Question 1

In effect,the U.S.does subsidize high-tech firms by subsidizing R&D.This is done through

Accepted Answer

A) the budget of the Department of Education. 
B) systematic protection through the levying of tariffs. 
C) systematic protection through the establishment of NTBs. 
D) relatively accelerated "depreciation" of R&D investment in the Federal tax codes. 
E) subsidies for high-tech firms. 
A) the budget of the Department of Education. 
B) systematic protection through the levying of tariffs. 
C) systematic protection through the establishment of NTBs. 
D) relatively accelerated "depreciation" of R&D investment in the Federal tax codes. 
E) subsidies for high-tech firms.

Question 2

The Shipbreakers of Alang utilize much labor and little capital,thereby supporting the applicability of the

Accepted Answer

A) factor proportions explanation of the sources of comparative advantage. 
B) specific factor theory of comparative advantage. 
C) monopolistic competition theory of comparative advantage. 
D) scale economies theory of comparative advantage. 
E) basis of the non-dumping legislation. 
A) factor proportions explanation of the sources of comparative advantage. 
B) specific factor theory of comparative advantage. 
C) monopolistic competition theory of comparative advantage. 
D) scale economies theory of comparative advantage. 
E) basis of the non-dumping legislation.

Question 3

It may be argued that Japan's explicit promotion of its microchip industry was an excellent example of successful industrial policy.What criteria would you apply to determine whether such a policy is or is not successful? Judging from your own stated criteria,was Japan's exercise successful? Why or why not? What information would a government require in order to increase the probability that its industrial policy would promote long term self-generated economic growth?

Accepted Answer

It is argued that Japan's subsidies to i

Question 4

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions,one must conclude that North South trade,such as U.S.-Mexico trade

Accepted Answer

A) must help low skill workers on both sides of the border. 
B) is likely to hurt high-skilled workers in the U.S. 
C) is likely to hurt low-skilled workers in the U.S. 
D) is likely to hurt low-skilled workers in Mexico. 
E) is likely to help highly skilled workers in Mexico. 
A) must help low skill workers on both sides of the border. 
B) is likely to hurt high-skilled workers in the U.S. 
C) is likely to hurt low-skilled workers in the U.S. 
D) is likely to hurt low-skilled workers in Mexico. 
E) is likely to help highly skilled workers in Mexico.

Question 5

Spencer and Brander's model highlights the conventional assumption that

Accepted Answer

A) government involvement in business or in the economy tends to fail. 
B) government subsidies tend to waste taxpayer's money. 
C) government subsidies cannot create a successfully competing export. 
D) government tends to distort when it displaces Adam Smith's Invisible Hand. 
E) government subsidies can produce profits that exceed the subsidy's value. 
A) government involvement in business or in the economy tends to fail. 
B) government subsidies tend to waste taxpayer's money. 
C) government subsidies cannot create a successfully competing export. 
D) government tends to distort when it displaces Adam Smith's Invisible Hand. 
E) government subsidies can produce profits that exceed the subsidy's value.

Question 6

The reason Airbus succeeded in the Brander Spencer example is that

Accepted Answer

A) the European government made an explicit subsidy offer,but the U.S.government did not. 
B) Airbus' prices were better when adjusted for quality and warranty services. 
C) Boeing traditionally refused to undertake any exchange rate risk in its transactions. 
D) the U.S.acted in accordance with its ideological reliance on market solutions,whereas the Europeans ignored market and technological factors. 
E) the Airbus plane benefited from more advanced technology. 
A) the European government made an explicit subsidy offer,but the U.S.government did not. 
B) Airbus' prices were better when adjusted for quality and warranty services. 
C) Boeing traditionally refused to undertake any exchange rate risk in its transactions. 
D) the U.S.acted in accordance with its ideological reliance on market solutions,whereas the Europeans ignored market and technological factors. 
E) the Airbus plane benefited from more advanced technology.

Question 7

-Refer to the above table.Suppose both governments offer their respective company a subsidy of $4(million).

Accepted Answer

Only Airbus will produce since

Question 8

Most developing countries oppose including labor standards in trade agreements because

Accepted Answer

A) they believe this would involve a loss of their national sovereignty. 
B) they believe this would limit their ability to export to rich markets. 
C) they believe this would create an uneven playing field. 
D) multinational corporations control them. 
E) they do not want to improve wages for their workers. 
A) they believe this would involve a loss of their national sovereignty. 
B) they believe this would limit their ability to export to rich markets. 
C) they believe this would create an uneven playing field. 
D) multinational corporations control them. 
E) they do not want to improve wages for their workers.

Question 9

The United States

Accepted Answer

A) does not provide more support for R&D as compared to other forms of investment. 
B) provides support for R&D by imposing high tariffs on R&D intensive products. 
C) provides support for R&D by providing direct subsidies for such activities. 
D) provides support for R&D through tax legislation. 
E) provides support for R&D through grant incentives. 
A) does not provide more support for R&D as compared to other forms of investment. 
B) provides support for R&D by imposing high tariffs on R&D intensive products. 
C) provides support for R&D by providing direct subsidies for such activities. 
D) provides support for R&D through tax legislation. 
E) provides support for R&D through grant incentives.

Question 10

The proposal that trade agreements should include a system which monitors worker conditions and make the results available to consumers in the rich importing country

Accepted Answer

A) is consistent with the Invisible Hand paradigm. 
B) is consistent with the market failure approach. 
C) is consistent with the Ricardian theory of comparative advantage. 
D) is consistent with the scale economies approach to trade theory. 
E) is consistent with the principles laid out by the WTO. 
A) is consistent with the Invisible Hand paradigm. 
B) is consistent with the market failure approach. 
C) is consistent with the Ricardian theory of comparative advantage. 
D) is consistent with the scale economies approach to trade theory. 
E) is consistent with the principles laid out by the WTO.

Question 11

In today's world markets,poor developing countries tend to rely primarily on exports of

Accepted Answer

A) agricultural products. 
B) primary products. 
C) mineral products. 
D) manufactured products. 
E) high-tech products. 
A) agricultural products. 
B) primary products. 
C) mineral products. 
D) manufactured products. 
E) high-tech products.

Question 12

The fact that articles of clothing sold in Walmart are produced by very poorly paid workers in Honduras,is a fact that if taken into account

Accepted Answer

A) would prove to economists that the Ricardian model of comparative advantage is false. 
B) would prove to economists that the equal-value in trade concept summed up in the trade triangles is incorrect. 
C) proves to economists that trade is a negative sum game. 
D) proves to the Anti-Globalization Movement that trade is a negative sum game. 
E) proves that corporations are exempt from labor standards. 
A) would prove to economists that the Ricardian model of comparative advantage is false. 
B) would prove to economists that the equal-value in trade concept summed up in the trade triangles is incorrect. 
C) proves to economists that trade is a negative sum game. 
D) proves to the Anti-Globalization Movement that trade is a negative sum game. 
E) proves that corporations are exempt from labor standards.

Question 13

When the WTO met in Seattle to initiate a further move towards free international trade,thousands of activists met

Accepted Answer

A) in order to promote the WTO's goals of "Trade-not Aid." 
B) in order to laud the WTO policy orientation which would bust local monopolies and therefore help ordinary relatively poor consumers everywhere. 
C) in order to laud the WTO policy of disallowing government sweetheart deals,which typically meant that corrupt governments subsidized their in-laws' conglomerates on the backs of poor taxpayers. 
D) in order to support the WTO efforts of bringing about a universal shift of resources in poor countries to higher efficiency and productivity uses,which would raise the real incomes of everyone. 
E) in order to protest WTO free trade policies that they believed hurt workers. 
A) in order to promote the WTO's goals of "Trade-not Aid." 
B) in order to laud the WTO policy orientation which would bust local monopolies and therefore help ordinary relatively poor consumers everywhere. 
C) in order to laud the WTO policy of disallowing government sweetheart deals,which typically meant that corrupt governments subsidized their in-laws' conglomerates on the backs of poor taxpayers. 
D) in order to support the WTO efforts of bringing about a universal shift of resources in poor countries to higher efficiency and productivity uses,which would raise the real incomes of everyone. 
E) in order to protest WTO free trade policies that they believed hurt workers.

Question 14

Labor standards in trade are typically opposed by most developing countries who believe that they will be used

Accepted Answer

A) to further neo-imperialist colonial exploitation. 
B) to charge these countries with crimes against child-labor standards at the Hague. 
C) as a protectionist tool by import-competing producers in industrial countries. 
D) as a means of spreading U.S.Corporate Values and destroying local cultures. 
E) to hinder investment in foreign-based multinational corporations. 
A) to further neo-imperialist colonial exploitation. 
B) to charge these countries with crimes against child-labor standards at the Hague. 
C) as a protectionist tool by import-competing producers in industrial countries. 
D) as a means of spreading U.S.Corporate Values and destroying local cultures. 
E) to hinder investment in foreign-based multinational corporations.

Question 15

If firms in an industry are generating knowledge that other firms can use without paying for it,this industry is characterized by

Accepted Answer

A) social costs that exceed private costs. 
B) social benefits that exceed private benefits. 
C) social costs that exceed social benefits. 
D) private benefits that exceed social benefits. 
E) social benefits that undermine private benefits. 
A) social costs that exceed private costs. 
B) social benefits that exceed private benefits. 
C) social costs that exceed social benefits. 
D) private benefits that exceed social benefits. 
E) social benefits that undermine private benefits.

Question 16

The Ricardian model of comparative advantage lends support to the argument that

Accepted Answer

A) trade tends to worsen the conditions of unskilled labor in rich countries. 
B) trade tends to worsen the conditions of owners of capital in rich countries. 
C) trade tends to worsen the conditions of workers in poor countries. 
D) trade tends to worsen the conditions of workers in rich countries. 
E) trade is mutually beneficial to the countries that engage in it. 
A) trade tends to worsen the conditions of unskilled labor in rich countries. 
B) trade tends to worsen the conditions of owners of capital in rich countries. 
C) trade tends to worsen the conditions of workers in poor countries. 
D) trade tends to worsen the conditions of workers in rich countries. 
E) trade is mutually beneficial to the countries that engage in it.

Question 17

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions,one must conclude that North South trade,such as U.S.-Mexico trade,

Accepted Answer

A) must help low skill workers on both sides of the border. 
B) is likely to hurt high-skilled workers in the U.S. 
C) is likely to involve higher overall national economic gains that will be greater than any harm done to low-skilled workers in the U.S. 
D) is likely to hurt low-skilled workers in Mexico. 
E) gives no advantage to the workers in either country. 
A) must help low skill workers on both sides of the border. 
B) is likely to hurt high-skilled workers in the U.S. 
C) is likely to involve higher overall national economic gains that will be greater than any harm done to low-skilled workers in the U.S. 
D) is likely to hurt low-skilled workers in Mexico. 
E) gives no advantage to the workers in either country.

Question 18

The reason Airbus succeeded in the Brander Spencer example is that

Accepted Answer

A) Boeing made the first move in this strategic game. 
B) Europeans tend to be better strategists than corn-fed Americans. 
C) the Airbus actually was a better plane than the Boeing 747. 
D) U.S.laws actually prohibit U.S.exporters from bribing foreign officials. 
E) the subsidy removed the advantage that Boeing gained with their head start in production. 
A) Boeing made the first move in this strategic game. 
B) Europeans tend to be better strategists than corn-fed Americans. 
C) the Airbus actually was a better plane than the Boeing 747. 
D) U.S.laws actually prohibit U.S.exporters from bribing foreign officials. 
E) the subsidy removed the advantage that Boeing gained with their head start in production.

Question 19

Faced with the evidence of poor working conditions and low wages in the border maquiladoras,economists

Accepted Answer

A) shrug their shoulders and ignore the issue. 
B) agree that trade theory is thus proven hollow and internally inconsistent. 
C) argue that U.S.consumers should not consume lettuce. 
D) argue that the poor conditions and low wages are actually improvements for the Mexican workers,and may be cited as gains-from-trade. 
E) argue that Mexico's generally high overall productivity offsets these conditions. 
A) shrug their shoulders and ignore the issue. 
B) agree that trade theory is thus proven hollow and internally inconsistent. 
C) argue that U.S.consumers should not consume lettuce. 
D) argue that the poor conditions and low wages are actually improvements for the Mexican workers,and may be cited as gains-from-trade. 
E) argue that Mexico's generally high overall productivity offsets these conditions.

Question 20

It is still the conventional wisdom in the U.S.that compliance with NAFTA requirements is having a deleterious effect on U.S.highway safety standards,on U.S.pollution and other environmental standards,and on U.S.jobs.What facts would proponents of an expansion of NAFTA (e.g. ,to include all of Central and South American countries)need to marshall in order to convince you?

Accepted Answer

The answer is subjective.Presu

In effect,the U.S.does subsidize high-tech firms by subsidizing R&D.This is done through

The Shipbreakers of Alang utilize much labor and little capital,thereby supporting the applicability of the

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions,one must conclude that North South trade,such as U.S.-Mexico trade

Spencer and Brander's model highlights the conventional assumption that

The reason Airbus succeeded in the Brander Spencer example is that

-Refer to the above table.Suppose both governments offer their respective company a subsidy of $4(million).

Most developing countries oppose including labor standards in trade agreements because

The United States

The proposal that trade agreements should include a system which monitors worker conditions and make the results available to consumers in the rich importing country

In today's world markets,poor developing countries tend to rely primarily on exports of

The fact that articles of clothing sold in Walmart are produced by very poorly paid workers in Honduras,is a fact that if taken into account

When the WTO met in Seattle to initiate a further move towards free international trade,thousands of activists met

Labor standards in trade are typically opposed by most developing countries who believe that they will be used

If firms in an industry are generating knowledge that other firms can use without paying for it,this industry is characterized by

The Ricardian model of comparative advantage lends support to the argument that

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions,one must conclude that North South trade,such as U.S.-Mexico trade,

The reason Airbus succeeded in the Brander Spencer example is that

Faced with the evidence of poor working conditions and low wages in the border maquiladoras,economists

Introduction

World Trade: An Overview

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: An Asset Approach

Money,Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: An Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

Exam 12: Controversies in Trade Policy

In effect,the U.S.does subsidize high-tech firms by subsidizing R&D.This is done through

The Shipbreakers of Alang utilize much labor and little capital,thereby supporting the applicability of the

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions,one must conclude that North South trade,such as U.S.-Mexico trade

Spencer and Brander's model highlights the conventional assumption that

The reason Airbus succeeded in the Brander Spencer example is that

-Refer to the above table.Suppose both governments offer their respective company a subsidy of $4(million).

Most developing countries oppose including labor standards in trade agreements because

The United States

The proposal that trade agreements should include a system which monitors worker conditions and make the results available to consumers in the rich importing country

In today's world markets,poor developing countries tend to rely primarily on exports of

The fact that articles of clothing sold in Walmart are produced by very poorly paid workers in Honduras,is a fact that if taken into account

When the WTO met in Seattle to initiate a further move towards free international trade,thousands of activists met

Labor standards in trade are typically opposed by most developing countries who believe that they will be used

If firms in an industry are generating knowledge that other firms can use without paying for it,this industry is characterized by

The Ricardian model of comparative advantage lends support to the argument that

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions,one must conclude that North South trade,such as U.S.-Mexico trade,

The reason Airbus succeeded in the Brander Spencer example is that

Faced with the evidence of poor working conditions and low wages in the border maquiladoras,economists

Introduction

World Trade: An Overview

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: An Asset Approach

Money,Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: An Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters