Chapter 7 Playposit and Quiz

World Trade Organization (WTO)

A global organization that has emerged as an effective advocate and facilitator of future trade deals

Self-defense

A lobbyist from London argues that the British government needs to protect the automotive industry from foreign competition. She argues that automotive technology is so important for national security that it would be dangerous to rely primarily on foreign producers for them. This is an example of _________ argument for government intervention.

strategic trade policy

According to the textbook, which trade policy argument suggests that a government should use subsidies to support promising firms that are active in newly emerging industries?

Subsidies

Government payments to domestic producers helping create a price floor so that domestic producers can compete against low-cost foreign imports

Politicians most commonly mention the following as the reason for governments to intervene in markets: As means to protect JOBS, protect NATIONAL SECURITY and to support the ECONOMIC GROWTH

Politicians most commonly mention the following as the reason for governments to intervene in markets: As means to protect ______, protect _____________ ___________ and to support the _____________ ___________.

Voluntary Export Restraints (VER)

Quotas on trade imposed by the exporting country, typically at the request of the importing country's government

global economic growth would rise

The World Trade Organization (WTO) argues that by removing all tariff barriers and subsidies to agriculture:

Strategic trade policy

The belief that governments should target technologies that may be important in the future and use subsidies to support development work aimed at commercializing technologies

True

True/ False - Alex Tabarrok argues larger markets save lives. If China and India were as rich as the United States, the market for cancer drugs would be eight times larger:

True

True/ False - Governments intervene in trade and markets for political and economic reasons:

True

True/ False - Of the ways that governments intervene in markets, one of the most popular tools is the use of tariffs which are taxes levied on imports

False

True/False: A Washington diplomate notes that governments always act in the national interest of their countries when they intervene in the economy.

True

True/False: Tariffs are generally pro domestic producers and anti-consumers.

True

True/False: The strategic trade policy arguments of the new trade theorists suggest an economic justification for government intervention in international trade:

Aid infant industries deemed important in the national economy.

Which of the following is a economic reason for governments to intervene in markets? a) protect domestic jobs b) provide subsidies to farmers c) aid infant industries deemed important in the national economy d) tariffs provide important government revenues

Subsidies

____________________ are government payments to domestic producers which help to create a price floor allowing domestic producers to compete with low-cost foreign imports.

The Infant Industry Argument

An industry should be protected until it can develop and be viable and competitive internationally