Globalization and Protectionism

Which statement describes protectionism?

1. When a country enacts protectionism, it increases the economic gains it would have been able to achieve through a combination of comparative advantage, specialized learning, and economies of scale.
   
2. Protectionism requires domestic consumers of a product (consumers may include either households or other firms) to pay higher prices to benefit domestic producers of that product.
   
3. Protectionism allows domestic consumers of a product (consumers may include either households or other firms) to pay lower prices to benefit domestic producers of that product.
   
4. When a country enacts protectionism, it does not lose the economic gains it would have been able to achieve through a combination of comparative advantage, specialized learning, and economies of scale.
   

Which statements describe protectionism? (Select all that apply.)

1. Protectionism takes three main forms: tariffs, import quotas, and nontariff barriers.
   
2. Protectionist policies often seek to shield domestic producers and domestic workers from foreign competition.
   
3. Protectionism takes two main forms: tariffs and import quotas.
   
4. Protectionist policies often seek to shield foreign producers and foreign workers from domestic competition.
   
5. A demand and supply analysis of protectionism shows that it is just a matter of domestic gains and foreign losses, with minimal domestic costs.
   

Which statements describe nontariff barriers? (Select all that apply.)

1. “Rules-of-origin” regulations are not an example of a nontariff barrier.
   
2. Nontariff barriers are a form of import quota.
   
3. A rule requiring certain safety standards is not a nontariff barrier that can limit imports.
   
4. Nontariff barriers are all the other ways that a nation can draw up rules, regulations, inspections, and paperwork to make it more costly or difficult to import products.
   
5. A rule requiring certain safety standards is a nontariff barrier that can limit imports.
   

Which statements describe circumstances related to the North American Free Trade Agreement (NAFTA)? (Select all that apply.)

1. NAFTA includes Canada, the United States, and Mexico.
   
2. At the time of passage of NAFTA, average wages in Mexico were about one-eighth of those in the United States.
   
3. U.S. employers relocated to Mexico to take advantage of lower wages resulting in increased U.S. unemployment.
   
4. At the time of passage of NAFTA, average wages in Mexico were about one-half of those in the United States.
   
5. NAFTA is a trade agreement between just the United States and Mexico.
   

Which statement describes the impact of protectionism on jobs?

1. Protectionism reshuffles jobs from industries with import protections to industries that are not protected from imports, but it does not create more jobs.
   
2. Protectionism reshuffles jobs from industries without import protections to industries that are protected from imports, thereby creating more jobs.
   
3. Protectionism reshuffles jobs from industries without import protections to industries that are protected from imports, but it does not create more jobs.
   
4. Protectionism reshuffles jobs from industries with import protections to industries that are not protected from imports, thereby creating more jobs.
   

Which statements describe the costs of saving jobs through protectionism? (Select all that apply.)

1. When an industry is protected, the economy as a whole gains the benefits of playing to its comparative advantage.
   
2. When an industry is protected, the economy as a whole loses the benefits of playing to its comparative advantage.
   
3. Part of the higher price that consumers pay for protected goods is increased economic efficiency.
   
4. Not all of the extra money paid by consumers because of tariffs or quotas goes to save jobs.
   
5. All of the extra money paid by consumers because of tariffs or quotas goes to save jobs.
   

Which statements describe anti-dumping law? (Select all that apply.)

1. In terms of economic theory, the case for anti-dumping laws is strong.
   
2. In terms of economic theory, the case for anti-dumping laws is weak.
   
3. It is not difficult to find evidence of predatory pricing by foreign firms exporting to the United States.
   
4. It is difficult to find evidence of predatory pricing by foreign firms exporting to the United States.
   
5. Anti-dumping investigations involve little politics and much careful analysis.
   

Which statements describe the national interest argument? (Select all that apply.)

1. The economic argument that a nation should not depend too heavily on other countries for supplies of certain key products, such as oil, or for special materials or technologies that might have national security applications is never applicable.
   
2. Decisions about what constitutes a key strategic material are made by nonpartisan analysts.
   
3. The economic argument that a nation should not depend too heavily on other countries for supplies of certain key products, such as oil, or for special materials or technologies that might have national security applications has some validity when used sparingly.
   
4. Decisions about what constitutes a key strategic material are made by politicians, not nonpartisan analysts.
   
5. The number of products that can be touted by lobbyists and politicians as vital to national security are very limited.
   

What does not describe one of the World Bank guidelines on infant industry protection?

1. Do not hand out protectionism and other subsidies to all industries, but focus on a few industries where your country has a realistic chance to be a world-class producer.
   
2. Be very hesitant about using protectionism in areas like computers, where many other industries rely on having the best products available, because it is not useful to help one industry by imposing high costs on many other industries.
   
3. Have clear guidelines for when the infant industry policy will end.
   
4. Limit protectionism to areas like computers, where many other industries rely on having the best products available, because it is sometimes useful to help one industry by imposing high costs on many other industries.
   

Match the country with the appropriate regional trade agreement.
New Zealand

1. APEC
   
2. LAIA
   
3. SADC
   
4. EU
   
5. ASEAN
   
6. NAFTA
   

Match the country with the appropriate regional trade agreement.
Canada

1. APEC
   
2. LAIA
   
3. SADC
   
4. EU
   
5. ASEAN
   
6. NAFTA
   

Match the country with the appropriate regional trade agreement.
Argentina

1. APEC
   
2. LAIA
   
3. SADC
   
4. EU
   
5. ASEAN
   
6. NAFTA
   

Match the country with the appropriate regional trade agreement.
Vietnam

1. APEC
   
2. LAIA
   
3. SADC
   
4. EU
   
5. ASEAN
   
6. NAFTA
   

Match the country with the appropriate regional trade agreement.
Congo

1. APEC
   
2. LAIA
   
3. SADC
   
4. EU
   
5. ASEAN
   
6. NAFTA
   

Match the country with the appropriate regional trade agreement.
Denmark

1. APEC
   
2. LAIA
   
3. SADC
   
4. EU
   
5. ASEAN
   
6. NAFTA
   

Match the year with the organization which was founded in that year.
1945

1. World Bank
   
2. World Trade Organization
   
3. United Nations
   
4. General Agreement on Tariffs and Trade
   

Match the year with the organization which was founded in that year.
1946

1. World Bank
   
2. World Trade Organization
   
3. United Nations
   
4. General Agreement on Tariffs and Trade
   

Match the year with the organization which was founded in that year.
1947

1. World Bank
   
2. World Trade Organization
   
3. United Nations
   
4. General Agreement on Tariffs and Trade
   

Match the year with the organization which was founded in that year.
1995

1. World Bank
   
2. World Trade Organization
   
3. United Nations
   
4. General Agreement on Tariffs and Trade
   

Which statements describe different types of global economic integration? (Select all that apply.)

1. Full economic unions are a form of global economic integration, in which, in addition to a common market, monetary and fiscal policies are coordinated.
   
2. Common markets are a form of global economic integration in which participants have a common external trade policy as well as free trade within the group.
   
3. Free trade agreements are a form of global economic integration in which participants have a common external trade policy as well as free trade within the group.
   
4. Common markets are a form of global economic integration, in which, in addition to a common market, monetary and fiscal policies are coordinated.
   
5. Free trade agreements are a form of global economic integration, in which, in addition to a common market, monetary and fiscal policies are coordinated.
   

Which statements describe the disruptive nature of free trade? (Select all that apply.)

1. The economic analysis of free trade relies on a belief that foreign trade is not disruptive or does not pose trade-offs.
   
2. The disruption caused by international trade is not fundamentally different from all the other disruptions caused by the other workings of a market economy.
   
3. The economic analysis of free trade does not rely on a belief that foreign trade is not disruptive or does not pose trade-offs.
   
4. Disruptions from free trade are the only reason why disruptions are experienced by workers and firms.
   
5. The disruption caused by international trade is fundamentally different from all the other disruptions caused by the other workings of a market economy.
   

Which statement describes the common belief among economists about the tradeoffs of trade policy?

1. The common belief among economists is that it is better to not embrace the gains from trade, and then deal with the costs and tradeoffs with other policy tools, such as cutting off trade to avoid the costs and tradeoffs.
   
2. The common belief among economists is that it is better to embrace the gains from trade, and then deal with the costs and tradeoffs with other policy tools, such as cutting off trade to avoid the costs and tradeoffs.
   
3. The common belief among economists is that it is better to embrace the gains from trade, and then deal with the costs and tradeoffs with other policy tools, than it is to cut off trade to avoid the costs and tradeoffs.
   
4. The common belief among economists is that it is better to use policy tools to deal with the costs and tradeoffs of trade, and then embrace the gains from trade, than it is to cut off trade to avoid the costs and tradeoffs.
   

Which statement describes the best public policy regarding disruptions of foreign trade?

1. In thinking about the disruptions of foreign trade, or any of the other possible costs and tradeoffs of foreign trade discussed in this chapter, the best public policy solutions typically do not involve protectionism, but instead involve finding ways for public policy to address the particular issues, while still allowing the benefits of international trade to occur.
   
2. In thinking about the disruptions of foreign trade, or any of the other possible costs and tradeoffs of foreign trade discussed in this chapter, the best public policy solutions typically involve protectionism, accompanied by finding ways for public policy to address the particular issues, while still allowing the benefits of international trade to occur.
   
3. In thinking about the disruptions of foreign trade, or any of the other possible costs and tradeoffs of foreign trade discussed in this chapter, the best public policy solutions typically do not involve protectionism, or finding ways for public policy to address the particular issues, but simply allowing the benefits of international trade to occur.
   
4. In thinking about the disruptions of foreign trade, or any of the other possible costs and tradeoffs of foreign trade discussed in this chapter, the best public policy solutions typically involve protectionism.
   

Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect?

1. government tax revenues increase
   
2. domestic production and sales by the protected industries increase
   
3. consumers' real incomes decrease
   
4. prices of the goods produced by protected industries increase
   

Suppose the government of Taiwan subsidized its watch-making industry, enabling Taiwanese producers to undersell foreign watch producers. The law of comparative advantage indicates that watch-importing nations would best take advantage of the Taiwanese subsidization policy by:

1. setting a tariff high enough to just offset the subsidy granted to the Taiwanese watch-making industry.
   
2. setting a declining quota on the import of Taiwanese watches such that the nation's domestic watch-making industry would continue to grow at the same rate as the rest of the economy.
   
3. setting a tariff such that the prices of Taiwanese and domestic watches to the consumer are equal.
   
4. accepting the subsidy of the Taiwanese government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.
   

International trade is fundamentally a ________________________.

1. win-lose situation
   
2. lose-lose situation
   
3. win-win situation
   
4. war which is won by the strongest
   

_____________ are numerical limitations on the quantity of products that can be imported.

1. Tariffs
   
2. Import quotas
   
3. Taxes
   
4. Non-tariff barriers
   

Import tariffs generally ________ the output of domestic producers of the affected products and also _________ the output of domestic exporters.

1. decrease; decrease
   
2. decrease; increase
   
3. increase; decrease
   
4. increase; increase
   

Which of the following would be expected if the tariff on foreign-produced automobiles were increased?

1. The domestic price of automobiles would fall.
   
2. The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.
   
3. The number of unemployed workers in the domestic automobile industry would rise.
   
4. The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.
   

During the second half of the twentieth century, trade barriers have in general:

1. declined quite substantially both in the U.S. economy and in the global economy.
   
2. declined quite substantially in the U.S. economy but not in the global economy.
   
3. increased quite substantially in the U.S. economy and in the global economy.
   
4. increased quite sbstantially in the U.S. economy but not in the global economy.
   

The acronym GATT stands for:

1. General Association for Trade and Tariffs.
   
2. General Agreement on Tariffs and Trade.
   
3. General Accounting for Tariff and Trade.
   
4. General Association on Technology and Trade.
   

Raising an existing tariff on grapes from Argentina will:

1. increase domestic production of grapes.
   
2. increase total American consumption of grapes.
   
3. increase American consumption of domestically produced grapes.
   
4. increase American imports of grapes from Argentina.
   

Economists would say tariffs:

1. protect domestic producers of exported goods.
   
2. limit voluntary exchanges.
   
3. protect foreign producers of goods.
   
4. protect domestic consumers of goods.
   

It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________.

1. National Interest Argument
   
2. Import Limitation Argument
   
3. Anti-Dumping Argument
   
4. Buy-American Argument
   

Which of the following is the best example of a tariff?

1. a tax placed on all small cars sold in the domestic market
   
2. a limit imposed on the number of small cars that can be imported from a foreign country
   
3. a subsidy from the American government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars
   
4. a $1000-per-car fee imposed on all small cars imported
   

After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:

1. decrease.
   
2. increase.
   
3. remain the same.
   
4. change in an indeterminate manner.
   

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:

1. contains one error; the trade restraints do not increase the scarcity of foreign-produced goods.
   
2. contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers.
   
3. contains two errors; trade restraints do not increase the domestic scarcity of product and neither do they harm domestic consumers.
   
4. is essentially correct.
   

An import quota does which of the following?

1. decreases the price of the imported goods to consumers
   
2. increases the price of the domestic goods to consumers
   
3. redistributes income away from domestic producers of those products toward domestic producers of exports
   
4. both a) and c)
   

Which of the following is the best example of a quota?

1. a tax placed on all small cars sold in the domestic market
   
2. a limit imposed on the number of men's suits that can be imported from a foreign country
   
3. a subsidy from the American government to domestic manufacturers of men's suits so they can compete more effectively with foreign producers of men's suits
   
4. a $100-per-car fee imposed on all small cars imported
   

A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________.

1. a non-tariff barrier
   
2. a quota
   
3. a government bureaucracy
   
4. an import quota
   

__________________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.

1. Tariffs
   
2. Nontariff barriers
   
3. Quotas
   
4. Import ceilings
   

____________ means selling goods below their cost of production.

1. Protectionism
   
2. Dumping
   
3. Import quotas
   
4. Non-tariff barriers
   

Introducing a tariff on vitamin Z would:

1. reduce exports of vitamin Z.
   
2. increase American consumption of domestically produced vitamin Z.
   
3. increase total American consumption of vitamin Z.
   
4. decrease domestic production of vitamin Z.