1.Which of the following arguments for trade restrictions is least valid? A) Tariffs are used to prohibit foreign firms from selling products in the country at below cost in an attempt to gain market share. B) Infant industries should be protected for a time while they develop and reduce costs. C) Some industries are highly sensitive to national security, and their products should therefore remain in the country. D) Trade restrictions create domestic jobs. The correct answer was D) While the other explanations have some support among economists, the argument that trade restrictions create domestic jobs has very little support. Part of the popularity of trade restrictions stems from their ability to protect easily identifiable jobs and the high wage levels in these jobs. However, in the long run, trade restrictions cannot protect the net number of jobs in the country. 2.Which of the items below is NOT a valid reason why nations adopt trade restrictions? To: A) protect industries that are highly sensitive to national security. B) protect industries in which they have a comparative advantage. C) protect industries while they are developing. D) prohibit foreign firms from increasing market share by selling products below cost. The correct answer was B) If a particular country enjoys a comparative advantage in a particular industry, no protection is needed. 3.An anti-dumping restriction on trade: A) keeps some highly sensitive products in the country. B) protects infant industries. C) reduces tariffs and other trade barriers. D) prohibits foreign firms from selling products below cost to gain market share. The correct answer was D) Firms dump their goods at a price lower than cost in order to drive out the competition. Once this is complete, they will be able to raise prices to much higher levels in order to gain abnormal profits. Of course, once prices are increased, new competitors may arise. 4.Which of the following is a reason why trade with low-wage countries does NOT depress wage rates in high-wage countries? A) High hourly wage rates mean high per unit labor costs. B) Low-wage countries have an advantage in high tech manufacturing. C) When each country produces goods for which it has a comparative advantage, both countries benefit. D) High-wage countries have an advantage in labor-intensive goods. The correct answer was C) When both countries produce the goods in which they have an advantage, total output and the availability of goods will increase. 5.The anti-dumping argument in favor of trade restrictions is the argument that restrictions should be imposed to: A) prevent foreign firms from dumping unwanted products in domestic markets. B) prevent foreign firms from selling their product below cost. C) discourage foreign firms from exporting products of inferior quality. D) discourage foreign firms from engaging in price competition. The correct answer was B) The anti-dumping argument is that restrictions should be used to prohibit foreign firms from increasing market share by selling products below cost. 6."Import quotas will create jobs, increasing the employment level of a nation." Economic analysis indicates that this statement is in the:
A) False True B) False
False C) True False D) True True The correct answer was C) The argument that trade restrictions protect jobs is of questionable validity. First, trade restrictions prevent trading partners from developing the purchasing power needed to buy import goods from the protected country, thus depressing the country's own export industry. Second, the higher price of the protected domestic goods dampens domestic purchasing power, taking sales away from other domestic products. Third, the jobs that would have been created in the import industry are never created.
The number of jobs protected by import restrictions will be offset by jobs lost in the import/export industry.
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发表于 2008-4-16 17:57
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