1.

Agricultural subsidies have been criticized for all of the following reasons except:
a. They allow inefficient farmers stay in business
b. They discourage countries to overproduce heavily subsidized agricultural products.
c. They encourage countries to produce products that could be grown more cheaply elsewhere
and imported.
d. They reduce international trade in agricultural products.
2. He argues that a strategic policy aimed at establishing domestic firms in a dominant position in a
global industry is a beggar-thy-neighbor- policy that boosts national income at the expense of
other countries.
a. Paul Krugman
b. Adam Smith
c. David Ricardo
d. John Dunning
3. Governments do not always act in the national interests when they intervene in the economy;
politically important interest groups often influence them.
TRUE
4. The GATT was a multilateral agreement whose objective is to liberalize trade.
TRUE
5. What is the longest, most complicated, and the last of the GATT rounds?
a. Kennedy Round
b. Uruguay Round
c. Doha Round
d. Tokyo Round
6. Passed in 1930, this U.S law erected a wall of tariff barriers against imports.
a. Payne-Aldrich Tariff Act
b. McKinley Tariff Act
c. Smoot-Hawley Tariff Act
d. None of the above
7. Under the U.S leadership, it was established in 1947.
a. Trade-Related Aspects of Intellectual property Rights
b. General Agreement on Trade and Services
c. World Trade Organization
d. General Agreement on Tariffs and Trade
8. The TRIPS acts as an umbrella organization that encompasses the GATT along with two new
sister bodies, one on services and the other on intellectual property.
False; (World Trade Organization)
9. Free trade as a government policy was first officially embraced by Great Britain in 1846, when
the British parliament repealed the Smoot-Hawley Act.
False; (Corn Laws)
10. Trade barriers constrain a firm’s ability to disperse its productive activities in such manner.
True