Question 1

Is the call for protection on the basis of national defense valid?

Accepted Answer

National defense is a valid reason for protectionism, as it can help protect domestic industries that are crucial for national security. However, this argument can be abused and overstated, leading to protectionism that harms the overall economy. Therefore, the answer is D, Yes, although it can be overstated and abused.

Question 2

Which of the following statements regarding the cheap foreign labor argument is correct?

Accepted Answer

The correct statement is C because if workers in other countries are willing to supply their products with little compensation, it can lead to lower prices for those goods in the U.S., potentially increasing the purchasing power and thus the standard of living of the average American worker.

Question 3

When can a country gain a price advantage on imports by imposing a tariff?

Accepted Answer

Imposing a tariff can lead to a price advantage on imports, but it can also lead to retaliation from other countries. Therefore, a country can only gain a price advantage on imports by imposing a tariff if it can do so without other countries retaliating with tariffs.

Question 4

The infant industry argument is valid when

Accepted Answer

The infant industry argument is valid when the industry's prospective gains are sufficient to repay the social losses incurred while it is being protected. This means that the industry has potential for future profitability and growth, but needs protection and support in its early stages to become competitive. Option A is not necessarily a requirement for the infant industry argument, as new industries often face losses initially. Option B is actually the reason for protectionism and the infant industry argument - to give the new industry time to improve efficiency and competitiveness. Option D is irrelevant, as the argument is based on potential future profitability, not current profitability.

Question 5

In William Safire's 1983 essay,"Smoot-Hawley Lives," he argues that the United States should

Accepted Answer

In the essay, Safire argues that the Smoot-Hawley Tariff Act of 1930, which raised tariffs on imported goods and led to other countries retaliating with their own tariffs, hurt the American economy. He suggests that instead of repeating this mistake, the United States should threaten retaliation if other countries practice protectionism, in order to encourage free trade. Therefore, choice A is the best answer.

Question 6

For many years the U.S.government imposed quotas on cheap,Middle Eastern oil imports.The U.S.consumer consequently paid $3 billion more per year for oil products.A likely rationale for such a policy is

Accepted Answer

The rationale behind imposing quotas on cheap, Middle Eastern oil imports was likely the belief that the United States should not be overly reliant on foreign sources of such a crucial resource. This is supported by the idea of energy security and the desire to have greater control over our own resources.

Question 7

When other nations Orient "dump" products on the U.S.market,they

Accepted Answer

Dumping refers to a situation where a foreign producer exports goods to another country at prices that are lower than those charged in the domestic market or lower than their cost of production. This is done to gain a competitive advantage and capture a larger share of the market. However, it can harm domestic producers in the importing country who cannot compete with the artificially low prices. Dumping is generally considered unfair trade practice and is subject to anti-dumping laws and regulations. The United States has its own anti-dumping laws and can impose tariffs and other penalties on dumped products. While other nations may seek government support to compensate for losses from dumping, this is not an expectation of the United States.

Question 8

A program of protection that results in preserving jobs in certain industries

Accepted Answer

Protectionism, or the practice of protecting domestic industries from foreign competition through measures such as tariffs or quotas, can lead to higher prices for consumers. This is because protected industries, facing less competition, can charge higher prices than they would in a truly competitive market. While protectionism may preserve jobs in the short-run, it can also lead to less innovation and efficiency in the protected industries over time.

Question 9

By tradition,Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses,they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Accepted Answer

This practice is known as "dumping," where companies sell their products at lower prices in foreign markets than in their home market, often resulting in anti-dumping measures by other countries to protect their own industries.

Question 10

Is the call for protection on the basis of "infant industry" valid?

Accepted Answer

The call for protection on the basis of "infant industry" is valid, but it can be overstated and abused. The theory suggests that young industries may need temporary protection from established foreign competitors until they are able to compete on their own. However, this should be done cautiously and with a plan for eventual removal of protection to avoid creating inefficient industries that rely on perpetual protection.

Question 11

The trade philosophy of the Clinton administration is best characterized as

Accepted Answer

The answer of The trade philosophy of the Clinton administration...

Question 12

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Accepted Answer

The national defense argument can be misused by industries that are not directly related to defense but claim to be, in order to receive protection or subsidies. This can lead to inefficiencies and misallocation of resources.

Question 13

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

Accepted Answer

The most common response from the exporting country is to retaliate by imposing tariffs or quotas on items from the other country. This is known as a trade war, and it can be highly damaging to both countries involved, as well as to the global economy as a whole. However, retaliatory tariffs are often seen as necessary to protect the interests of the exporting country and maintain fair trade practices.

Question 14

William Safire argues that a unilateral free trade policy is a disaster if

Accepted Answer

According to William Safire, a unilateral free trade policy can be disastrous when the governments of the nations' trading partners practice "helpfulism." This refers to the use of government subsidies or other measures that give those nations an unfair advantage in international trade. As a result, the nation with a unilateral free trade policy could face economic disadvantages and be unable to compete with the subsidized goods from their trade partners.

Question 15

"Protection" is designed to help

Accepted Answer

Protectionism is usually used to save domestic industries that are struggling to compete against foreign imports due to their inefficiency. The government imposes tariffs, quotas, or other trade barriers on imported goods to make them more expensive than domestic products, giving local industries a chance to compete.

Question 16

The basic concept behind strategic trade policy is that free trade is the best policy to pursue,but some countries don't play by those rules.Therefore,

Accepted Answer

The basic concept behind strategic trade policy is that free trade is the best policy to pursue, but some countries don't play by those rules. Therefore, countries can use strategic trade policies to threaten to protect their markets unless other nations agree to open theirs. This way, they can level the playing field and ensure fair competition. Restricting imports of military items may also make sense for defense purposes, but it's not related to the concept of strategic trade policies. Self-sufficiency and not exporting items of strategic importance are not effective strategies for promoting economic growth and development.

Question 17

An essential point,among many,in the refutation of the "cheap foreign labor" argument is that

Accepted Answer

The answer of An essential point,among many,in the refutation of...

Question 18

A program of protection that results in preserving jobs in certain industries

Accepted Answer

Protectionism often results in higher costs for consumers, which can be seen as a cost to society. Additionally, protectionism will generally result in higher prices for the inputs used by protected industries, and may require subsidies or other forms of support to keep the protected industries afloat. These costs can be substantial and may ultimately be borne by taxpayers or consumers, making protectionism an expensive policy choice.

Question 19

The Trade Adjustment Assistance program is intended to help

Accepted Answer

The Trade Adjustment Assistance program is intended to help workers and businesses that lose markets due to increases in imports. The program provides reemployment services, training, income support, and job search allowances to affected workers, as well as technical assistance and other support to affected businesses.

Question 20

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will

Accepted Answer

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will lead to specialization based on comparative advantage. The nation with cheap labor will specialize in labor-intensive goods and the nation with expensive labor will specialize in capital-intensive goods. This will lead to a more efficient allocation of resources, higher productivity, and increased output. As a result, both countries will benefit from the trade, and the standard of living will increase in both countries.

Quiz 18: International Trade and Comparative Advantage

Is the call for protection on the basis of national defense valid?

Which of the following statements regarding the cheap foreign labor argument is correct?

When can a country gain a price advantage on imports by imposing a tariff?

The infant industry argument is valid when

In William Safire's 1983 essay,"Smoot-Hawley Lives," he argues that the United States should

For many years the U.S.government imposed quotas on cheap,Middle Eastern oil imports.The U.S.consumer consequently paid $3 billion more per year for oil products.A likely rationale for such a policy is

When other nations Orient "dump" products on the U.S.market,they

A program of protection that results in preserving jobs in certain industries

By tradition,Japanese employers cannot "lay off" workers.As a result they have goods that they cannot sell on the domestic market without driving down prices.To minimize losses,they sell goods such as steel and televisions in foreign markets at prices well below those in Japan.This is called

Is the call for protection on the basis of "infant industry" valid?

The trade philosophy of the Clinton administration is best characterized as

The danger of using the national defense argument to protect domestic industries necessary to wage war is that

Assume that a country imposes a tariff in order to gain a price advantage on an item.What is the typical response from the exporting country?

William Safire argues that a unilateral free trade policy is a disaster if

"Protection" is designed to help

The basic concept behind strategic trade policy is that free trade is the best policy to pursue,but some countries don't play by those rules.Therefore,

An essential point,among many,in the refutation of the "cheap foreign labor" argument is that

A program of protection that results in preserving jobs in certain industries

The Trade Adjustment Assistance program is intended to help

Opening trade between a nation that has "cheap labor" and one that has "expensive labor" will