Question :
1) Any policy designed to benefit domestic industries at the : 1384526
1) Any policy designed to benefit domestic industries at the expense of foreign export industries is called
A) predatory practice.
B) monopolization.
C) commercialization.
D) cartelization.
E) protection.
2) Suppose you are an economist advising the Canadian government as to whether to erect trade barriers for the protection of Canada’s textile industry. You are likely to study the gains to be realized in this industry and weigh those against
A) the effect on factor incomes of Canada’s trading partners.
B) the lower factor prices that occur in competing domestic industries.
C) the cost in terms of higher prices to Canadian consumers.
D) the cost in terms of lower national income of Canada’s trading partners.
3) Does free trade improve the living standards of all residents of a country?
A) Yes, definitely, because the gains from trade outweigh the losses in the import-competing industries.
B) Yes, because inefficient import-competing industries are replaced with efficient export industries.
C) Probably not – in principle, the net gains from trade could be divided such that every individual is better off, but in practice, some individuals are likely to be worse off.
D) No, because the benefits from free trade are only theoretical.
E) No, because the losses in the import-competing industries outweigh the gains from trade in the new export industries.
4) Which of the following policy objectives can sometimes lead a government of a small economy to rationally oppose free trade?
A) to maximize national income
B) to protect against low-wage labour from abroad
C) to raise average living standards
D) to diversify production in the domestic economy
E) to prevent domestic currency from going abroad
5) Suppose a national government chooses to impose barriers to trade in an effort to promote a more diversified economy. This objective would be particularly important to, for example, an economy largely dependent on one or two agricultural products because
A) that country’s terms of trade will continue to deteriorate over time if it continues to specialize.
B) it will allow firms in the economy to exploit economies of scale in newly developed industries.
C) it will certainly maximize national income and raise average living standards.
D) it will increase net exports for the economy.
E) any volatility in the world prices of those commodities leads to great volatility in national income.
6) The main objective of protectionist trade policies is to
A) create a level playing field.
B) raise average real wages in the economy.
C) raise government revenues through tariffs.
D) maximize world production.
E) shield local producers from foreign competition.
7) According to the infant-industry argument for protection, a new small industry
A) must be protected even if it will never have a comparative advantage.
B) must be protected permanently to provide for a diversified economy.
C) will need protection once it has exploited available economies of scale.
D) may need protection temporarily until it can exploit its economies of scale.
E) must be protected in order to provide a domestic supply of the product.
8) In the past few decades, an example of the infant-industry argument at work has been the
A) Canadian forest-products industry.
B) Canadian agriculture industry.
C) Japanese agriculture industry.
D) European commercial aircraft industry.
E) U.S. automobile industry.
9) Economists would tend to accept which of the following arguments in favour of tariffs?
A) Tariffs are needed to avoid exporting jobs.
B) Tariffs are needed to limit imports and reduce the capital flow from the country.
C) Tariffs help to reduce inflation by reducing the price of domestic products.
D) Temporary tariff protection in some situations may help to generate an eventual comparative advantage in that product.
E) Tariffs will stimulate the domestic economy.
10) An example of the “infant industry” argument for trade protection is that
A) tariffs should be implemented in order to improve the terms of trade and thereby maximize the gains from trade.
B) tariffs should not be imposed on countries that have democratic governments.
C) in the presence of unexploited scale economies, tariff protection may permit a country to develop future comparative advantage in certain products.
D) imports of certain products should be limited in the interests of national defence.
E) “strategic” trade policy is helpful when other countries are also being strategic.
