Question 1

The Canadian winemaking industry would support a tariff on imported French wines.

Accepted Answer

The Canadian winemaking industry would likely support a tariff on imported French wines because it would make French wines more expensive, reducing competition and potentially increasing the market share for Canadian wines domestically.

Question 2

The Canadian Auto Workers union would support an import quota on Korean automobiles.

Accepted Answer

The Canadian Auto Workers union has called for import quotas on Korean automobiles in the past, in order to protect jobs in the Canadian auto industry.

Question 3

The number of consumers who gain from freer trade is large, but the gain for each consumer is small.

Accepted Answer

Freer trade leads to lower prices and greater variety of goods, which benefits a large number of consumers. However, each individual consumer tends to only save a small amount of money on any particular item or service.

Question 4

The completion of the Canadian Pacific Railway in 1885 and the North American Free Trade Agreement (NAFTA) in 1994 both led to the destruction of less productive, higher-cost products and businesses.

Accepted Answer

The completion of the Canadian Pacific Railway allowed for more efficient transportation of goods and led to the decline of small local markets, while NAFTA allowed for increased competition from cheaper imports, leading to the decline of some domestic businesses. Both of these events caused the destruction of less productive, higher-cost products and businesses.

Question 5

Subsidies for imported products are an example of a government protectionist policy.

Accepted Answer

Subsidies are typically provided to domestic producers to help them compete against foreign imports, not for imported products. Protectionist policies aim to protect domestic industries from foreign competition.

Question 6

Political pressure for protectionism arises because freer trade results in a large number of businesses facing small losses.

Accepted Answer

The answer of Political pressure for protectionism arises because freer...

Question 7

National security can be threatened by specialization and free trade.

Accepted Answer

Specialization and free trade can lead to dependence on imported goods and services, which can be disrupted during times of conflict or crisis, potentially threatening national security.

Question 8

Restrictions on the number of international students allowed to study in Canada is an export quota.

Accepted Answer

An export quota is a government-imposed restriction on the quantity of a good or service that can be exported from a country. In this case, the restriction is on the number of international students allowed to study in Canada.

Question 9

Political pressure for protectionism arises because freer trade results in a small number of businesses facing large losses.

Accepted Answer

When trade barriers are removed, competition increases and some industries may struggle to compete with foreign companies. This can lead to job losses and economic hardship for those affected businesses and communities, leading to political pressure for protectionism.

Question 10

Jobs lost through trade and new international competition are part of frictional unemployment.

Accepted Answer

Jobs lost through trade and new international competition are considered structural unemployment, as they result from changes in the structure of the economy, not from the normal frictions of job searching.

Question 11

Restrictions on the number of international students allowed to study in Canada is an import quota.

Accepted Answer

Restrictions on the number of international students allowed to study in Canada is not an import quota as it pertains to the flow of people, not goods. An import quota would refer to limitations on the amount of goods or services allowed to be imported into a country.

Question 12

Jobs lost through trade and new international competition are part of the natural rate of unemployment.

Accepted Answer

Jobs lost through trade and new international competition are considered part of structural unemployment, which is a type of unemployment that is considered part of the natural rate of unemployment.

Question 13

Tariffs on imported products are an example of a government protectionist policy.

Accepted Answer

Tariffs on imported products are designed to make them more expensive, which makes domestically produced goods more competitive. This protects domestic producers from foreign competition but can lead to higher prices for consumers.

Question 14

The completion of the Canadian Pacific Railway in 1885 and the North American Free Trade Agreement (NAFTA) in 1994 both benefitted consumers and businesses in Canada on the whole.

Accepted Answer

The completion of the Canadian Pacific Railway connected the eastern and western parts of Canada, making transportation of goods and people easier and more efficient, which benefited businesses and consumers alike. Similarly, NAFTA increased trade between Canada, the US, and Mexico, resulting in lower prices and increased competition, again benefiting consumers and businesses.

Question 15

The completion of the Canadian Pacific Railway in 1885 and the North American Free Trade Agreement (NAFTA) in 1994 both led to a process of creative destruction.

Accepted Answer

The completion of the Canadian Pacific Railway and NAFTA both opened up new economic opportunities but also caused the destruction of certain industries and ways of life. This is known as creative destruction, a term coined by economist Joseph Schumpeter.

Question 16

The unequal distribution of gains and losses from international trade produces political pressure to protect the losers.

Accepted Answer

This statement is true. When some individuals or industries in a country benefit from international trade while others suffer losses, those who have been negatively affected may become politically active and pressure the government to take protective measures such as tariffs or subsidies to limit imports or support domestic producers. This phenomenon is sometimes referred to as the "politics of protectionism."

Question 17

Jobs lost through trade and new international competition are part of cyclical unemployment.

Accepted Answer

Jobs lost through trade and new international competition are actually part of structural unemployment, which refers to shifts in the economy that result in the displacement of certain types of workers or industries. Cyclical unemployment, on the other hand, is caused by downturns in the business cycle and leads to temporary job losses as a result of reduced demand for goods and services.

Question 18

Jobs lost through trade and new international competition are part of structural unemployment.

Accepted Answer

Structural unemployment refers to long-lasting changes in the economy, such as shifts in industry and technology, that result in a mismatch between the skills workers have and the skills employers need. Jobs lost through trade and international competition are considered structural unemployment because they don't often come back and require workers to acquire new skills to find work in another industry.

Question 19

The unequal distribution of gains and losses from international trade produces political pressure to reward the winners.

Accepted Answer

The unequal distribution of gains and losses from international trade often produces political pressure to protect or compensate the losers, not to reward the winners.

Question 20

The number of consumers who lose from freer trade is small, but the loss for each consumer is large.

Accepted Answer

The statement is incorrect because freer trade typically results in lower prices and a wider selection of goods for consumers, benefiting a large number of consumers. The individuals who might lose from freer trade are usually specific groups of producers or workers in industries facing increased foreign competition, not consumers.

Quiz 13: Are Sweatshops All Bad Globalization and Trade Policy