1. Which of the following is NOT true?

A.) Governments intervene in markets to ensure access to a domestic supply of certain

items in the event that war could restrict their availability.
B.) Industries considered essential to national security often receive government-
sponsored protection.
C.) Governments may intervene to protect both imports and exports.
D.) It is difficult to make the case to protect industries for the purpose of
preserving national security
2. According to Paul Krugman, a country that adopts a strategic trade policy aimed at
establishing domestic firms in a dominant position in a global industry will probably
provoke retaliation.
A.) True
B.) False
3. A general reduction in world trade brought about by retaliation and increases in trade
barriers around the world.
A.) Domestic Policies
B.) Strategic Trade Policies
C.) Trade war
D.) Deadweight cost
4. _________argues that STP aimed at making dominant domestic firms is a "beggar-thy-
neighbor" policy that boosts national income in expense to OTHER COUNTRIES.
A.) The revised Case for Free Trade
B.) Strategic Trade Policy
C.) Policy Implications
D.) Krugman
5. A government helping a domestic firm establish a dominant position globally is likely to
cause retaliation. This will leave countries worse-off than they were before. Best answer
to this is to establish rules of the game with opposing government that minimizes
subsidies.
A.) Domestic Policies
B.) Retaliation and Trade War
C.) Strategic Trade Policy
D.) Free Trade