Tutik Inayati
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Tutik Inayati
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International Trade

Question 1 of 29

1

The existence of positive externalities due to the impossibility of full appropriability

Select one of the following:

  • supports the conclusions of the Heckscher-Ohlin model.

  • rejects the usefulness of government protectionism

  • supports the concept that the government should support only high-tech industries

  • provides support for government protectionism.

  • supports arguments for free trade

Explanation

Question 2 of 29

1

The United States....

Select one of the following:

  • does not provide more support for R&D as compared to other forms of investment

  • provides support for R&D by imposing high tariffs on R&D intensive products

  • provides support for R&D by providing direct subsidies for such activities.

  • provides support for R&D through tax legislation.

  • provides support for R&D through grant incentives.

Explanation

Question 3 of 29

1

The Brander-Spencer model identified market failure in certain industries due to

Select one of the following:

  • unfair competition.

  • wildcat destructive competition.

  • environmental negative externalities associated with pollution.

  • limited competition.

  • lack of excess returns.

Explanation

Question 4 of 29

1

In the Brander-Spencer model the subsidy raises profits by more than the subsidy because of

Select one of the following:

  • the "multiplier" effect of government expenditures.

  • the military-industrial complex.

  • the forward and backward linkage effects of certain industries.

  • the deterrent effect of the subsidy on foreign competition.

  • the economies of scale once the company enters the market.

Explanation

Question 5 of 29

1

Criticisms of the Brander-Spencer model include all EXCEPT which of the following?

Select one of the following:

  • the problem of insufficient information

  • the problem of likely foreign retaliation

  • the problem of harm to interests of consumers

  • the problem of adverse effects of trade policy politics

  • the problem of simultaneously causing harm to other industries

Explanation

Question 6 of 29

1

Japan's protection of its semiconductor (RAM) producers is today seen as an object lesson in

Select one of the following:

  • how strategic planning may backfire and cause a large waste of resources.

  • how externalities may be successfully exploited by protectionist policies.

  • how excess returns may be successfully exploited by protectionist policies.

  • how government intervention may create a meaningful comparative advantage.

  • how monopolies can outlast government intervention.

Explanation

Question 7 of 29

1

The Heckscher-Ohlin, factor-proportions model lends support to the argument that

Select one of the following:

  • trade tends to worsen the conditions of unskilled labor in rich countries.

  • trade tends to worsen the conditions of owners of capital in rich countries.

  • trade tends to worsen the conditions of workers in poor countries.

  • trade tends to worsen the conditions of workers in rich countries.

  • trade tends to worsen the conditions of highly skilled workers in rich countries.

Explanation

Question 8 of 29

1

If firms in an industry are generating knowledge that other firms can use without paying for it, this industry is characterized by

Select one of the following:

  • social costs that exceed private costs.

  • social benefits that exceed private benefits.

  • social costs that exceed social benefits.

  • private benefits that exceed social benefits.

  • social benefits that undermine private benefits.

Explanation

Question 9 of 29

1

It is argued that high-tech industries typically generate new technologies but cannot fully appropriate the commercial benefits associated with their inventions or discoveries. If this is true then in order to maximize a country's real income, the government should

Select one of the following:

  • tax the high-tech firms.

  • subsidize the high-tech firms.

  • protect the high-tech firms.

  • outsource high-tech production.

  • discourage high-tech investments.

Explanation

Question 10 of 29

1

In effect, the U.S. does subsidize high-tech firms by subsidizing R&D. This is done through

Select one of the following:

  • the budget of the Department of Education.

  • systematic protection through the levying of tariffs.

  • systematic protection through the establishment of NTBs.

  • relatively accelerated "depreciation" of R&D investment in the Federal tax codes.

  • subsidies for high-tech firms.

Explanation

Question 11 of 29

1

The best economic case one can make for an active industrial policy involves

Select one of the following:

  • the national security argument.

  • the technological spillover argument.

  • the environment preservation argument.

  • the high value added argument.

  • raising the national income.

Explanation

Question 12 of 29

1

Spencer and Brander's model highlights the existence of

Select one of the following:

  • aircraft industries.

  • excess returns present in highly competitive markets.

  • excess returns, or rents, available in non-competitive markets.

  • the futility of government bureaucrats' attempts to build an airplane.

  • natural advantages in foreign technology firms.

Explanation

Question 13 of 29

1

Spencer and Brander's model highlights the conventional assumption that

Select one of the following:

  • government involvement in business or in the economy tends to fail.

  • government subsidies tend to waste taxpayer's money.

  • government subsidies cannot create a successfully competing export.

  • government tends to distort when it displaces Adam Smith's Invisible Hand.

  • government subsidies can produce profits that exceed the subsidy's value.

Explanation

Question 14 of 29

1

The reason Airbus succeeded in the Brander Spencer example is that

Select one of the following:

  • Boeing made the first move in this strategic game.

  • Europeans tend to be better strategists than corn-fed Americans.

  • the Airbus actually was a better plane than the Boeing 747.

  • U.S. laws actually prohibit U.S. exporters from bribing foreign officials.

  • the subsidy removed the advantage that Boeing gained with their head start in production.

Explanation

Question 15 of 29

1

The reason Airbus succeeded in the Brander Spencer example is that

Select one of the following:

  • the European government made an explicit subsidy offer, but the U.S. government did not.

  • Airbus' prices were better when adjusted for quality and warranty services.

  • Boeing traditionally refused to undertake any exchange rate risk in its transactions.

  • the U.S. acted in accordance with its ideological reliance on market solutions, whereas the Europeans ignored market and technological factors.

  • the Airbus plane benefited from more advanced technology.

Explanation

Question 16 of 29

1

The argument that strategic planning is not likely to be practical due to insufficient information means that

Select one of the following:

  • because of trade secrets, the government does not know true cost relationships in any given industry.

  • if the government had all the relevant information in a given industry then it could decide whether a subsidy would enhance the public's welfare.

  • even if the government had all the relevant information in a given industry, it still could not decide whether a subsidy would enhance the public's welfare.

  • due to recent cuts in the Department of the Census' sampling budgets, industry surveys are no longer reliable, so that there is no way to determine if a subsidy is in the public's interest.

  • the government would need to employ its intelligence agencies in order to gain a complete understanding of the market.

Explanation

Question 17 of 29

1

The invocation of beggar-thy-neighbor arguments with respect to industrial policies

Select one of the following:

  • strengthens the argument for subsidies.

  • makes sense if the international Keynesian multipliers exceed unity.

  • applies only to rich countries most of whose trade partners are very poor countries.

  • weakens the argument for subsidies.

  • does not apply to rich countries who can influence relative world prices.

Explanation

Question 18 of 29

1

When the WTO met in Seattle to initiate a further move towards free international trade, thousands of activists met

Select one of the following:

  • in order to promote the WTO's goals of "Trade-not Aid."

  • in order to laud the WTO policy orientation which would bust local monopolies and therefore help ordinary relatively poor consumers everywhere.

  • in order to laud the WTO policy of disallowing government sweetheart deals, which typically meant that corrupt governments subsidized their in-laws' conglomerates on the backs of poor taxpayers.

  • in order to support the WTO efforts of bringing about a universal shift of resources in poor countries to higher efficiency and productivity uses, which would raise the real incomes of everyone.

  • in order to protest WTO free trade policies that they believed hurt workers.

Explanation

Question 19 of 29

1

When one applies the Heckscher-Ohlin model of trade to the issue of trade-related income redistributions, one must conclude that North South trade, such as U.S.-Mexico trade

Select one of the following:

  • must help low skill workers on both sides of the border.

  • is likely to hurt high-skilled workers in the U.S.

  • is likely to hurt low-skilled workers in the U.S.

  • is likely to hurt low-skilled workers in Mexico.

  • is likely to help highly skilled workers in Mexico.

Explanation

Question 20 of 29

1

The evidence usually cited to prove that globalization hurts workers in developing countries

Select one of the following:

  • is inconclusive due to poor statistical design of the underlying samples.

  • is inconclusive due to the poorly funded Central Statistical Office of Mexico.

  • is inconclusive due to the ambiguous theoretical implications of the findings.

  • is conclusive.

  • does not take into account the Heckscher-Ohlin model.

Explanation

Question 21 of 29

1

The proposal that trade agreements should include a system which monitors worker conditions and make the results available to consumers in the rich importing country

Select one of the following:

  • is consistent with the Invisible Hand paradigm.

  • is consistent with the market failure approach.

  • is consistent with the Ricardian theory of comparative advantage.

  • is consistent with the scale economies approach to trade theory.

  • is consistent with the principles laid out by the WTO.

Explanation

Question 22 of 29

1

Labor standards in trade are typically opposed by most developing countries who believe that they will be used

Select one of the following:

  • to further neo-imperialist colonial exploitation.

  • to charge these countries with crimes against child-labor standards at the Hague.

  • as a protectionist tool by import-competing producers in industrial countries.

  • as a means of spreading U.S. Corporate Values and destroying local cultures.

  • to hinder investment in foreign-based multinational corporations.

Explanation

Question 23 of 29

1

The WTO seems at times to be interfering in domestic policy since

Select one of the following:

  • the line between domestic policies and de factor protectionism is often fuzzy.

  • it is a supra-national organization with the power to overturn governments.

  • it determines which nations may trade what with whom.

  • it punishes naughty nations.

  • it exempts the U.S. and other powerful member nations from many of its edicts.

Explanation

Question 24 of 29

1

In today's world markets, poor developing countries tend to rely primarily on exports of

Select one of the following:

  • agricultural products.

  • primary products.

  • mineral products.

  • manufactured products.

  • high-tech products.

Explanation

Question 25 of 29

1

In the second half of the 1990s a rapidly growing movement focused on the harm caused by international trade to

Select one of the following:

  • land owners in poor countries.

  • capital owners in rich industrialized countries.

  • land owners in rich industrialized countries.

  • production workers in both rich and poor countries.

  • terms of trade in developing countries.

Explanation

Question 26 of 29

1

The Ricardian model of comparative advantage lends support to the argument that

Select one of the following:

  • trade tends to worsen the conditions of unskilled labor in rich countries.

  • trade tends to worsen the conditions of owners of capital in rich countries.

  • trade tends to worsen the conditions of workers in poor countries.

  • trade tends to worsen the conditions of workers in rich countries.

  • trade is mutually beneficial to the countries that engage in it.

Explanation

Question 27 of 29

1

Most developing countries oppose including labor standards in trade agreements because

Select one of the following:

  • they believe this would involve a loss of their national sovereignty.

  • they believe this would limit their ability to export to rich markets.

  • they believe this would create an uneven playing field.

  • multinational corporations control them.

  • they do not want to improve wages for their workers.

Explanation

Question 28 of 29

1

When Japan's MITI (Ministry of International Trade and Industry) focused resources on the semiconductor industry, and in particular on Random Access Memory (RAM), it was viewed as a typically successful Japanese foray into a new dynamic strategic sector. The results, as viewed by the late 1990s

Select one of the following:

  • justified this view.

  • led to similar structuring of industrial policy in the U.S.

  • lent support to the Brander-Spencer model.

  • helped shift the focus of economists away from Japanese-style industrial policy.

  • propelled Japan into the leading country in high-tech manufacturing.

Explanation

Question 29 of 29

1

Low wages and poor working conditions in many U.S. trade partners

Select one of the following:

  • prove that the gains-from-trade arguments of the Ricardian model are false.

  • may be a fact of life, but economists don't care.

  • are facts emphasized by U.S. labor in its contract negotiations.

  • prove that the gains-from-trade arguments of the Ricardian model are true.

  • prove that international trade is exploitative.

Explanation

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