One popular case for protectionism is the "Protection Saves Jobs" argument. What is the nature of this argument? What is its weakness?
What will be an ideal response?
The main argument is that foreign competition costs domestic jobs. If Americans purchase foreign-made goods then domestic-made goods go unsold. This costs American workers their jobs. The weakness of this argument is that it fails to recognize or admit that workers from displaced sectors may be absorbed in other expanding sectors of the economy.
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Assume the economy is experiencing a recessionary gap. Keynesian economists would support which of the following policies:
a. Nonstabilization b. Expansionary c. Nonintervention d. Fixed wage
Which of the following is most likely to lead to an economic contraction?
a. A decrease in the average price level b. An increase in aggregate supply c. A decrease in aggregate demand d. A decrease in taxes e. An increase in transaction demand for money
Collusion is most likely to succeed when there are ___________ firms in an industry.
Fill in the blank(s) with the appropriate word(s).
What are the basic lessons learned about the redistributive effects of price changes?
What will be an ideal response?