978-1259723223 Test Bank TBChap040 Part 9

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Blooms: Analyze

Difficulty: 03 Hard

Learning Objective: 40-05 Analyze the validity of the most frequently presented arguments for

protectionism.

Test Bank: II

Topic: The Case for Protection: A Critical Review

291. Which of the following is a valid counterargument against using tariffs to protect high

wages from cheap foreign labor?

292. The Smoot-Hawley Tariff Act of 1930 is notorious for which of the following

reasons?

293. Which is not a commonly heard argument for protectionism?

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domestically.

B. Infant industries need short-term protection from foreign competition in order to grow.

C. Specialization along the lines of comparative advantage can lead to some economic

instability in a nation.

D.

When other nations’ economies grow, they typically import fewer goods and services.

294. A major goal of the World Trade Organization is to

295. The World Trade Organization is the successor to the

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Test Bank: II

Topic: Multilateral Trade Agreements and Free-Trade Zones

296. Which organization meets regularly to establish rules and settle disputes related to

international trade?

297. Which of the following is not a major achievements of the European Union (EU)?

298. The so-called eurozone refers to

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AACSB: Knowledge Application

A c c e s s i b i l i t y :

Keyboard Navigation

Blooms: Remember

Dif f i c u l t y :

01 Easy

Learning Objective: 40-06 Identify and explain the objectives of GATT, WTO, EU, eurozone,

and NAFTA, and discuss offshoring and trade adjustment assistance.

Test Bank: II

Topic: Multilateral Trade Agreements and Free-Trade Zones

299. NAFTA established a free-trade area and eliminated trade barriers between

300. The Trade Adjustment Assistance Act of 2002 focused mainly on assisting

301. “Offshoring” of certain production activities refers to

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locations.

B. businesses acquiring other businesses abroad.

C. investors putting their funds into foreign assets instead of investing them in local

businesses.

D. firms opening new markets offshore and expanding their targeted export areas.

302. Some people accuse an offshoring firm of “exporting jobs”. This activity called

offshoring is really equivalent to

303. Globalization of resource markets has resulted in the business practice of offshoring,

which involves

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Learning Objective: 40-06 Identify and explain the objectives of GATT, WTO, EU, eurozone,

and NAFTA, and discuss offshoring and trade adjustment assistance.

Test Bank: II

Topic:

Multilateral Trade Agreements and Free-Trade Zones

304. Frederic Bastiat’s satire clearly illustrates that

305. One main point of Frederic Bastiat’s satire is that

True / False Questions

306. In terms of trade volume in the past many years, China has been the largest trading

partner of the United States.

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AACSB: Knowledge Application

A c c e s s i b i l i t y : Keyboard Navigation

Blooms: Remember

Dif f i c ul t y : 01 Easy

Learning Objective: 40-01 List and discuss several key facts about international trade.

Test Bank: II

Topic: Some Key Trade Facts

307. In 2014, the United States was the largest exporter in the world.

308. Among the principal exports of the United States are agricultural products.

309. The United States can be classified as an “open” economy in that foreign trade

accounts for more than 50 percent of its GDP.

310. The U.S. has a sizable trade surplus in services.

311. One major factor that serves as an economic basis for world trade is the uneven

distribution of resources among nations.

312. Comparative advantage is another name for absolute advantage.

313. If a nation‘s labor can produce more of a good compared to labor in another nation,

then we say that the first nation has a comparative advantage in producing that good.

314. In a two-nation, two-good world, it is possible for one nation to have the comparative

advantage in both goods.

315. If two nations specialize in their respective comparative advantage and then trade

with each other, both nations can consume output-combinations that are beyond their

production possibilities curves.

316. In a two-nation, two-good world, if one nation is more efficient in producing both

goods than the other nation, then the more-efficient nation cannot gain from trading with the

other nation.

317. The terms of trade will favor a larger nation over a smaller nation.

318. With constant costs in production, specialization tends to proceed to complete

specialization, but with increasing costs, specialization will not be complete.

319. A nation will import a particular product if the world price is less than the domestic

price.

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Blooms: Understand

Difficulty: 02 Medium

Learning Objective: 40-03 Describe how differences between world prices and domestic prices

prompt exports and imports.

Test Bank: II

Topic:

Supply and Demand Analysis of Exports and Imports

320. If a nation starts exporting a product to the rest of the world, then the price of that

product in the exporting nation will rise.

321. The world price for a traded product will be between the domestic no-trade prices of

the trading nations.

322. Import tariffs benefit the consumers of the product involved.

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Test Bank: II

Topic: Trade Barriers and Export Subsidies

323. If demand for a product is increasing, an import tariff is less restrictive than an import

324. Export subsidies tend to hurt domestic consumers and benefit the foreign consumers.

325. A voluntary export restraint (VER) is similar to an import quota, except that the

former benefits the foreign producers while the latter benefits the domestic producers.

326. Trade protection in most instances transfers wealth from consumers to domestic

producers.

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TRUE

327. Tariffs and import quotas meant to increase domestic employment also eliminate

domestic jobs in export industries.

328. Whenever a foreign producer is selling a product like steel at a lower price than

domestic producers, then dumping is being practiced and must be corrected.

329. The World Trade Organization was established by the United States to force other

nations to open their markets to U.S. goods.

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written consent of McGraw-Hill Education.

AACSB: Knowledge Application

A c c e s s i b i l i t y :

Keyboard Navigation

Blooms: Remember

Dif f i c ul t y : 01 Easy

Learning Objective: 40-06 Identify and explain the objectives of GATT, WTO, EU, eurozone,

and NAFTA, and discuss offshoring and trade adjustment assistance.

Test Bank: II

Topic:

Multilateral Trade Agreements and Free-Trade Zones

330. NAFTA is a trade agreement that covers trade between the United States and the

European Union.

331. Bastiat’s “Petition of the Candlemakers,” a classic reading in economics, presents a

powerful argument in favor of protectionism.