Economics Test 4

Poverty is measured by the number of people who fall below

a certain level of income. the income needed for a basic standard of living. the nation's economic poverty line.

Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create

a poverty trap

The main difference between a tariff and a quota is:

a tariff generates tax revenue for the government, while a quota generates rents to the license-holders.

Labor unions can:

be a primary line of defense against suppressed wage levels. be controversial in a for-profit market driven economy. bring better economic gains for their memberships. protect workers' pensions and all of the above.

the U.S. government strongly encouraged unions to be formed in the early 1940s because they held the view that unions would help to

co-ordinate the all-out production efforts needed during World War II.

Negotiations between unions and a firm or firms is called __________________.

collective bargaining

When an economy moves from autarky to free international trade, in the export sector:

consumer surplus falls, producer surplus rises and the economy as a whole gains

When an economy moves from autarky to free international trade, in the import sector:

consumer surplus rises, producer surplus falls, and the economy as a whole gains

Since the United States imports a large quantity of textiles from Asia, the overall wages of U.S. textile workers has ______, while the price of textiles in the United States has

decreased; decreased

When a government chooses to impose a policy of protectionism, it wants to protect ____ producers by ____ international trade.

domestic, restricting

Which of the following industries is the least likely to employ a unionized labor force?

finance, insurance and real estate

For infant industry protection to be successful, it is best for it to be ____ and ____.

focused, limited

Import protections are often imposed because:

groups representing import-competing industries are more cohesive than consumers.

Which of the following is a key requirement imposed under the Welfare Reform Act's new antipoverty program?

states receiving TANF grants must impose work or school attendance requirements

In a Ricardian model of international trade the production possibilities frontiers are ______, indicating that the opportunity cost of increasing the production of one item relative to another ______.

straight lines; is constant

Which of the following statements about comparative advantage is NOT true?

Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources.

France and England both produce wine and cloth under conditions of constant opportunity costs. France can produce 150 units of wine if it produces no cloth, and 100 units of cloth if it produces no wine. England can produce 50 units of wine if it produces no cloth, and 100 units of cloth if it produces no wine. Using this information, we can conclude that:

England has a comparative advantage in cloth production.

Of the many available policies to reduce discrimination by race and gender in the U.S. labor market, the most controversial is likely to be

affirmative action goals and quotas

Discriminatory impulses in the labor market can emerge at a number of levels:

among managers among workers among customers

According to the Hecksher-Ohlin model, Brazil will have a comparative advantage in oranges if the factors ______ in the production of oranges are ______.

intensive; abundantly available

Saudi Arabia has a tremendous comparative advantage in petroleum. Which of the following is a source of this comparative advantage?

large reserves of crude oil

The Taft-Hartley Act made the legal climate ____________________, and union membership levels ___________________.

less encouraging to union movements; soon started declining

Many countries engage in trade protection by imposing import tariffs or quotas for at least some goods. This is because:

while such restrictions harm consumers, they benefit producers who are usually a more cohesive and politically influential group.

Benefits of reducing trade barriers stem from

moving toward a greater specialization in a nation's own comparative advantage

Which of the following is a common argument for trade protection?

national security job creation the infant-industry argument

An individual whose income level is just above the poverty line would most likely be classified as being a member of the _____________ .

near-poor

The infant-industry argument for trade protection essentially states that:

new industries should be protected temporarily from foreign competition until they become established

How does being caught in a poverty tap affect an individual's future job prospects?

1)it causes working in the future even less attractive 2)it causes a lack of job experience and contacts

The World Trade Organization (WTO):

1)oversees global trade agreements and provides the framework for negotiations between countries on matters dealing with international trade. 2)resolves disputes between member nations arising from alleged violations of previous agreements dealing with international trade. 3)has no direct enforcement power, but member nations agree to accept its judgments, even if this means relinquishing some sovereignty.

Which of the following statements is NOT correct?

Efficiency wages explain why more efficient workers earn more than less efficient workers

Which of the following is not a tool of restricting trade through protectionism?

Tie-in sales

If the poverty trap were made even more difficult to overcome because a working mother will have extra expenses like transportation and child care that a nonworking mother will not face, then

her economic gains from working will be even smaller.

A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ .

horizontal axis; vertical axis

When trade expands, industries that are exporting tend to see a(n) ____ in the number of jobs, while industries that are strongly affected by imports tend to see a(n) ____ in the number of jobs.

increase, decrease

The costs that immigrants impose on governments are largely in terms of ___, which are primarily the responsibilities of the ___ government(s).

public schools and healthcare, state and local

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

race, ethnic group, sex, age, or other personal characteristics.

China, which is labor-abundant, has a comparative advantage in clothing production, which is labor-intensive. Which of the following models explains this pattern of comparative advantage?

the Heckscher-Ohlin model

If unions help workers secure pension benefits, so that those workers are less dependent on government social assistance after their retirement, then

the union is economically beneficial

If a rise in incomes for both low-income and high-income workers is higher for the high-income workers,

then poverty will fall and inequality will rise.

One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then

to divide all households into quintiles.