Question 1

Why does protectionism cause a "deadweight loss" in trade?

Accepted Answer

A) Protectionism is likely to cause trade partners to raise trade barriers,thus costing exporters sales. 
B) Developing countries have to go into debt to subsidize consumers so they can buy the higher priced imports. 
C) It causes countries to switch production to industries where lack of comparative advantage makes production less efficient. 
D) It creates a loss of sales tax revenue from decreased consumption. 
A) Protectionism is likely to cause trade partners to raise trade barriers,thus costing exporters sales. 
B) Developing countries have to go into debt to subsidize consumers so they can buy the higher priced imports. 
C) It causes countries to switch production to industries where lack of comparative advantage makes production less efficient. 
D) It creates a loss of sales tax revenue from decreased consumption. C

Question 2

Why do countries often restrict trade?

Accepted Answer

A) Some influential interest groups may benefit from tariffs. 
B) Trade restrictions are usually the best way to improve a country's overall economy. 
C) Free trade hurts industries that make use of the most abundant resource in a country. 
D) Trade restrictions are more important to consumers than to producers of products. 
A) Some influential interest groups may benefit from tariffs. 
B) Trade restrictions are usually the best way to improve a country's overall economy. 
C) Free trade hurts industries that make use of the most abundant resource in a country. 
D) Trade restrictions are more important to consumers than to producers of products. A

Question 3

Why do economists believe that free trade would be beneficial for the world economy? Why do nations still erect barriers in the face of those arguments?

Accepted Answer

Answers will vary. Classical economists emphasized that specialization requires access to
large markets,division of labor allows gains from international trade, comparative advantage dictates that a nation gains most by specializing in producing and exporting what it produces most efficiently.These are the basic reasons for free trade. Despite the powerful economic arguments for free trade,every country currently has at least some restrictions on trade with the rest of the world. Virtually all tools of trade protection-tariffs,quotas,and other restrictions-make imports more expensive,which allows domestic producers to sell more of their products,to raise their prices,or both.

Question 4

Explain hegemonic stability theory and how one or a few powerful countries can affect the international trading system.

Accepted Answer

Answers will vary.The hegemonic stabilit

Question 5

Which of the following countries is most likely to follow a liberal trade policy?

Accepted Answer

A) A country led by a dictator who suppresses national political parties 
B) A country led by a dictator who allows limited elections to take place 
C) A country led by a small group of military officers 
D) A democratic country with strong national political parties and a powerful executive 
A) A country led by a dictator who suppresses national political parties 
B) A country led by a dictator who allows limited elections to take place 
C) A country led by a small group of military officers 
D) A democratic country with strong national political parties and a powerful executive

Question 6

Which of the following is an example of absolute advantage?

Accepted Answer

A) Germany makes cars more efficiently than the United States but less efficiently than Japan 
B) The United States is likely to win in a trade war against either Germany or Japan. 
C) Japan makes cars more efficiently than any other country. 
D) All countries are equally efficient at making software. 
A) Germany makes cars more efficiently than the United States but less efficiently than Japan 
B) The United States is likely to win in a trade war against either Germany or Japan. 
C) Japan makes cars more efficiently than any other country. 
D) All countries are equally efficient at making software.

Question 7

Demonstrate mathematically how comparative advantage suggests that two countries should specialize and trade.Despite the math,why would countries refuse to partake in trade?

Accepted Answer

Answers will vary.The students may cite

Question 8

Which of the following is an implication of the Ricardo-Viner explanation for trade-policy preferences?

Accepted Answer

A) A country's government will usually prefer to protect owners of capital. 
B) The interests of groups in society toward trade are determined by the factor of production of which they are part. 
C) The interests of factors of production are often determined by the industry sector,rather than by the factor of production. 
D) A country will import goods that make intensive use of the resources a country has in abundance. 
A) A country's government will usually prefer to protect owners of capital. 
B) The interests of groups in society toward trade are determined by the factor of production of which they are part. 
C) The interests of factors of production are often determined by the industry sector,rather than by the factor of production. 
D) A country will import goods that make intensive use of the resources a country has in abundance.

Question 9

Which of the following would be expected by Heckscher-Ohlin trade theory?

Accepted Answer

A) A country with abundant fertile land exporting agricultural products 
B) A country with abundant capital importing manufactured goods 
C) A country with abundant fertile land importing agricultural goods 
D) A country with abundant labor exporting agricultural products 
A) A country with abundant fertile land exporting agricultural products 
B) A country with abundant capital importing manufactured goods 
C) A country with abundant fertile land importing agricultural goods 
D) A country with abundant labor exporting agricultural products

Question 10

Which of the following describes comparative advantage?

Accepted Answer

A) A country specializing in what they do most well or least poorly 
B) A country producing everything better than other countries 
C) The advantage that countries that export many products have over more specialized economies 
D) The ability of workers in industrialized economies to work more efficiently than those in developing countries 
A) A country specializing in what they do most well or least poorly 
B) A country producing everything better than other countries 
C) The advantage that countries that export many products have over more specialized economies 
D) The ability of workers in industrialized economies to work more efficiently than those in developing countries

Question 11

The trade protection that the United States steel industry receives has which of the following effects?

Accepted Answer

A) It raises the cost of steel for American consumers. 
B) It lowers the profits of American steel companies. 
C) It lowers the prices of products made with steel,such as cars and appliances. 
D) It increases the sales of foreign steel products in the United States. 
A) It raises the cost of steel for American consumers. 
B) It lowers the profits of American steel companies. 
C) It lowers the prices of products made with steel,such as cars and appliances. 
D) It increases the sales of foreign steel products in the United States.

Question 12

The key assumption distinguishing the Ricardo-Viner (RV)model from the Stolper-Samuelson (SS)model is that:

Accepted Answer

A) RV assumes that factor mobility is high; SS assumes that factor mobility is low. 
B) RV assumes that factor mobility is low; SS assumes that factor mobility is high. 
C) RV assumes that free trade benefits consumers; SS assumes that free trade hurts consumers. 
D) RV assumes that free trade hurts consumers; SS assumes that free trade benefits consumers. 
A) RV assumes that factor mobility is high; SS assumes that factor mobility is low. 
B) RV assumes that factor mobility is low; SS assumes that factor mobility is high. 
C) RV assumes that free trade benefits consumers; SS assumes that free trade hurts consumers. 
D) RV assumes that free trade hurts consumers; SS assumes that free trade benefits consumers.

Question 13

Which of the following is an example of "reciprocity" in international trade?

Accepted Answer

A) Most of the countries in the European Union have adopted the same currency. 
B) France reduced tariffs on wheat imports after Great Britain reduced tariffs on wheat imports. 
C) A majority of the world's countries have joined the World Trade Organization. 
D) Oil-producing states cooperate on how much oil they will export. 
A) Most of the countries in the European Union have adopted the same currency. 
B) France reduced tariffs on wheat imports after Great Britain reduced tariffs on wheat imports. 
C) A majority of the world's countries have joined the World Trade Organization. 
D) Oil-producing states cooperate on how much oil they will export.

Question 14

Why are those who favor free trade concerned about regional trade agreements?

Accepted Answer

A) They think there are too few regional trade agreements. 
B) They think regional trade agreements are biased toward workers' rights. 
C) They think regional trade agreements will be stepping stones toward a more integrated world economy. 
D) They think regional trade agreements may result in the members trading only among themselves. 
A) They think there are too few regional trade agreements. 
B) They think regional trade agreements are biased toward workers' rights. 
C) They think regional trade agreements will be stepping stones toward a more integrated world economy. 
D) They think regional trade agreements may result in the members trading only among themselves.

Question 15

Which of the following is a nontariff barrier to trade?

Accepted Answer

A) A subsidy on domestic production 
B) A tax on imports 
C) A quota on imports 
D) Consumer preference for domestic goods 
A) A subsidy on domestic production 
B) A tax on imports 
C) A quota on imports 
D) Consumer preference for domestic goods

Question 16

When the United States established steel tariffs in 2002,who benefited?

Accepted Answer

A) Steel exporters in other countries 
B) Consumers in the United States 
C) Producers in the United States that used steel as an input 
D) Producers of steel in the United States 
A) Steel exporters in other countries 
B) Consumers in the United States 
C) Producers in the United States that used steel as an input 
D) Producers of steel in the United States

Question 17

Explain how interests,institutions,and interactions led to increasing amounts of free trade in developing countries starting in the 1980s.

Accepted Answer

Answers will vary.Students should discus

Question 18

Which of the following is a factor of production?

Accepted Answer

A) Export industries 
B) Military power 
C) Unskilled labor 
D) Multinational firms 
A) Export industries 
B) Military power 
C) Unskilled labor 
D) Multinational firms

Question 19

Why does compensating those harmed by trade represent a "Pareto improvement"?

Accepted Answer

A) Trade benefits the country as a whole sufficiently that the country can provide compensation,thus improving the outcome for those hurt by trade,while still coming out ahead overall. 
B) Tying compensation to trade makes trade so costly that it will only occur when it is extremely beneficial to the country. 
C) Generous compensation will draw additional workers from abroad,thus increasing the output of the protected industry. 
D) Compensation improves the efficiency of workers,which can counteract the comparative disadvantage labor has in a developed economy. 
A) Trade benefits the country as a whole sufficiently that the country can provide compensation,thus improving the outcome for those hurt by trade,while still coming out ahead overall. 
B) Tying compensation to trade makes trade so costly that it will only occur when it is extremely beneficial to the country. 
C) Generous compensation will draw additional workers from abroad,thus increasing the output of the protected industry. 
D) Compensation improves the efficiency of workers,which can counteract the comparative disadvantage labor has in a developed economy.

Question 20

What factors explain why countries trade what they do and who they trade with?

Accepted Answer

Answers will vary.Students should define

Why does protectionism cause a "deadweight loss" in trade?

Why do countries often restrict trade?

Why do economists believe that free trade would be beneficial for the world economy? Why do nations still erect barriers in the face of those arguments?

Explain hegemonic stability theory and how one or a few powerful countries can affect the international trading system.

Which of the following countries is most likely to follow a liberal trade policy?

Which of the following is an example of absolute advantage?

Demonstrate mathematically how comparative advantage suggests that two countries should specialize and trade.Despite the math,why would countries refuse to partake in trade?

Which of the following is an implication of the Ricardo-Viner explanation for trade-policy preferences?

Which of the following would be expected by Heckscher-Ohlin trade theory?

Which of the following describes comparative advantage?

The trade protection that the United States steel industry receives has which of the following effects?

The key assumption distinguishing the Ricardo-Viner (RV)model from the Stolper-Samuelson (SS)model is that:

Which of the following is an example of "reciprocity" in international trade?

Why are those who favor free trade concerned about regional trade agreements?

Which of the following is a nontariff barrier to trade?

When the United States established steel tariffs in 2002,who benefited?

Explain how interests,institutions,and interactions led to increasing amounts of free trade in developing countries starting in the 1980s.

Which of the following is a factor of production?

Why does compensating those harmed by trade represent a "Pareto improvement"?

What factors explain why countries trade what they do and who they trade with?

What Shaped Our World

Understanding Interests, interactions, and Institutions

Why Are There Wars

Domestic Politics and War

International Institutions and War

Violence by Nonstate Actors: Civil War and Terrorism

International Financial Relations

International Monetary Relations

Development: Causes of the Wealth and Poverty of Nations

International Law and Norms

Human Rights

The Global Environment

The Future of International Politics

Introduction

Foundations, War, and Peace

International Political Economy, Transnational Politics, and Looking Ahead

Filters

Exam 7: International Trade

Why does protectionism cause a "deadweight loss" in trade?

Why do countries often restrict trade?

Why do economists believe that free trade would be beneficial for the world economy? Why do nations still erect barriers in the face of those arguments?

Explain hegemonic stability theory and how one or a few powerful countries can affect the international trading system.

Which of the following countries is most likely to follow a liberal trade policy?

Which of the following is an example of absolute advantage?

Demonstrate mathematically how comparative advantage suggests that two countries should specialize and trade.Despite the math,why would countries refuse to partake in trade?

Which of the following is an implication of the Ricardo-Viner explanation for trade-policy preferences?

Which of the following would be expected by Heckscher-Ohlin trade theory?

Which of the following describes comparative advantage?

The trade protection that the United States steel industry receives has which of the following effects?

The key assumption distinguishing the Ricardo-Viner (RV)model from the Stolper-Samuelson (SS)model is that:

Which of the following is an example of "reciprocity" in international trade?

Why are those who favor free trade concerned about regional trade agreements?

Which of the following is a nontariff barrier to trade?

When the United States established steel tariffs in 2002,who benefited?

Explain how interests,institutions,and interactions led to increasing amounts of free trade in developing countries starting in the 1980s.

Which of the following is a factor of production?

Why does compensating those harmed by trade represent a "Pareto improvement"?

What factors explain why countries trade what they do and who they trade with?

What Shaped Our World

Understanding Interests, interactions, and Institutions

Why Are There Wars

Domestic Politics and War

International Institutions and War

Violence by Nonstate Actors: Civil War and Terrorism

International Financial Relations

International Monetary Relations

Development: Causes of the Wealth and Poverty of Nations

International Law and Norms

Human Rights

The Global Environment

The Future of International Politics

Introduction

Foundations, War, and Peace

International Political Economy, Transnational Politics, and Looking Ahead

Filters