Question 1

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

Accepted Answer

While protectionism can be abused and used as an excuse for unnecessary tariffs and trade barriers, there are situations where protecting domestic industries can be a valid national defense strategy. For example, in times of war or during a national emergency, it may be necessary to ensure a domestic supply of essential goods and services. However, it is important to balance national defense needs with the potential negative economic effects of protectionism.

Question 2

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

Accepted Answer

Protectionist policies that preserve jobs in certain industries often come at a high cost to consumers who are forced to pay more for the products from those industries due to tariffs, quotas, or other trade barriers. This can also harm overall economic efficiency by diverting resources from more productive sectors.

Question 3

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

Accepted Answer

By opening trade between a nation that has "cheap labor" and one that has "expensive labor," the two countries can specialize in the goods and services in which they have a comparative advantage relative to the other country. This leads to greater efficiency, lower prices, and higher productivity, which can raise the standard of living in both countries. While some workers may be negatively impacted by competition, overall, the benefits of trade outweigh the costs.

Question 4

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 a disaster if the governments of the nations' trading partners practice "helpfulism," which means they protect their own industries with tariffs and other trade barriers, while still benefiting from the open markets of the other country. This can lead to an imbalance of trade and hurt the domestic industries and workers of the country with the unilateral free trade policy.

Question 5

The Trade Adjustment Assistance program is intended to help

Accepted Answer

The Trade Adjustment Assistance program is specifically designed to assist workers and businesses that have been negatively impacted by increases in imports. It provides a variety of support services, including job training, relocation assistance, and financial aid, to help these individuals and businesses adjust to changing market conditions and remain competitive.

Question 6

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

Accepted Answer

Protectionist policies often result in higher costs for consumers as well as lower efficiency in the protected industries. The cost of maintaining jobs in these industries can be much higher than the average income of workers in those industries, leading to an overall cost to society that outweighs the benefits of job preservation. This can ultimately harm the economy and reduce living standards for the average person.

Question 7

The trade philosophy of the Clinton administration is best characterized as

Accepted Answer

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

Question 8

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

Accepted Answer

The call for protection on the basis of "infant industry" can be valid in certain circumstances, but it can also be overstated and abused. The idea is that a new domestic industry may need protection from foreign competition in its early stages until it can become established and competitive on its own. However, this should only be a temporary measure and should be carefully monitored to prevent inefficiencies and rent-seeking behavior. Therefore, option D is the correct answer.

Question 9

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 the policy was likely that the U.S. did not want to be overly dependent on foreign supplies of such a crucial resource. By imposing quotas, the U.S. government aimed to maintain a certain level of domestic production and ensure that the U.S. was not overly reliant on cheap imports from the Middle East. This rationale is supported by the fact that the policy was in place for many years, indicating a long-term strategic approach to energy security.

Question 10

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 a tariff is imposed by another country is to retaliate by imposing tariffs or quotas on items from the other country. This is known as a trade war, where both countries engage in a tit-for-tat strategy of imposing tariffs on each other's goods in order to protect their own industries. It is a common response by countries when they feel their economic interests are being threatened by another country's trade policies.

Question 11

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 argues that some countries might engage in aggressive trade policies or subsidize industries to gain a competitive edge in the world market. In response, it might make sense for a country to threaten to protect its markets unless other countries agree to open their markets. This strategy involves bargaining and negotiating with other countries to ensure a level playing field and prevent unfair practices, rather than resorting to protectionism or self-sufficiency. Restricting exports or imports of items of strategic importance might also be part of this strategy, but the main idea is to use trade policy as a tool for economic and strategic benefits. Therefore, choice (C) makes the most sense as a possible outcome of strategic trade policy.

Question 12

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 13

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

Accepted Answer

Dumping refers to a practice where foreign firms sell their products in the US market at lower prices than what they charge in their domestic market. This enables them to capture a larger market share in the US and drive out domestic competitors. This practice is illegal under international trade laws but can be difficult to prove. The other options (A and C) are not true in general and do not apply to all cases of dumping.

Question 14

"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 15

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...

Question 16

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

Accepted Answer

If a country can impose a tariff without other countries retaliating with tariffs, it can gain a price advantage on imports. However, if other countries impose tariffs in response, the price advantage may be eliminated or even reversed.

Question 17

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 18

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

Accepted Answer

In the essay, Safire argues for a policy of threat retaliation against trading partners who practice protectionism. He suggests that the United States should take a tough stance against protectionist policies to help ensure that global trade remains open and fair. He does not advocate for a unilateral free trade policy regardless of what others do, nor does he advocate for limiting government's role in the economy.

Question 19

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 implies that the industry has a potential for growth and profitability in the future, but requires temporary protection from competition in the early stages of development. Protecting an industry that is losing money or is less efficient than foreign competitors (options A and B) does not necessarily guarantee future success or repay social losses. Option D is also incorrect as it does not account for the potential for growth and profitability in the future.

Question 20

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

The practice described in the statement is dumping, which involves selling goods in foreign markets at prices well below those in the domestic market to minimize losses. This is often illegal under international trade laws, as it can harm the domestic industry of the importing country.

Quiz 35: International Trade and Comparative Advantage

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

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

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

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

The Trade Adjustment Assistance program is intended to help

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

The trade philosophy of the Clinton administration is best characterized as

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

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

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?

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,

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

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

"Protection" is designed to help

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

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

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

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

The infant industry argument is valid when

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