Question 1

Some argue that governments should use the threat of _____ to intervene in trade policy as a bargaining tool to help open foreign markets and force trading partners to "play by the rules of the game."

Accepted Answer

A)  free trade
B)  deregulation
C)  retaliation
D)  liberalizationE) C) and D)
F) B) and C)

Question 2

Which of the following historical events signified the first official embracing of free trade as a government policy by Great Britain?

Accepted Answer

A)  The Union of the Crowns in 1603
B)  The repeal of the Corn Laws by the British Parliament in 1846
C)  The Treaty of American Independence in 1783
D)  The Industrial Revolution of the 18th and 19th centuriesE) B) and C)
F) B) and D)

Question 3

According to Paul Krugman,a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry will probably:

Accepted Answer

A)  dominate the industry.
B)  move away from protectionism.
C)  provoke retaliation.
D)  incur huge financial debts.E) A) and B)
F) A) and C)

Question 4

Japan has a long history of supporting inefficient domestic producers with farm subsidies.

Accepted Answer

A) True 
 B)False

Question 5

All of the following were provisions of the Uruguay Round Agreement EXCEPT:

Accepted Answer

A)  clearer and stronger GATT rules.
B)  extension of GATT fair trade and market access rules to cover a wider range of services.
C)  substantial reduction in agricultural subsidies.
D)  increase in tariffs on industrial goods in lieu of the reduction in agricultural subsidies.E) None of the above
F) A) and C)

Question 6

Describe how the world trade system erected by GATT came under strain from protectionist trends that dominated the world economy from 1980 to 1993.

Accepted Answer

During the 1980s and early 1990s,the wor...

Question 7

The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.

Accepted Answer

A) True 
 B)False

Question 8

Governments typically pay for subsidies by:

Accepted Answer

A)  selling junk bonds.
B)  taxing individuals and corporations.
C)  foreign direct investment in poorer countries.
D)  privatization of public holdings.E) A) and C)
F) A) and B)

Question 9

The extra profit that producers make when supply is artificially limited by an import quota is referred to as a:

Accepted Answer

A)  trade surplus.
B)  quota rent.
C)  trade reconciliation.
D)  profit hike margin.E) B) and C)
F) All of the above

Question 10

What is the "infant industry argument"? What are its implications for the world economy? What are the criticisms of this argument?

Accepted Answer

The infant industry argument is by far t...

Question 11

According to the text,given efficient global capital markets,the only industries that would require government protection would be:

Accepted Answer

A)  those that are not worthwhile.
B)  defense-related,such as aerospace and semiconductors.
C)  chemical and processing industries.
D)  those that require efficient administration.E) A) and C)
F) All of the above

Question 12

The infant industry argument is the oldest economic argument for government intervention.

Accepted Answer

A) True 
 B)False

Question 13

U.S.trade sanctions against Cuba,Libya,and Iran are examples of:

Accepted Answer

A)  governments protecting domestic consumers from unsafe products.
B)  governments using trade policy to support their foreign policy objectives.
C)  governments protecting local businesses from international competition.
D)  governments punishing foreign companies for dumping products in their markets.E) B) and C)
F) None of the above

Question 14

With the development of the _____ and _____,the economic arguments for government intervention have undergone a renaissance in recent years.

Accepted Answer

A)  technology;WTO
B)  free trade;democratic governments
C)  new trade theory;strategic trade policy
D)  democratic governments;anti-globalization movementE) B) and D)
F) A) and C)

Question 15

A(n) _____ is a quota on trade imposed by the exporting country,typically at the request of the importing country's government.

Accepted Answer

A)  tariff rate quota
B)  quota rent
C)  import quota
D)  voluntary export restraint (VER) E) B) and D)
F) A) and D)

Question 16

The main effect of the Uruguay Round Agreement on agricultural products was that:

Accepted Answer

A)  caps were imposed on textile exports.
B)  farm subsidies were reduced.
C)  tariffs on industrial goods were increased.
D)  a wide range of agricultural services were exempted from GATT rules.E) A) and B)
F) A) and C)

Question 17

The U.S.government imposed an eight to thirty percent tariff on steel imports into the United States in March 2002.This belongs to which of the following categories?

Accepted Answer

A)  General
B)  Ad valorem
C)  Specific
D)  Ad hocE) A) and B)
F) A) and C)

Question 18

One of the main reasons why many economists remain critical of the infant industry argument is its assumption that:

Accepted Answer

A)  protection of manufacturing from foreign competition is harmful.
B)  absolute advantage cannot sustain productivity of an industry.
C)  foreign firms too come under the definition of infant industry when they newly enter a foreign market.
D)  firms are unable to make efficient long-term investments through domestic or international capital markets.E) None of the above
F) B) and C)

Question 19

According to Krugman,one of the reasons for not embracing strategic trade policy is that such a policy might:

Accepted Answer

A)  hamper the chances of a country's firms to effectively exploit first-mover advantages.
B)  be captured by special-interest groups within the economy for personal benefits.
C)  be used to establish rules of the game that minimize use of trade-distorting subsidies.
D)  divert attention from the need to establish domestic firms in a dominant position in the global industry.E) C) and D)
F) None of the above

Question 20

Countries sometimes argue that it is necessary to protect certain industries because they are important for national security.

Accepted Answer

A) True 
 B)False

Exam 6: The Political Economy of International Trade

According to Paul Krugman,a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry will probably:

Correct AnswerverifiedShow Answer

The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.

Correct AnswerverifiedShow Answer

Describe how the world trade system erected by GATT came under strain from protectionist trends that dominated the world economy from 1980 to 1993.

Correct AnswerverifiedDuring the 1980s and early 1990s,the wor...View AnswerShow Answer

According to Krugman,one of the reasons for not embracing strategic trade policy is that such a policy might:

Correct AnswerverifiedShow Answer

Governments typically pay for subsidies by:

Correct AnswerverifiedShow Answer

The U.S.government imposed an eight to thirty percent tariff on steel imports into the United States in March 2002.This belongs to which of the following categories?

Correct AnswerverifiedShow Answer

The main effect of the Uruguay Round Agreement on agricultural products was that:

Correct AnswerverifiedShow Answer

Which of the following historical events signified the first official embracing of free trade as a government policy by Great Britain?

Correct AnswerverifiedShow Answer

The extra profit that producers make when supply is artificially limited by an import quota is referred to as a:

Correct AnswerverifiedShow Answer

The infant industry argument is the oldest economic argument for government intervention.

Correct AnswerverifiedShow Answer

One of the main reasons why many economists remain critical of the infant industry argument is its assumption that:

Correct AnswerverifiedShow Answer

Some argue that governments should use the threat of _____ to intervene in trade policy as a bargaining tool to help open foreign markets and force trading partners to "play by the rules of the game."

Correct AnswerverifiedShow Answer

Countries sometimes argue that it is necessary to protect certain industries because they are important for national security.

Correct AnswerverifiedShow Answer

Japan has a long history of supporting inefficient domestic producers with farm subsidies.

Correct AnswerverifiedShow Answer

With the development of the _____ and _____,the economic arguments for government intervention have undergone a renaissance in recent years.

Correct AnswerverifiedShow Answer

A(n) _____ is a quota on trade imposed by the exporting country,typically at the request of the importing country's government.

Correct AnswerverifiedShow Answer

All of the following were provisions of the Uruguay Round Agreement EXCEPT:

Correct AnswerverifiedShow Answer

According to the text,given efficient global capital markets,the only industries that would require government protection would be:

Correct AnswerverifiedShow Answer

What is the "infant industry argument"? What are its implications for the world economy? What are the criticisms of this argument?

Correct AnswerverifiedThe infant industry argument is by far t...View AnswerShow Answer

U.S.trade sanctions against Cuba,Libya,and Iran are examples of:

Correct AnswerverifiedShow Answer

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During the 1980s and early 1990s,the wor...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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With the development of the _ and _,the economic arguments for government intervention have undergone a renaissance in recent years.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The infant industry argument is by far t...
View Answer

Correct Answer
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