econ 101 ch 21

_________________________ is vital to two industries of key importance in many low-income countries: tourism and agriculture

Environmental protection

_____________________ reshuffles jobs from industries without import protections to industries that are protected from imports, but it does not create more jobs.

Protectionism

_______________________ propose(s) giving an industry a short-term indirect subsidy to support it until such time that it matures and turns into a vibrant, healthy industry.

The infant industry argument

________________________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry.

The infant industry argument

NAFTA is __________.

a regional free trade agreement

Which of the following is an example of nontariff barriers?

a requirement for imported toys to pass a safety inspection before they can be sold in the U.S.

The last half-century has seen a dramatic reduction in government-created barriers to trade, such as tariffs, import quotas, and nontariff barriers, as well as a number of technological developments that have made international trade easier, such as

advances in transportation information management communication

Which of the following will benefit domestic buyers of TVs?

an elimination of an import tariff on TVs from South Korea

If the government legislates policies that block imports of solar panels and gives domestic manufacturers a $5 billion dollar tax subsidy, the benefits to the U.S. solar panel manufacturing and distribution industry will be very visible. The bearers of the cost of the tax subsidy:

are more anonymous.

Full _______________ have not only a common market, but also coordinate monetary and fiscal policies.

economic unions

Among the goals of the The World Trade Organization is to __________.

enhance world trade by promoting a reduction in trade restrictions

An import quota or tariff on French wine that raises the prices for wine will probably:

hurt domestic wine drinkers but help domestic wineries, which will gain from the higher prices.

Anti-dumping laws block imports that are sold below the cost of production by ______________.

imposing tariffs that increase the price of these imports to reflect their cost of production

A tariff imposed on imported wheat will cause the domestic production of wheat to ____________ .

increase

Increasing a current tariff on grapes from France will:

increase American consumption of domestically produced grapes.

A new American import quota on imported steel would be likely to:

increase American production of steel.

When the United States adopts a tariff in the market for tires, the price of tires in the United States will:

increase.

Import tariffs generally ________ the output of domestic producers of the affected products and also _________ the output of domestic exporters.

increase; decrease

The removal of a US quota on the import of sugar will have a ____________ effect on domestic producers as the price of sugar will ____________.

negative; decrease

Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits. This phenomenon is called

race to the bottom

In general, high-income countries such as the United States, Canada, Japan, and the nations of the European Union have relatively _______ environmental standards whereas middle- and low-income countries like Brazil, Nigeria, India, and China have _______ environmental standards.

strict; low

The World Trade Organization (WTO) superseded which organization?

the General Agreement on Tariffs and Trade (GATT)

The common belief among economists is that it is better to embrace _____________, and then deal with the costs and trade offs with other policy tools, than it is to engage in _______________.

the gains from trade; protectionism

The _________________________________ emphasizes blocking out imported goods that are unsafe for consumers.

unsafe consumer products argument

Workers in many low-income countries around the world labor under conditions that ________________________________.

would be illegal for a worker in the United States