Trade agreements like the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) that lower trade barriers are least likely to:

A) cause a recession in the United States.

B) increase competition worldwide.

C) lead to economic growth.

Trade agreements like the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) that lower trade barriers are least likely to:

A) cause a recession in the United States.

B) increase competition worldwide.

C) lead to economic growth.

Prior to the beginning of the baseball season, the United States government places a tariff on imported bubble gum. Assume for this example that this tariff has a significant impact on the supply of bubble gum. Which of the following statements about the impact of this tariff is least valid? The tariff:

A) will protect the jobs of domestic bubble gum industry workers in the long run.

B) will prohibit foreign firms from dumping bubble gum on the U.S. market at below cost.

C) is not necessary to maintain the high wages of the U.S. bubble gum industry workers.

Prior to the beginning of the baseball season, the United States government places a tariff on imported bubble gum. Assume for this example that this tariff has a significant impact on the supply of bubble gum. Which of the following statements about the impact of this tariff is least valid? The tariff:

A) will protect the jobs of domestic bubble gum industry workers in the long run.

B) will prohibit foreign firms from dumping bubble gum on the U.S. market at below cost.

C) is not necessary to maintain the high wages of the U.S. bubble gum industry workers.

"Import quotas will create jobs, increasing the employment level of a nation." Economic analysis indicates that this statement is incorrect in:

A) the short run only.

B) both the long and short run.

C) the long run only.

"Import quotas will create jobs, increasing the employment level of a nation." Economic analysis indicates that this statement is incorrect in:

A) the short run only.

B) both the long and short run.

C) the long run only.

The anti-dumping argument in favor of trade restrictions is the argument that restrictions should be imposed to:

A) discourage foreign firms from engaging in price competition.

B) prevent foreign firms from selling their product below cost.

C) prevent foreign firms from dumping unwanted products in domestic markets.

The anti-dumping argument in favor of trade restrictions is the argument that restrictions should be imposed to:

A) discourage foreign firms from engaging in price competition.

B) prevent foreign firms from selling their product below cost.

C) prevent foreign firms from dumping unwanted products in domestic markets.

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) High-wage countries have an advantage in labor-intensive goods.

C) When each country produces goods for which it has a comparative advantage, both countries benefit.

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) High-wage countries have an advantage in labor-intensive goods.

C) When each country produces goods for which it has a comparative advantage, both countries benefit.

An anti-dumping restriction on trade:

A) keeps some highly sensitive products in the country.

B) protects infant industries.

C) prohibits foreign firms from selling products below cost to gain market share.

An anti-dumping restriction on trade:

A) keeps some highly sensitive products in the country.

B) protects infant industries.

C) prohibits foreign firms from selling products below cost to gain market share.

Which of the items below is NOT a valid reason why nations adopt trade restrictions? To:

A) prohibit foreign firms from increasing market share by selling products below cost.

B) protect industries in which they have a comparative advantage.

C) protect industries that are highly sensitive to national security.

Which of the items below is NOT a valid reason why nations adopt trade restrictions? To:

A) prohibit foreign firms from increasing market share by selling products below cost.

B) protect industries in which they have a comparative advantage.

C) protect industries that are highly sensitive to national security.

Which of the following arguments for trade restrictions is least valid?

A) Trade restrictions create domestic jobs.

B) Some industries are highly sensitive to national security, and their products should therefore remain in the country.

C) Tariffs are used to prohibit foreign firms from selling products in the country at below cost in an attempt to gain market share.

Which of the following arguments for trade restrictions is least valid?

A) Trade restrictions create domestic jobs.

B) Some industries are highly sensitive to national security, and their products should therefore remain in the country.

C) Tariffs are used to prohibit foreign firms from selling products in the country at below cost in an attempt to gain market share.

David Forsythe and Linda Novak are discussing the advantages and disadvantages of import restrictions. They state the following:

Forsythe: One of the groups that benefits from import restrictions is often the government that imposes them.

Novak: Import restrictions impose costs on specific groups, such as the country’s import industries, but these costs are more than offset by the benefits to other groups and to the economy as a whole.

With respect to these statements:

A) both are correct.

B) only one is correct.

C) both are incorrect.

David Forsythe and Linda Novak are discussing the advantages and disadvantages of import restrictions. They state the following:

Forsythe: One of the groups that benefits from import restrictions is often the government that imposes them.

Novak: Import restrictions impose costs on specific groups, such as the country’s import industries, but these costs are more than offset by the benefits to other groups and to the economy as a whole.

With respect to these statements:

A) both are correct.

B) only one is correct.

C) both are incorrect.

Which of the following reasons for a nation to adopt trade restrictions is the least valid? The:

A) job protection argument.

B) national defense argument.

C) anti-dumping argument.

Which of the following reasons for a nation to adopt trade restrictions is the least valid? The:

A) job protection argument.

B) national defense argument.

C) anti-dumping argument.