Arguments in favor of protectionism

Question

Question 1. An example of a negative externality is _____

•         a public park that has litter, dead grass, and broken benches.
•         paying one's taxes on time.
•         voting for a candidate who loses an election or 'throwing away one's vote'.
•         all of the above

Question 2. Economists strongly support which of the following arguments in favor of protectionism?

• National Security. It is imperative that established industries be supported, in order to protect our way of life.
• Infant Industry. Critical new industries must be given a chance to mature, before they face brutal international competition.
• Unfair Competition. When foreign exporters undercut domestic consumers, they hurt the economy.
• Breathing Room. Large and robust nations need room to expand, and require accommodations from their lesser developed neighbors.
• None of the above

Question 3. Human capital is _____

• skills and personal qualities that enable individuals to earn more income and to enjoy life more than they would without those skills and qualities.
• one's material wealth minus the amount of debt that one owes.
• the material wealth at one's disposal, regardless of the debt that one owes.
• the value of the tools of one's trade that one owns.

Question 4. All other things being equal, an additional unit of capital invested in a capital-rich economy will lead to _____ increase in output as compared with a unit of capital invested in a capital-poor economy.

• a smaller
• a larger
• about the same sized
• an unknowable

Question 5. Foreign investment _____

• is very beneficial to an economy, by increasing the amount of capital available.
• is a tool of imperialism and colonialism.
• decreases the amount of capital available and increases local interest rates.
• none of the above

Question 6. Immigration is _____

• harmful to an economy, because it increases the demand for resources, leaving less for each.
• harmful to an economy, because it increases the number of individuals, who do not fully support our way of life.
• beneficial to an economy, because human ingenuity offsets the demand for resources.
• beneficial to an economy, because it maintains an underclass of cheap labor.

Question 7. Bonds are _____

• money posted by politicians and corporate executives to stay out of jail.
• financial ties that prevent wealthy individuals from expatriating.
• debt issued by firms and governments, when they borrow money from the public.
• money placed in escrow by corporations as insurance against lawsuits.

Question 8. Stock is _____

• a share of ownership in a corporation.
• another name for bond.
• a legal fiction created by capitalists to deprive workers of the fruits of their labors.
• a very large amount of cash.

Question 9. Financial intermediaries include _____

• salesmen and brokers.
• regulatory agencies.
• depository institutions and investment funds.
• none of the above

Question 10. Increased spending by the public leads to _____

• a larger output of new goods.
• inflation.
• higher prices.
• some combination of a larger output and higher prices.

Question 11. Saving is _____

• the source of the supply of loanable funds.
• the source of the demand for loanable funds.
• not a relevant macroeconomic topic, because it is related to microeconomic decision making by individuals and households.
• none of the above

Question 12. Investment is _____

• the source of the supply of loanable funds.
• the source of the demand for loanable funds.
• not a relevant macroeconomic topic, because it is related to microeconomic decision making by individuals and households.
• none of the above

Question 13. Why would an economist say that the US government has never made a choice or a decision?

• Economists often deny the most obvious facts.
• The US government does not make choices; only firms make decisions and choices.
• Individuals within an organization, rather than the organization itself, make choices.
• Economists' worldview is influenced by the interests of their social class.

Question 14. The Consumer Price Index is _____

• a measure of stock market activity that investors use to help make investment decisions.
• a measure of the aggregate price level that is used to estimate the rate of inflation.
• set by the Bureau of Labor Statistics as a signal to producers, telling them how much to supply.
• none of the above

Question 15. _____ is widely recognized as the father of modern economics.

• John Maynard Keynes
• Adam Smith
• Ben Bernanke
• N. Gregory Mankiw

Question 16. All other things being equal, when the demand for money decreases _____

• interest rates decrease.
• interest rates increase.
• the government prints more money.
• the government takes money out of circulation.

Question 17. The principle of comparative advantage states that individuals, firms, and national economies should produce _____

• what they are able to produce most efficiently.
• only those things that they can produce more efficiently than anyone else.
• whatever they want for their own consumption.
• enough necessities to ensure self-sufficiency.

Question 18. Economists argue that communism fails, because _____

• it is an immoral system that violates fundamental human rights.
• it is established by force and not through democratic processes.
• people are not yet civilized or enlightened enough to fully appreciate its advantages over wasteful market processes
• it does not allow prices to adjust freely, leading to misallocation of resources

Question 19. Tastes affect prices, because _____

• changes in taste lead to changes in demand.
• people with superior taste are role models for individuals who have inferior taste.
• marginal utility increases as more individuals embrace new fashions.
• taste is subjective and cannot be compared between any two individuals.

Question 20. The law of supply asserts that _____

• market prices often are unfair, and government must set limits on how much sellers can charge for necessities.
• human wants are insatiable.
• there is a negative relationship between the amount of anything that people will purchase and the quantity that sellers will bring to market.
• there is a positive relationship between the amount of anything that people will purchase and the quantity that sellers will bring to market.

Question 21. Intelligent policy-making requires the making of trade-offs, which means _____

• accepting unethical but unavoidable compromises.
• giving up what is less valuable for what is more valuable.
• putting one's own interests ahead of the interests of others.
• violating someone's rights.

Question 22. According to our textbook, which is more likely to reduce drug-related crime: drug interdiction or public education?

• Interdiction, because then more criminals would be sent to prison.
• Interdiction, because reduced supply would cause prices to fall.
• Education, because reduced demand would cause prices to fall.
• Education, because reduced prices would cause shortages and there would be less drugs available to buy.
• A higher demand for all goods in general