Question : 10.3   Income Distribution and Trade Policy 1) It argued that special : 1303540

10.3   Income Distribution and Trade Policy

1) It is argued that special interest groups are likely to take over and promote protectionist policies, which may lead to a decrease in national economic welfare. This argument leads to

A) a presumption that in practice a free trade policy is likely to be better than alternatives.

B) a presumption that trade policy should be shifted to Non-Governmental Organizations, so as to limit taxpayer burden.

C) a presumption that free trade is generally a second-best policy, to be avoided if feasible alternatives are available.

D) a presumption that free trade is the likely equilibrium solution if the government allows special interest groups to dictate its trade policy.

E) a presumption that protectionist policies will better serve a country as a whole than free trade policies.

2) The authors of the text believe that

A) second-best policy is worse than optimal policy.

B) special interest groups generally enhance national welfare.

C) national welfare is likely to be enhanced by the imposition of an optimal tariff.

D) market failure arguments tend to support free-trade policy.

E) there is no such thing as national welfare.

3) The median voter model

A) works well in the area of trade policy.

B) is not intuitively reasonable.

C) tends to result in biased tariff rates.

D) does not work well in the area of trade policy.

E) is not widely practiced in the United States.

4) The fact that trade policy often imposes harm on large numbers of people, and benefits only a few may be explained by

A) the lack of political involvement of the public.

B) the power of advertisement.

C) the problem of collective action.

D) the basic impossibility of the democratic system to reach a fair solution.

E) a cycle of political corruption.

5) Protectionism tends to be concentrated in two sectors

A) agriculture and clothing.

B) high-tech and national security sensitive industries.

C) capital and skill intensive industries.

D) industries concentrated in the South and in the Midwest of the country.

E) financial services and manufacturing based in the Midwest.

6) Export embargoes cause greater losses to consumer surplus in the target country

A) the lesser its initial dependence on foreign produced goods.

B) the more elastic is the target country’s demand schedule.

C) the more elastic is the target country’s domestic supply.

D) the more inelastic the target country’s supply.

E) the larger the target country’s labor force is.

7) The strongest political pressure for a trade policy that results in higher protectionism comes from

A) domestic workers lobbying for import restrictions.

B) domestic workers lobbying for export restrictions.

C) domestic workers lobbying for free trade.

D) domestic consumers lobbying for export restrictions.

E) domestic consumers lobbying for import restrictions.

8) The average tariff rate dutiable imports in the United States is approximately

A) less than 10 % of the value of imports.

B) 15% of the value of imports.

C) 20 % of the value of imports.

D) 25% of the value of imports.

E) more than 30% of the value of imports.