QUESTION Which of the following is a major reason why many economists remain critical of the infant industry argument? A. It makes the domestic industry inefficient. B. It does not provide guaranteed employment for the citizens. C. It affects the standards of living and per capita income of the people. D. It promotes foreign direct […]
QUESTION One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that: A. protection of manufacturing from foreign competition is harmful. B. absolute advantage cannot sustain productivity of an industry. C. foreign firms too come under the definition of infant industry when they newly […]
QUESTION Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to: A. economic development argument. B. comparative advantage theory. C. national security argument. D. infant industry argument. E. mixed economy theory. ANSWER D
QUESTION The act that allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution is known as the: A. Frederick-Peterson Act. B. D’Amato-Perkins Act. C. Perkins-Dole Act. D. Helms-Burton Act. E. Godfrey-Milliken Act. ANSWER D
QUESTION According to Krugman, the ideal way for a country to respond, when the foreign competitors of its companies are already being supported by government subsidies, is probably not to engage in retaliatory action, but to: A. help establish rules that minimize the use of trade-distorting subsidies. B. adopt the strategic trade policy as a […]
QUESTION According to Krugman, which of the following best indicates the dangers of a strategic trade policy? A. Decrease in subsidies B. Decrease in protectionism C. Occurrence of a trade war D. Huge financial debts for the countries involved E. Occurrence of a global recession ANSWER C
QUESTION A government should use subsidies to support promising firms that are active in newly emerging industries, according to: A. strategic trade policy. B. public policy. C. absolute advantage. D. product life-cycle. E. industrialization. ANSWER A
QUESTION According to Paul Krugman, a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to: A. dominate the industry. B. move away from protectionism. C. provoke retaliation. D. incur huge financial debts. E. upset the special-interest groups within the […]
QUESTION In the Uruguay Round of the WTO, member countries sought to exempt trade in services from GATT rules. Indicate whether the statement is true or false. ANSWER FALSE Against the background of rising pressures for protectionism, in 1986 GATT members embarked on their eighth round of negotiations to reduce tariffs, the Uruguay Round. […]
QUESTION The Palladian government required that all imported products that came from Lovaskiya be checked by Palladian customs inspectors. The inspection was done at a container freight station that was both remote and poorly staffed. This delayed the Lovaskiyan consignment from reaching the consumers in Palladia. The inspection strategy adopted by the customs officers in […]
