Discuss reasons why we see trade restrictions. Are any of these reasons valid?
What will be an ideal response?
There are several reasons advanced to restrict trade. These include: the infant-industry argument (that the nation should protect a young industry that will reap learning-by-doing gains in productivity and eventually be able to compete successfully in the world market); dumping (the nation should protect an industry from foreign competitors who sell goods below cost); protection saves jobs (the claim that imports cost U.S. jobs); cheap foreign labor (the assertion that tariffs are necessary to compete with cheap foreign labor); lax environmental standards (the claim that protection is needed to compete against nations with weak environmental standards); and, rich nations exploit developing countries (the suggestion that protection prevents developed nations from forcing people in poor nations to work for slave wages). Economists reject all of these claims as valid reasons for protection.
You might also like to view...
A vertical aggregate supply curve implies __________ Phillips curve
A) an upward-sloping B) a downward-sloping C) a vertical D) a horizontal
A prediction based on rational expectations ________
A) relies solely on past experience B) will always be superior to one based on adaptive expectations C) is based on real, rather than nominal variables D) will not always be accurate
A key assumption in the classical model is
A) sticky wages. B) pure competition exists. C) sticky prices. D) the government plays a major role in economic problems.
Opponents of active stabilization policy
a. advocate a monetary policy designed to offset changes in the unemployment rate. b. argue that fiscal policy is unable to change aggregate demand or aggregate supply. c. believe that the political process creates lags in the implementation of fiscal policy. d. None of the above is correct.