Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 13

Evaluate the following statements:
a. Protective tariffs reduce both the imports and the exports of the nation that levies tariffs.
b. The extensive application of protective tariffs destroys the ability of the international market system to allocate resources efficiently.
c. Unemployment in some industries can often be reduced through tariff protection, but by the same token inefficiency typically increases.
d. Foreign firms that "dump" their products onto the U.S. market are in effect providing bargains to the country's citizens.
e. In view of the rapidity with which technological advance is dispersed around the world, free trade will inevitably yield structural maladjustments, unemployment, and balance-of-payments problems for industrially advanced nations.
f. Free trade can improve the composition and efficiency of domestic output. Competition from Volkswagen, Toyota, and Honda forced Detroit to make a compact car, and foreign imports of bottled water forced American firms to offer that product.
g. In the long run, foreign trade is neutral with respect to total employment.