Chapter 21 Globalization and Protectionism

The United States national minimum wage is _____________.

$7.25

The membership of the WTO includes about __________ nations.

150

Despite interlocking import quotas, tariffs, and nontariff barriers, the share of apparel sold in the United States that is imported rose from about _________ in 1999 to about ________ today.

50%; 75%

The acronym GATT stands for the ____.

General Agreement on Tariffs and Trade

_____________ are numerical limitations on the quantity of products that can be imported.

Import quotas

It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________.

National Interest

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss?

This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices.

Politicians often argue for tariff increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long-run effect is most likely to be:

a decrease in both American imports and exports.

Which of the following is the best example of a quota?

a limit imposed on the number of men's suits that can be imported from a foreign country

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) __________ advantage and toward industries where it has a(n) ___________ advantage

comparative; comparative

The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:

domestic producers can attain the economies of scale to allow them to compete in world markets

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.

Tariffs are taxes imposed on _________________.

imported products

After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:

increase

Introducing a tariff on vitamin Z would:

increase American consumption of domestically produced vitamin Z.

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

increase American production of steel.

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

increase;decrease

"Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic producers of the restricted products at the expense of domestic consumers." This statement:

is essentially correct

A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________.

non-tariff barrier

International trade is fundamentally a ________________________.

win-win