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Suppose a National Government Chooses to Impose Barriers to Trade

Question 108

Multiple Choice

Suppose a national government chooses to impose barriers to trade in an effort to promote a more diversified economy. This objective would be particularly important to, for example, an economy largely dependent on one or two agricultural products because


A) it will increase net exports for the economy.
B) it will certainly maximize national income and raise average living standards.
C) it will allow firms in the economy to exploit economies of scale in newly developed industries.
D) any volatility in the world prices of those commodities leads to great volatility in national income.
E) that country's terms of trade will continue to deteriorate over time if it continues to specialize.

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