Discusssing the Arguments in Support of Restricting Imports

13. Some argue that a nation should not depend too heavily on other countries for supplies of certain key products that might have national security applications. This comes under __________________________________ of restricting imports.

a. infant industry argument

b. national interest argument

c. the unsafe consumer products argument

1. International trade_________________________________________________________.

a. increases both producer surplus and consumer surplus throughout the world

b. benefits low-income countries and hurts high-income countries

c. benefits countries which export goods and hurts countries which import goods

d. has a net beneficial effect only for countries with an autarky equilibrium

2. Which of the following is not used as an argument for trade restrictions?

a. Emerging domestic industries, especially those with economies of scale, could not gain entry in some world markets without protection during the early years

b. Trade restrictions are required to prevent some countries from exporting a commodity at a price below its cost of production.

c. Consumer surplus is maximized when import tariffs and quotas promote exports over imports.

3. Countries that institute protectionist policies lose the economic gains associated with international trade. True or False.

a. True

b. False

4. The infant industry argument for protectionism is to block imports ________________________.

a. forever

b. for a limited time

5. The infant industry argument for protectionism is to block imports for a limited time, to give the infant industry time to mature, before it starts competing on equal terms in the global economy. True or False.

a. False

b. True

6. Protectionism for infant industries always imposes costs on domestic users of the product and typically has provided little benefit in the form of stronger, competitive industries. True or False.

a. False

b. True

7. The infant industry policy of protectionism and other subsidies seemed to have worked fairly well in East Asia? A study by the World Bank in the early 1990s offered three guidelines to countries thinking about infant industry protection. They are:

a. Not to hand out protectionism and other subsidies to all industries, but focus on a few industries where your country has a realistic chance to be a world-class producer.

b. To be hesitant about using protectionism in areas like computers, where many other industries rely on having the best products available.

c. To have clear guidelines relating to the period of protection available to infant industries. 

d. All of these

8. _____________ in international trade refers to selling goods below their cost of production.

a. Arbitrage

b. Dumping

9. Anti-dumping laws block imports that are sold below the cost of production. True or False.

a. False

b. True

10. The reasons behind dumping in international trade include:

a. market prices are set by demand and supply, not by the cost of production.

b. dumping can be part of a long-term strategy.

c. both a and b

11. In general, high-income countries such as the United States have relatively strict environmental standards. In contrast, middle- and low-income countries like Brazil, Nigeria, India have lower environmental standards. True or False.

a. True

b. False

12. This gap in environmental standards between high-income and low-income countries raises two worrisome possibilities in a world of increasing global trade:

a. the race to the bottom scenario

b. the environmental paradox scenerio

14. The _________________________________, was established in 1947 to provide a forum in which nations could come together to negotiate reductions in tariffs and other barriers to trade.

a. World Trade Organization(WTO)

b. General Agreement on Tariffs and Trade (GATT)

15. The European Union, the North American Free Trade Agreement (NAFTA) are examples of:

a. global trading agreements

b. regional trading agreements