Macroeconomics Ch. 21 Quiz

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%

________ means selling goods below their cost of production.

Dumping

How might international trade impact the labor demand curve and wages?

Workers in industries impacted by imported products will see the demand curve shift left and wages decrease.

International trade is fundamentally a ________________________.

win-win situation

What is the primary argument supporting protectionism?

Free trade can lead to job loss and lower wages.

Why don't countries specialize in the production of just a few goods for which they have a comparative advantage?

In most cases, increasing opportunity costs would accompany the continually increasing production of a product specialist.

How does protectionism impact the job market?

Jobs will flow from industries without import protections to those with import protections.

Protectionism has three main forms: tariffs, import quotas, and...

Non-Tariff barriers

________ are ways that a nation can draw up regulations, inspections, and paperwork to make it more costly or difficult to import products.

Nontariff barriers

What happens to the equilibrium price and quantity when a country sets a low or medium tariff or import quota?

The equilibrium price and quantity will be somewhere between those that prevail with no trade and those with completely free trade.

___________ 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

If Argentina imports manufacturing parts from Guatemala, and Guatemala imports delivery trucks from Argentina, how could you best describe the pattern of trade?

The opportunity cost of producing manufacturing parts in Argentina is higher than it is in Guatemala.

Various international crises and issues periodically raise the price of oil imports, which can send ripple effects throughout the economy. While it might not be the producer that other countries are, the U.S. has vast supplies of oil. What is a likely reason it still imports oil despite the impact of these international influences on prices?

The opportunity costs of producing all oil products domestically must still be higher than importing.

What is an argument expressed to counter infant industry rationale for protectionism?

The protectionism intended to be short-term often extends further than planned.

What would be expected if the tariff on foreign-produced automobiles were increased?

The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.

The long-term trend in barriers to trade can be characterized as follows:

Trade barriers have generally been reduced, and means of trade have generally been increased.

A tariff differs from a quota in that a tariff is:

a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

What is not a short-run impact of imposing quotas on the American industries they seek to protect?

government tax revenues increase

Tariffs are taxes imposed on _________________.

imported products