1. The mercantilists would have objected to:
Export promotion policies initiated by the government
The use of tariffs or quotas to restrict imports
Trade policies designed to accumulate gold and other precious metals
International trade based on open markets
2. Unlike the mercantilists, Adam Smith maintained that:
Trade benefits one nation only at the expense of another nation
Government control of trade leads to maximum economic welfare
All nations can gain from free international trade
The world’s output of goods must remain constant over time
United States – BPROG: Reflective Thinking – BPROG: Analysis
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Historical Development of Modern Trade Theory
3. The trading principle formulated by Adam Smith maintained that:
International prices are determined from the demand side of the market
Differences in resource endowments determine comparative advantage
Differences in income levels govern world trade patterns
Absolute cost differences determine the immediate basis for trade
United States – BPROG: Reflective Thinking – BPROG: Analysis
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Historical Development of Modern Trade Theory
4. Unlike Adam Smith, David Ricardo’s trading principle emphasizes the:
Demand side of the market
Supply side of the market
Role of comparative costs
United States – BPROG: Reflective Thinking – BPROG: Analysis
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Historical Development of Modern Trade Theory
BLOOM’S: Knowledge