Professional Documents
Culture Documents
MULTIPLE CHOICE
1. The trade protection that the United States steel industry receives has which of the following
effects?
a. It raises the cost of steel for American consumers.
b. It lowers the profits of American steel companies.
c. It makes American steelworkers’ salaries unpredictable.
d. It leads to less support from the steel industry for the government.
e. It increases the sales of foreign steel products in the United States.
ANS: A DIF: Easy REF: What’s So Good about Trade?
MSC: Remembering
4. Given the following exports, which of these is most likely a rich, developed country?
a. A country that exports shoes.
b. A country that exports computer chips.
c. A country that exports copper.
d. A country that exports oil.
e. A country that exports jeans.
ANS: B DIF: Moderate REF: What’s So Good about Trade?
MSC: Applying
7. Which of the following statements best describes the opinion of most economists about trade?
a. Trade barriers are bad for economic growth and well-being.
b. Trade barriers have no discernible effect on domestic production.
c. Trade barriers have no long-term effect on exports.
d. Trade barriers are “a rising tide that lifts all boats.”
e. Trade barriers disproportionately hurt low-skilled labor.
ANS: A DIF: Easy REF: What’s So Good about Trade?
MSC: Applying
13. All of the following are economic characteristics, or factors of production, EXCEPT:
a. land. d. skilled labor.
b. military power. e. investment capital.
c. unskilled labor.
ANS: B DIF: Easy REF: What’s So Good about Trade?
MSC: Remembering
14. Developing countries have been surprisingly receptive to free trade since the 1970s. According to
scholars this is likely because of which other development?
a. Developed nations offered incentives to encourage free trade.
b. More developing countries became democratic rather than authoritarian.
c. The United Nations mandated free trade among developing countries.
d. Developing nations began doing more trade with each other.
e. Offshoring of jobs from developed nations encouraged developing countries to embrace
free trade.
ANS: B DIF: Moderate
REF: Explaining Trends and Patterns in International Trade MSC: Understanding
15. Which of the following would be expected by the Heckscher-Ohlin trade theory?
a. A country with abundant fertile land exporting agricultural products.
b. A country with abundant capital importing manufactured goods.
c. A country with abundant fertile land importing agricultural goods.
d. A country with abundant labor exporting agricultural products.
e. A country with abundant capital exporting agricultural goods.
ANS: A DIF: Difficult REF: What’s So Good about Trade?
MSC: Applying
16. All of the following are more likely to have higher levels of trade than other similar countries
EXCEPT:
a. two countries that have a dispute over ownership of a border region.
b. two countries that use the same currency.
c. a country that buys many bonds issued by another country.
d. two countries with embassies in each other’s country.
e. two members of a military alliance.
ANS: A DIF: Easy REF: What’s So Good about Trade?
MSC: Applying
23. Which statement best describes the position of the United States toward free trade?
a. The United States has always promoted free trade.
b. The United States has always been a highly protectionist country.
c. The United States was initially in favor of free trade but then became more protectionist,
and is currently highly protectionist.
d. The United States was initially in favor of free trade, became protectionist but currently
promotes free trade.
e. The United States was initially strongly protectionist but has since favored free trade.
ANS: E DIF: Moderate REF: What’s So Good about Trade?
MSC: Remembering
27. When the United States established steel tariffs in 2002, who benefited?
a. Steel exporters in other countries.
b. Consumers in the United States.
c. Producers in the United States that used steel as an input.
d. Steel importers in the United States.
e. Steel exporters in the United States.
ANS: E DIF: Moderate
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Applying
31. Which of the following is explained well by the specific-factor approach (Ricardo-Viner model)?
a. Steel workers and steel factory owners both lobby for tariffs on imported steel.
b. Steel workers and agricultural workers join together to oppose tariffs.
c. Owners of factories in a country with abundant fertile land promote free trade.
d. Car manufacturers and owners of megafarms collude in lobbying for tariffs on car and
wheat imports.
e. Workers in an automobile factory promote free trade while the factory owners lobby for
tariffs on imported cars.
ANS: A DIF: Difficult
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Applying
32. Which of the following trade policy results would be most expected, given the logic of collective
action?
a. Factory workers successfully lobbying for lower tariffs on imported automobiles.
b. Agricultural workers successfully lobbying for lower tariffs on imported wheat.
c. Consumers successfully lobbying for higher tariffs on imported corn.
d. Consumers successfully lobbying for lower tariffs on imported televisions.
e. Automobile manufacturers successfully lobbying for higher tariffs on imported
automobiles.
ANS: E DIF: Easy
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Applying
33. Which of the following international organizations was formed in the wake of World War II as a
response to the devastation of European economies during the war?
a. United Nations. d. North Atlantic Treaty Organization.
b. Warsaw Pact. e. World Trade Organization.
c. European Union.
ANS: C DIF: Moderate
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Remembering
35. Which of the following countries is most likely to follow a liberal trade policy?
a. A country led by a dictator who suppresses national political parties.
b. A country led by a dictator who allows limited elections to take place.
c. A country led by a small group of military officers.
d. A democratic country with strong national political parties and a powerful executive.
e. A democratic country with weak political parties and a weak national executive.
ANS: D DIF: Moderate
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Applying
36. Which of the following would be a movement toward the Pareto frontier with regard to the benefits
of trade?
a. Steel workers losing their jobs because of steel imports get free training, paid for by the
government, so they can get jobs in another industry.
b. Agricultural workers facing wage decreases because of imported food successfully lobby
the government to institute tariffs.
c. Workers in a clothing factory in Mexico being laid off go to the United States to find
work.
d. South Korean semiconductor manufacturers sell their products at a lower-than-market
price in Japan.
e. The wages of Bangladeshi shoe makers rise when the United States imposes tariffs on
shoe imports.
ANS: A DIF: Difficult
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Applying
37. The creation of the European Common Market and the subsequent growth of the customs union in
Europe is best an example of the importance of ________ in international trade.
a. interests d. interactions
b. institutions e. identities
c. ideas
ANS: B DIF: Moderate
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Applying
38. Which of the following groups in the United States is most likely to have experienced stagnant or
declining wages since the 1970s?
a. Workers in a chicken processing plant in Louisiana.
b. Workers doing computer coding in California’s “Silicon Valley.”
c. Film editors in Los Angeles.
d. Book editors in New York City.
e. Workers in a pharmacy in Minnesota.
ANS: A DIF: Easy
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Applying
40. All of the following statements about dumping are true EXCEPT:
a. dumping consists of selling goods below their true costs.
b. exporters use dumping to put competitors out of business.
c. dumping is widely seen as unfair.
d. dumping is easy to define and measure.
e. governments can aid dumping by subsidizing industries.
ANS: D DIF: Easy
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Remembering
41. Which of the following is most likely to help countries overcome trade problems with each other?
a. When a large number of countries participate in trade negotiations so they can gain
broader consensus.
b. When countries have limited interactions over time and therefore little chance for disputes.
c. When countries are able to restrict the information that other countries have about their
products.
d. When the countries have concluded a limited war fought with each other to resolve a
dispute over trade routes.
e. When countries can negotiate concessions in different industries to achieve an agreement.
ANS: E DIF: Moderate
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Understanding
46. Which of the following statements about the World Trade Organization (WTO) is FALSE?
a. All countries have equal votes in decision making in the WTO.
b. The WTO has helped achieve the liberalization of agricultural trade in developed
countries.
c. The largest member countries dominate negotiations in the WTO.
d. Developing countries often find that discussions of issues of concern to them are blocked
in the WTO.
e. The WTO has helped countries reduce barriers to trade.
ANS: B DIF: Easy
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Applying
47. Why are those who favor free trade concerned about regional trade agreements?
a. They think there are too few regional trade agreements.
b. They think regional trade agreements are biased toward workers’ rights.
c. They think the signers of regional trade agreements will become more protectionist in
general.
d. They think regional trade agreements will be stepping stones toward a more integrated
world economy.
e. They think regional trade agreements may result in the members trading only among
themselves.
ANS: E DIF: Easy
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Understanding
48. Antiglobalization critics criticize the WTO because they think it:
a. favors domestic workers over other actors.
b. disregards environmental and safety issues.
c. is overly concerned about workers’ health and safety.
d. is not doing enough to reduce government subsidies for domestic producers in developing
countries.
e. has too little authority in regulating international trade.
ANS: B DIF: Easy
REF: Explaining Trends and Patterns in International Trade MSC: Understanding
a. Portugal has an absolute advantage over England in both cloth and wine.
b. England’s opportunity cost for producing wine is lower than Portugal’s.
c. Portugal can produce more wine than England.
d. Neither country has a comparative advantage in the production of cloth.
e. Neither country has a comparative advantage in the production of wine.
ANS: A DIF: Easy
REF: Special Topic: Comparative Advantage and the Political Economy of Trade
MSC: Understanding
52. According to Ricardo’s theory on trade, in the example described by the table, Portugal should:
a. let England produce everything.
b. produce wine exclusively.
c. produce cloth exclusively.
d. produce everything itself.
e. produce half the wine and half the cloth needed by both parties.
ANS: B DIF: Moderate
REF: Special Topic: Comparative Advantage and the Political Economy of Trade
MSC: Understanding
53. What is true of an autarkic state in the example depicted in the figure, where Pw is the world price
of a good?
55. In the figure, at what level will domestic firms produce under liberalization?
a. Qs. d. B.
b. Qd. e. P.
c. A.
ANS: B DIF: Moderate
REF: Special Topic: Comparative Advantage and the Political Economy of Trade
MSC: Understanding
56. What is true of a state that adopts a tariff in the scenario depicted in the figure?
57. Line Qd t to Qd represents what occurring under the tariff in the figure?
58. In the figure, at what level will domestic firms produce under the tariff?
a. Qst. d. C.
b. Qd t. e. Pw.
c. A.
ANS: A DIF: Moderate
REF: Special Topic: Comparative Advantage and the Political Economy of Trade
MSC: Understanding
ESSAY
1. Explain how interests, institutions, and interactions affect the likelihood of trade liberalization or
trade restriction in domestic politics.
ANS:
Answer will vary.
ANS:
Answer will vary.
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Analyzing
3. How do domestic political institutions affect whether a country will adopt trade liberalization or
protectionism?
ANS:
Answer will vary.
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Analyzing
4. How do international institutions affect whether the world trading system is more or less open?
ANS:
Answer will vary.
ANS:
Answer will vary.
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Analyzing
6. Explain hegemonic stability theory and how one or a few powerful countries can affect the
international trading system.
ANS:
Answer will vary.
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Understanding
7. What factors make it more likely that countries will have trade agreements? How do strategic
interactions make it more or less likely that a country will erect a trade barrier?
ANS:
Answer will vary.
REF: Why Do Governments Restrict Trade? The Domestic Political Economy of Protection
MSC: Understanding
9. Why do powerful countries like the United States abide by WTO rules, even when the WTO rules
against them?
ANS:
Answer will vary.
10. Imagine that you are the economic adviser to the executive of a state. What factors would you tell
him or her to consider before announcing a new policy on trade? Which groups in society would
you expect to be in favor of protectionism? Which groups would you expect to be in favor of free
trade?
ANS:
Answer will vary.
REF: How Do Countries Get What They Want? The International Political Economy of Trade
MSC: Applying
11. How does the WTO both help and hurt the world’s poor?
ANS:
Answer will vary.
12. Why do economists believe that free trade would be beneficial for the world economy? Why do
nations still erect barriers in the face of those arguments?
ANS:
Answer will vary.
13. Demonstrate mathematically how comparative advantage suggests two countries should specialize
and trade. Despite the math, why would countries refuse to partake in trade?
ANS:
Answer will vary.