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Instructor’s Manual
1. Traditional protectionist arguments (e.g., protective argument and infant industry) have influenced
much of U.S. trade legislation. During the 1970s and 1980s, the issue of jobs has underlaid many
2. Protectionism in the United States culminated with the passage of the Smoot-Hawley Tariff Act of
1930.
3. Under the normal-trade-relations (most-favored-nation) principle, reductions of trade restrictions
agreed to by two nations are extended to all other nations with which the bargaining nations have
4. The GATT/World Trade Organization provides a mechanism whereby trade disputes among member
countries can be settled, so as to reduce the possibility of an international trade war.
Instructor’s Manual
Instructor's Manual 2
5. Trade remedy laws attempt to redress hardships for U.S. producers resulting from policies of foreign
firms and governments, thus resulting in a fair trading environment. They consist of the escape
6. Intellectual property refers to inventions, ideas and processes that are registered with the government
and which awards the inventor (author) exclusive rights to use the invention for a given period of time.
7. Under the adjustment assistance program, workers, firms and communities who are injured by foreign
8. The Tokyo Round of multilateral trade negotiations emphasized the role of nontariff trade barriers that
gained in importance during the 1960s and 1970s. Codes of conduct were agreed to concerning
nontariff trade barriers. Minor reductions in tariff barriers also occurred. The Uruguay Round
9. Industrial policies of the United States have been less formal than those of Europe and Japan. The
U.S. government encourages exports via its Export-Import Bank and Commodity Credit Corporation.
10. The U.S. gains from the foreign subsidy since the resulting increases in consumer surplus more than
offset the reduction in producer surplus.
11. Strategic trade policy refers to governmental assistance provided to support key industries that are
12. Economic sanctions refer to trade and financial restrictions levied against a foreign country. Such
restrictions are designed to impose economic hardship on the people of the foreign nation which will
lead to their pressuring the government to modify its political behavior. A country facing economic
13. a. 4 tons, 8 tons, 4 tons, $800, $3200.
b-1. $200, 2 tons, 10 tons, 8 tons.
b-2. Hurts, falls by $600, rises by $1800, benefits by $1200.
