to this tariff,other countries ________ and international trade ________.

Accepted Answer

In response to the Smoot-Hawley Tariff, other countries raised their tariffs as well, creating a "trade war" and severely reducing international trade. This ultimately worsened the Great Depression, rather than helping to alleviate it.

Question 17

The quota on imported sugar costs U.S.consumers more than $2 billion annually and protects very few jobs.Why does Congress maintain a sugar quota that protects only a few thousand workers while forcing millions of people to pay higher prices for sugar products?

Accepted Answer

The answer of The quota on imported sugar costs U.S.consumers...

Question 18

In 1995,the General Agreement on Tariffs and Trade (GATT)was replaced by the World Trade Organization (WTO).

Accepted Answer

This statement is true. The WTO was established in 1995 as a successor to GATT.

Question 19

Protectionism is the use of ________ to protect domestic firms from foreign competition.

Accepted Answer

Trade barriers, such as tariffs or quotas, are used to restrict foreign imports and protect domestic industries from competition. Military force and cheap labor are not related to protectionism, and dumping refers to selling goods in a foreign market below cost to gain market share, not protecting domestic firms.

Question 20

It is difficult to determine if foreign companies are selling their products for prices below their costs of production because

Accepted Answer

The answer of It is difficult to determine if foreign...

Quiz 9: Comparative Advantage and the Gains From International Trade