Question 1

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 likely lead to increased specialization and a more efficient allocation of resources. The country with cheap labor can produce goods and services at a lower cost, making them more competitive in the global market. The country with more expensive labor can focus on producing goods and services that require more specialized skills or technology. As a result, both countries can benefit from trade, leading to an overall increase in the standard of living. While there may be some workers in the more expensive labor country who are negatively impacted by increased competition, overall, trade is beneficial for both countries.

Question 2

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

Accepted Answer

In his essay, Safire advocates for a strategy of "reciprocal free trade," where the U.S. would threaten retaliation against countries that practice protectionism and only offer preferential treatment to those that open their markets to American products. This suggests that Safire believes in using negotiation and leverage to promote free trade, rather than unilaterally pursuing it regardless of what others do. The idea of limiting government's role in the economy is not directly addressed in the essay.

Question 3

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

Strategic trade policy involves using government intervention to protect domestic industries from foreign competition in order to gain a competitive advantage. This can be achieved through threats of protectionism unless other countries open their markets, or through subsidies or tariffs. The idea is to level the playing field and allow domestic industries to compete on a fair basis. Therefore, option C is the best choice. Options A, B, and D do not address the concept of strategic trade policy.

Question 4

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

Accepted Answer

Protectionism often comes with a cost that is much higher than the average income of persons in the protected industries, resulting in higher prices for consumers, loss of efficiency, and reduced competitiveness. While protectionism may preserve jobs in certain industries in the short term, it can lead to economic inefficiency and reduced economic growth in the long term.

Question 5

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

Selling goods in foreign markets at prices well below those in Japan is called dumping. This is done to minimize losses due to the tradition of not laying off workers in Japan.

Question 6

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 7

The Trade Adjustment Assistance program is intended to help

Accepted Answer

The Trade Adjustment Assistance program is specifically designed to provide assistance to workers and businesses that have been negatively impacted by increases in imports. It provides training and support to help these individuals find new jobs or adapt to changing market conditions. The program does not focus on assisting businesses that seek to expand exports, nor does it primarily provide support to local governments or protected industries.

Question 8

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

Accepted Answer

Although a program of protection can preserve jobs in certain industries, it typically results in higher prices for consumers of the products from those industries. This is because protection leads to decreased competition, which can allow producers to charge higher prices. As a result, consumers may be forced to pay more for goods and services, which can lead to a lower standard of living overall.

Question 9

"Protection" is designed to help

Accepted Answer

Protectionism measures such as tariffs or quotas are often implemented to help less efficient domestic firms compete with cheaper foreign imports. This is because it increases the price of foreign goods, making domestic alternatives more competitive.

Question 10

The infant industry argument is valid when

Accepted Answer

The infant industry argument suggests that protecting a new industry from foreign competition can be justified if the industry has the potential to become efficient and profitable in the future. However, during the initial period of development, the industry may face financial losses, and the protection provided by the government may cause social losses. The argument is only valid if the industry's prospective gains are sufficient enough to repay the social losses incurred while it is being protected. Therefore, option C is a valid condition for the infant industry argument to be applicable. Options A, B, and D are not applicable for the infant industry argument.

Question 11

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

Accepted Answer

If a country imposes a tariff on imports, other countries may retaliate with tariffs of their own, which can lead to a trade war and ultimately harm both countries involved. Therefore, if a country can impose a tariff without risking retaliation from other countries, it can gain a price advantage on imports.

Question 12

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

Accepted Answer

William Safire argues that a unilateral free trade policy can be disastrous if other nations' governments practice "helpfulism," which refers to protectionist policies that are aimed at benefiting their own industries and workers. In such cases, unilateral free trade can lead to unfair competition that harms domestic industries and workers, making it difficult for them to compete on a level playing field. Therefore, Safire argues that international trade agreements that promote bilateral or multilateral free trade are a better option.

Question 13

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 to reduce dependence on foreign supplies of such a crucial resource. This policy was driven by a desire to ensure energy security and reduce the risk of supply disruptions that could occur due to political instability or conflicts in the Middle East. The policy aimed to encourage domestic production of oil and reduce reliance on foreign imports, which would enhance energy independence and national security. B and D could be possible secondary reasons, but C is the most likely primary motivation behind this policy. A is not a valid rationale for such a policy.

Question 14

The trade philosophy of the Clinton administration is best characterized as

Accepted Answer

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

Question 15

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 typical response from the exporting country when faced with a tariff is to retaliate by imposing tariffs or quotas on items from the other country. This is known as a trade war, where both countries impose restrictions on each other's goods in an attempt to gain an advantage. The exporting country may also choose to file a complaint with the World Trade Organization (WTO) if they believe the tariff is in violation of international trade rules. However, retaliation is the most common response, as it allows the country to protect its own industries and maintain its competitiveness in the global market.

Question 16

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 argument is that new industries need temporary protection from foreign competition in order to grow and develop, but this protection should only be temporary and should not become a permanent crutch for the industry. Therefore, choice D is the best answer.

Question 17

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 18

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

Accepted Answer

The call for protection on the basis of national defense can be valid but it can also be overstated and abused. This means that there may be situations where protectionist measures are necessary to protect national security, but governments should be cautious in implementing them and ensure that they do not harm the overall economy. Option A and B are incorrect because they make blanket statements that protection is never acceptable, which is not always true. Option C is incorrect because economic theory can provide guidance on this issue.

Question 19

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

Accepted Answer

When other nations "dump" products on the U.S. market, they sell at prices lower than prices charged to their own domestic customers. However, there is no evidence or expectation that they sell at prices that do not cover costs of production, nor do they expect the United States to help pay any industrialists' losses.

Question 20

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

Accepted Answer

The argument is that cheap foreign labor is harmful to the United States economy because it takes jobs away from American workers. However, this argument is flawed because it assumes that foreign workers are less productive than American workers. In reality, foreign workers are often just as productive as American workers, and their lower wages are simply a reflection of differences in the cost of living and labor market conditions. Therefore, the argument that cheap foreign labor harms the American economy is not supported by the evidence.

Quiz 22: International Trade and Comparative Advantage

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

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

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,

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

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

The Trade Adjustment Assistance program is intended to help

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

"Protection" is designed to help

The infant industry argument is valid when

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

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

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

The trade philosophy of the Clinton administration is best characterized as

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?

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

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

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

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

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