Econ Test

As of 2020, how many members are in the World Trade Organization?

164

Who wrote in defense of free trade, "In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest"?

Adam Smith

According to Hazlitt, which of the following would be consequences of the United States placing a new tariff on foreign sweaters, resulting in the creation of a domestic sweater industry? (choose all that apply)

American consumers would be forced to subsidize this industry. There would be no net addition to American industry or employment.

If a lot of Americans are buying products made in Europe, which of the following will happen? (choose all that apply)

Demand for euros on the foreign exchange market will increase. The supply of American dollars on the foreign exchange market will increase.

Which of the following is a regional political and economic union that promotes trade by removing trade barriers and adopting a common currency?

EU

Hazlitt quotes an essay by William Graham Sumner, in which A and B work together to propose laws that help X, who is suffering, but that these laws usually focus on what C will do for X. C is referred to as the ______________.

Forgotten Man

Hazlitt writes that "a little economics can easily lead to . . . paradoxical and preposterous conclusions." What does he say about depth in economics?

It brings people back to common sense.

The United States has free trade agreements with which of the following nations? (choose all that apply)

Mexico Australia Canada

The United States has free trade agreements with which of the following nations? (choose all that apply)

Mexico. Australia Canada

____________ occurs when a nation focuses its resources on producing goods that it expects to trade.

Specialization

What effect do tariffs have on domestic producers?

Tariffs help producers in the protected industries at the expense of all other domestic producers.

What effect do tariffs have on labor productivity and wages?

Tariffs reduce labor productivity and reduce wages.

Hazlitt's arguments against tariffs are directed against which of the following fallacies? (choose all that apply)

That tariffs provide employment. That tariffs protect the American standard of living. That tariffs raise wages.

Which of the following are advantages of cooperatives? (choose all that apply)

Their owners don't have personal liability for the business. Their owners often get discounts on the goods and services produced by the cooperative. update with other answer

Which of the following are advantages of sole proprietorships? (choose all that apply)

Their owners get to keep all the profits for themselves. Their owners have total control over their business. They are generally easy and inexpensive to start.

Why do politicians often establish trade barriers even though the barriers usually do more harm than good?

They are incentivized to create policies that disperse costs over a large number of people but benefit small, powerful groups.

Which of the following are disadvantages of corporations? (choose all that apply

They are more complicated and expensive to establish than other business structures. Their owners are subjected to double taxation.

Which of the following are disadvantages of corporations? (choose all that apply)

They are more complicated and expensive to establish than other business structures. Their owners are subjected to double taxation.

Which of the following agreements was negotiated during President Trump's administration and contains provisions that benefit American farmers, protect intellectual property, and regulate digital trade?

USMCA

What group was established in 1995 and oversees international trade agreements, provides a place for its member nations to negotiate, and acts as a mediator when disputes arise?

World Trade Organization

Which of the following would be hurt by a strong dollar? (choose all that apply)

an American farmer who exports corn to the Middle East

Entrepreneurs develop new products and start new businesses by ________________.

bringing natural, human, and capital resources together

A business that's owned and controlled by the members who use its products is called a _____________.

cooperative

Hazlitt writes that "the economist, assigned a practical problem, must know both the essential facts of that problem and the valid __________ to be drawn from those facts."

deductions

Hazlitt writes that the fundamental fallacy of looking only at certain groups instead of at everyone "is an almost inevitable result" of what?

division of labor

Foreign goods are goods that were made in other countries, and _________ goods are goods that were made in your own country.

domestic

Hazlitt compares economics to both mathematics and ___________.

engineering

Which of the following are true about the impact of entrepreneurship on society? (choose all that apply)

entrepreneurship leads to higher quality goods entrepreneurship increases competition

In the long run, imports must _________ exports.

equal

What is the rate at which one currency is exchanged for another?

exchange rate

One way that nations can control the value of their currency is by establishing a ____________, in which the value of a currency is set at a specific value relative to another currency or some other measure of value.

fixed exchange rate

One way that nations can control the value of their currency is through a ___________, in which the value of a currency is determined by the forces of supply and demand.

floating exchange rate

Trade barriers are harmful to which of the following groups? (choose all that apply)

foreign producers in the affected industries domestic consumers

A business owned by an entrepreneur that is licensed to sell products under the name of a larger corporation is called a ____________.

franchise

Hazlitt writes that economics should be concerned "not only [with] some special interest in the short run, but [with] the _________ interest in the long run."

general

Which of the following can discourage the creation of new businesses?

high tax rates

Which of the following are challenges for entrepreneurs? (choose all that apply)

high time commitment high levels of stress high financial commitment

Foreign products bought from sellers in other nations are called ________.

imports

Because of ________________, the world's nations have becoming increasingly interdependent economically.

increased specialization

In the United States, one in five small businesses fail within the first year. How many fail within the first five years?

one in two

One incentive for entrepreneurs is the ability to pursue their _________.

passions

One disadvantage of partnerships is that conflict can occur between the owners. Therefore, an additional important step when starting a partnership is drafting a partnership agreement that outlines each partner's ______________.

privileges and responsibilities

Which of the following are incentives for entrepreneurs? (choose all that apply)

profit helping others

A limit on the quantity of a product that's allowed into a nation is called a(n) _______.

quota

In his discussion of economic problem solving, Hazlitt quotes philosopher George Santayana, who wrote that logic "traces the _________ of truth."

radiation

A business with one owner is called a ________________.

sole proprietorship

In Adam Smith's theories, free trade was considered as one aspect of the __________ of labor.

specialization

If the US dollar has a high value relative to other countries, then it's said to be ________.

stronger

Hazlitt writes, "The effect of a tariff, therefore, is to change the ____________ of American production" because it makes some industries larger and others smaller.

structure

Which of the following is the most common trade barrier?

tariff

What is one key element that encourages people to trade?

the ability to buy a particular good from someone else cheaper than it costs to make it yourself

What happens when all nations specialize in the areas in which they have comparative advantages? (choose all that apply)

total world production increases the global standard of living increases

A treaty between two or more nations designed to facilitate trade is called a ____________.

trade agreement

In the past, the United States has been so focused on exporting goods that they gave other nations loans to pay for the goods America exported to them. But if these loans are never repaid, it means that _____________.

we are giving the goods away

When we make a voluntary trade, we are exchanging one item for another because __________________.

we value the item acquired more than what we're giving up