Question 1

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...

Question 2

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 3

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 there may be a temporary loss of jobs in import-competing industries due to foreign competition, overall, free trade leads to an expansion of industries, especially exporting industries, creating new jobs. Therefore, foreign competition causing a reduction in the number of domestic jobs is a temporary effect.

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

Countries that restrict foreign trade are likely to

Accepted Answer

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

Question 6

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 7

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 are intended to protect domestic producers from foreign competition. However, it is unlikely that tariffs will lead to a higher rate of technological advance among domestic producers. In fact, protectionism may reduce the incentives for domestic producers to innovate and improve their production processes, as they face less competition. Therefore, choice C is the least likely consequence of imposing tariffs on imported furniture.

Question 8

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

Accepted Answer

Trade restrictions can be necessary for national security reasons, such as preventing sensitive technologies from falling into the hands of foreign adversaries or protecting domestic industries essential to national defense.

Question 9

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. This argument suggests that providing temporary protection to a new industry can enable it to protect its development and growth, making it a viable competitor in the international market in the long run.

Question 10

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 11

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

Accepted Answer

The other three arguments (the jobs argument, the protection-as-a-bargaining-chip argument, and the infant-industry argument) are all valid reasons some people may argue for restricting trade. However, the no-deadweight-loss argument is not an argument for restricting trade; it is an argument against taxation. Deadweight loss is the loss of economic efficiency that occurs when the taxed good is not being traded despite the fact that it would have been traded if there was no tax.

Question 12

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 13

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

Accepted Answer

The efficiency argument is not a commonly-advanced argument for trade restrictions. In fact, trade restrictions can often be seen as reducing efficiency by limiting the ability of countries to specialize in producing goods in which they have a comparative advantage. The other three arguments (jobs, national-security, and infant-industry) are commonly-cited reasons for imposing trade restrictions, although they are subject to much debate and criticism.

Question 14

Workers displaced by trade eventually find jobs in

Accepted Answer

Workers displaced by trade eventually find jobs in the industries in which their country has a comparative advantage because these are the industries where the country can produce goods and services at a lower opportunity cost compared to other countries. As a result, these industries are more competitive and will create more jobs. The other options are not as likely since workers displaced by trade may not want to move to another country (A), the government sector may not have enough job openings (B), and finding a job in the same industry may be difficult due to increased competition (D).

Question 15

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 achieving free trade are the unilateral approach (in which a country removes its trade barriers without waiting for other countries to do the same) and the multilateral approach (in which countries negotiate together to reduce or eliminate trade barriers). The other choices listed are not recognized approaches in economics.

Question 16

"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 statement about owners of firms in young industries being willing to bear temporary losses supports the infant-industry argument, which suggests that protecting and supporting new industries with temporary tariffs or subsidies can eventually lead to their long-term success and profitability. This may explain why many economists are skeptical about the argument for trade restrictions based on the need to protect young or infant industries.

Question 17

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 18

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

Quotas are typically used to protect domestic producers from foreign competition. Therefore, it is likely that the quotas on sugar imports were the result of lobbying from U.S. producers of sugar. The quotas increase the price of sugar in the United States, which benefits domestic sugar producers by increasing their producer surplus. However, it also reduces consumer surplus for U.S. consumers of sugar, who must pay higher prices. The quotas also harm foreign sugar producers, who are unable to sell as much sugar in the U.S. market as they otherwise would be able to.

Question 19

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

Accepted Answer

A multilateral approach to free trade involves multiple countries reducing their trade restrictions together. This allows for increased trade between nations and the potential for economic growth. It is not just about one country removing trade restrictions unilaterally (A) or refusing to remove trade restrictions (C). And while a country taking a multilateral approach may be willing to trade with multiple countries at once (D), the key factor is the reduction of trade restrictions in partnership with other nations.

Question 20

Which of the following is the most accurate statement?

Accepted Answer

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

Quiz 9: Application: International Trade

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

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

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

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

Countries that restrict foreign trade are likely to

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

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?

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

The infant-industry argument

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

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

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

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

Workers displaced by trade eventually find jobs in

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

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

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?

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

Which of the following is the most accurate statement?

Quiz 9: Application: International Trade

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

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

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

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

Countries that restrict foreign trade are likely to

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

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?

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

The infant-industry argument

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

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

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

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

Workers displaced by trade eventually find jobs in

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

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

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?

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

Which of the following is the most accurate statement?

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