Question 1

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

Accepted Answer

A) the jobs argument 
B) the national-security argument 
C) the infant-industry argument 
D) the efficiency argument 
A) the jobs argument 
B) the national-security argument 
C) the infant-industry argument 
D) the efficiency argument D

Question 2

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

A) The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States,reduce producer surplus for the United States,and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States,reduce consumer surplus for the United States,and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States,increase consumer surplus for the United States,and benefit foreign sugar producers. 
D) U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. 
A) The quotas are probably the result of lobbying from U.S.consumers of sugar.The quotas increase consumer surplus for the United States,reduce producer surplus for the United States,and harm foreign sugar producers. 
B) The quotas are probably the result of lobbying from U.S.producers of sugar.The quotas increase producer surplus for the United States,reduce consumer surplus for the United States,and harm foreign sugar producers. 
C) The quotas are probably the result of lobbying from foreign producers of sugar.The quotas reduce producer surplus for the United States,increase consumer surplus for the United States,and benefit foreign sugar producers. 
D) U.S.lawmakers did not need to be lobbied to impose the quotas because total surplus for the United States is higher with the quotas than without them. B

Question 3

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

Accepted Answer

A) United States should protect its domestic steel industry from this unfair competition. 
B) harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Korean steel. 
C) harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel. 
D) United States should subsidize the products it sells to Korea. 
A) United States should protect its domestic steel industry from this unfair competition. 
B) harm done to U.S.steel producers from this unfair competition exceeds the gain to U.S.consumers of cheap Korean steel. 
C) harm done to U.S.steel producers is less than the benefit that accrues to U.S.consumers of steel. 
D) United States should subsidize the products it sells to Korea. C

Question 4

The North American Free Trade Agreement

Accepted Answer

A) is an example of the unilateral approach to free trade. 
B) eliminated tariffs on imports to North America from the rest of the world. 
C) reduced trade restrictions among Canada,Mexico and the United States. 
D) All of the above are correct. 
A) is an example of the unilateral approach to free trade. 
B) eliminated tariffs on imports to North America from the rest of the world. 
C) reduced trade restrictions among Canada,Mexico and the United States. 
D) All of the above are correct.

Question 5

A possible outcome of the multilateral approach to free trade is that such an approach can

Accepted Answer

A) win political support when a unilateral approach cannot. 
B) result in more restricted trade than under a unilateral approach,when international negotiations fail. 
C) result in drastic reductions in tariffs for many countries. 
D) All of the above are correct. 
A) win political support when a unilateral approach cannot. 
B) result in more restricted trade than under a unilateral approach,when international negotiations fail. 
C) result in drastic reductions in tariffs for many countries. 
D) All of the above are correct.

Question 6

Which of the following is the most accurate statement?

Accepted Answer

A) The one argument for restricting trade that almost all economists accept as valid is the infant-industry argument. 
B) Almost all economists insist that it is never appropriate to protect "key" industries,even when there are legitimate concerns about national security. 
C) The idea that one nation might want to threaten another nation with a trade restriction is associated with the protection-as-a-bargaining-chip argument for restricting trade. 
D) The protection-as-a-bargaining-chip argument for restricting trade is also known as the infant-industry argument. 
A) The one argument for restricting trade that almost all economists accept as valid is the infant-industry argument. 
B) Almost all economists insist that it is never appropriate to protect "key" industries,even when there are legitimate concerns about national security. 
C) The idea that one nation might want to threaten another nation with a trade restriction is associated with the protection-as-a-bargaining-chip argument for restricting trade. 
D) The protection-as-a-bargaining-chip argument for restricting trade is also known as the infant-industry argument.

Question 7

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

A) better off no matter how Honduras responds. 
B) better off if Honduras gives in,and will be no worse off if it doesn't. 
C) worse off if Honduras doesn't give in to the threat. 
D) worse off no matter how Honduras responds. 
A) better off no matter how Honduras responds. 
B) better off if Honduras gives in,and will be no worse off if it doesn't. 
C) worse off if Honduras doesn't give in to the threat. 
D) worse off no matter how Honduras responds.

Question 8

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

A) foreign competition may cause unemployment in import-competing industries,but the effect is temporary because other industries,especially exporting industries,will be expanding. 
B) foreign competition may cause unemployment in import-competing industries,but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C) the critics are correct,so countries must protect their industries with tariffs or quotas. 
D) foreign competition may cause unemployment in import-competing industries,but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs. 
A) foreign competition may cause unemployment in import-competing industries,but the effect is temporary because other industries,especially exporting industries,will be expanding. 
B) foreign competition may cause unemployment in import-competing industries,but the increase in consumer surplus due to free trade is more valuable than the lost jobs. 
C) the critics are correct,so countries must protect their industries with tariffs or quotas. 
D) foreign competition may cause unemployment in import-competing industries,but the increase in the variety of goods consumers can choose from is more valuable than the lost jobs.

Question 9

Which of the following assertions is not correct about the multilateral approach to free trade?

Accepted Answer

A) The multilateral approach has the potential to result in freer trade than does the unilateral approach. 
B) The multilateral approach may have a political advantage over the unilateral approach. 
C) The multilateral approach is simpler than the unilateral approach. 
D) NAFTA and GATT both represent multilateral approaches to free trade. 
A) The multilateral approach has the potential to result in freer trade than does the unilateral approach. 
B) The multilateral approach may have a political advantage over the unilateral approach. 
C) The multilateral approach is simpler than the unilateral approach. 
D) NAFTA and GATT both represent multilateral approaches to free trade.

Question 10

In a December 2007 New York Times column Paul Krugman argued in favor of

Accepted Answer

A) protectionism based on the national-security argument. 
B) protectionism based on the infant-industry argument. 
C) protectionism based on the unfair-competition argument. 
D) keeping world markets relatively open. 
A) protectionism based on the national-security argument. 
B) protectionism based on the infant-industry argument. 
C) protectionism based on the unfair-competition argument. 
D) keeping world markets relatively open.

Question 11

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

Accepted Answer

A) the jobs argument. 
B) the protection-as-a-bargaining-chip argument. 
C) the no-deadweight-loss argument. 
D) the infant-industry argument. 
A) the jobs argument. 
B) the protection-as-a-bargaining-chip argument. 
C) the no-deadweight-loss argument. 
D) the infant-industry argument.

Question 12

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

Accepted Answer

A) 54 percent 
B) 72 percent 
C) 89 percent 
D) 97 percent 
A) 54 percent 
B) 72 percent 
C) 89 percent 
D) 97 percent

Question 13

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

A) cause these factories to pay the U.S.minimum wage. 
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C) increase poverty in poor countries and benefit U.S.firms which compete with these imports. 
D) harm U.S.firms which compete with these imports. 
A) cause these factories to pay the U.S.minimum wage. 
B) increase the rate of technological advance in poor countries so that they can afford to pay higher wages. 
C) increase poverty in poor countries and benefit U.S.firms which compete with these imports. 
D) harm U.S.firms which compete with these imports.

Question 14

President Bush imposed temporary tariffs on imported steel in 2002.The reasons for this trade restriction is most consistent with the

Accepted Answer

A) national-security argument. 
B) infant-industry argument. 
C) unfair competition argument. 
D) protection-as-a-bargaining chip-argument. 
A) national-security argument. 
B) infant-industry argument. 
C) unfair competition argument. 
D) protection-as-a-bargaining chip-argument.

Question 15

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

Accepted Answer

A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials. 
A) representatives of industry. 
B) representatives of the defense establishment. 
C) members of households. 
D) foreign government officials.

Question 16

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

Accepted Answer

A) removes trade restrictions on its own. 
B) reduces its trade restrictions while other countries do the same. 
C) does not remove trade restrictions no matter what other countries do. 
D) is willing to trade with multiple countries at once. 
A) removes trade restrictions on its own. 
B) reduces its trade restrictions while other countries do the same. 
C) does not remove trade restrictions no matter what other countries do. 
D) is willing to trade with multiple countries at once.

Question 17

In a 2007 New York Times article Paul Krugman wrote that

Accepted Answer

A) the infant-industry argument works well as an argument in favor of protection for the U.S.steel industry. 
B) the negative effects of third world exports on U.S.wages may be increasing. 
C) there are social gains to the U.S.from free trade. 
D) high wage countries account for a growing share of U.S.imports of manufactured goods. 
A) the infant-industry argument works well as an argument in favor of protection for the U.S.steel industry. 
B) the negative effects of third world exports on U.S.wages may be increasing. 
C) there are social gains to the U.S.from free trade. 
D) high wage countries account for a growing share of U.S.imports of manufactured goods.

Question 18

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies,the United States will be

Accepted Answer

A) better off regardless of how Colombia responds. 
B) better off if Colombia removes the subsidies,and will be no worse off if it doesn't. 
C) worse off if Colombia doesn't remove the subsidies in response to the threat. 
D) worse off regardless of how Colombia responds. 
A) better off regardless of how Colombia responds. 
B) better off if Colombia removes the subsidies,and will be no worse off if it doesn't. 
C) worse off if Colombia doesn't remove the subsidies in response to the threat. 
D) worse off regardless of how Colombia responds.

Question 19

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

Accepted Answer

A) if it works consumer surplus will decline. 
B) if it works producer surplus falls. 
C) if it fails the country faces a choice between two bad options. 
D) if it fails total surplus will increase. 
A) if it works consumer surplus will decline. 
B) if it works producer surplus falls. 
C) if it fails the country faces a choice between two bad options. 
D) if it fails total surplus will increase.

Question 20

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

Accepted Answer

A) Trade restrictions make all Americans better off. 
B) Trade restrictions increase economic efficiency. 
C) Trade restrictions are necessary for economic growth. 
D) Trade restrictions are sometimes necessary for national security. 
A) Trade restrictions make all Americans better off. 
B) Trade restrictions increase economic efficiency. 
C) Trade restrictions are necessary for economic growth. 
D) Trade restrictions are sometimes necessary for national security.

Exam 9: Application International Trade: The Arguments for Restricting Trade

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

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?

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

The North American Free Trade Agreement

A possible outcome of the multilateral approach to free trade is that such an approach can

Which of the following is the most accurate statement?

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

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

Which of the following assertions is not correct about the multilateral approach to free trade?

In a December 2007 New York Times column Paul Krugman argued in favor of

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

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

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

President Bush imposed temporary tariffs on imported steel in 2002.The reasons for this trade restriction is most consistent with the

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

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

In a 2007 New York Times article Paul Krugman wrote that

If the United States threatens to impose a tariff on Colombian coffee if Colombia does not remove agricultural subsidies,the United States will be

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is

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

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: Conclusion

Application International Trade: Part A