A) political clout of foreigners.
B) political clout of domestic consumers.
C) political power of the special interest groups.
D) attractiveness of sound economic policies to elected political officials.
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A) exports more than it imports.
B) imports more than it exports.
C) imports goods for which it is a low opportunity cost producer.
D) exports goods for which it is a low opportunity cost producer.
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A) there is no link between the degree of a country's trade openness and its economic growth.
B) more open economies have grown more rapidly than those that have imposed substantial barriers restricting trade.
C) economies that have imposed high trade barriers have, on average, grown more rapidly than economies that are more open to international trade.
D) countries with higher trade barriers have been able to achieve higher levels of per capita GDP than those that are more open to international trade.
E) both c and d are correct.
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A) free rider problem.
B) law of comparative advantage.
C) infant-industry argument.
D) law of diminishing marginal returns.
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A) increase the real income of Americans.
B) benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries.
C) help channel more of our resources into producing goods for which we are a low-cost producer.
D) reduce unemployment and increase the productivity of American workers.
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A) will reduce imports, but a quota generally will not.
B) can easily be rescinded, but a quota cannot.
C) will reduce the ability of foreigners to obtain the purchasing power to buy a nation's export goods, but a quota will not affect the foreign demand for the nation's exports.
D) typically generates tax revenue, while a quota does not.
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A) P1 and Q1.
B) P1 and Q4.
C) P2 and Q2.
D) P2 and Q3.
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A) all industries will claim that they are infant industries in order to gain protection.
B) the protected industry will become too efficient and drive out foreign competition.
C) once in place, it is difficult to remove protection even as the industry matures.
D) it causes the goods that are produced in the protected industry to have lower prices.
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A) reduce the demand for U.S.export goods since foreigners will be less able to buy our goods if they cannot sell to us.
B) benefit producers in industries that export goods.
C) increase the nation's income since it protects domestic jobs.
D) enhance economic efficiency by allocating more resources to the areas of their greatest comparative advantage.
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The United States would import bicycles ...View Answer
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A) political clout of foreigners.
B) political clout of domestic consumers.
C) political power of special interest groups.
D) political desire for economic efficiency.
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A) P1 and Q1.
B) P1 and Q4.
C) P2 and Q2.
D) P2 and Q3.
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A) increasing as a share of the economy.
B) relatively constant as a share of the economy.
C) declining as a share of the economy.
D) increasing during periods of recession, but declining during periods of strong economic growth.
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A) they reduce the ability of the U.S.to export products abroad.
B) they acquire the dollars that are necessary to purchase goods, services, and assets from Americans.
C) they reduce the living standards of Americans.
D) they cause the dollar to depreciate.
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A) domestic consumers gain, domestic producers lose, and the gains outweigh the losses.
B) domestic producers gain, domestic consumers lose, and the gains outweigh the losses.
C) domestic consumers gain, domestic producers lose, and the losses outweigh the gains.
D) domestic producers gain, but domestic consumers lose an equal amount.
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A) the monetary sector.
B) the balance of payments deficit.
C) the exports of a nation.
D) taxation and other revenue-generating activities.
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A) trade between the United States and Mexico increased.
B) trade between the United States and Canada increased.
C) the joint output of the United States, Mexico, and Canada has increased.
D) all of the above are correct.
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A) most industries need protection when they are mature, not when they are first established.
B) the amount of the tariff is unlikely to have much impact on the success of an infant industry.
C) political pressure will likely prevent the withdrawal of the tariff when the industry matures.
D) domestic consumers will continue to buy the foreign products anyway, regardless of the tariff.
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A) Restrictions on foreign trade will increase employment and permanently reduce unemployment.
B) Removal of restrictions that have existed for years will initially cause inflation.
C) Infant industries need permanent protection to develop and gain productive efficiency.
D) A nation needs to protect industries that are vital to national defense in case of future international conflict.
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A) allow a country to specialize in producing certain goods and services.
B) reduce world output.
C) allow a country to move to higher consumption levels.
D) increase world output.
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