The textbook refers to the following quotation from a Federal Reserve publication:
"Trade is a win-win situation for all countries that participate." But many firms and workers oppose free-trade policies and protests against globalization have become a regular occurrence at meetings of the World Trade Organization. If trade is a "win-win" situation, why is there strong opposition to free trade and globalization?
Free trade between any two countries can be shown to make both countries better off by increasing the amount of goods and services available to consumers. Free trade gives incentives to countries to produce goods and services for which they have a comparative advantage. This allows for an efficient allocation of scarce resources. But devoting more resources to the production of one product means fewer resources are devoted to producing another product. Firms that produce these products experience a loss in revenue and profits and some workers are likely to lose their jobs. Even if other opportunities are available for workers they often require acquiring new skills and movement to another area of the country. There are net gains from free trade—gains exceed losses—but it is not surprising that those who are harmed oppose free trade policies.
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If the central bank can act as a lender of last resort during a banking panic, banks can
A) call in their loans to their customers and eventually restore the public's faith in the banking system. B) satisfy customer withdrawal needs and eventually restore the public's faith in the banking system. C) borrow more and more money from the central bank, and this will lower its reserves and decrease the public's faith in the banking system. D) encourage the public to borrow directly from the central bank, and this will worsen the banking panic.
Population increases are the limiting factor in the growth process in
A) classical growth theory. B) neoclassical growth theory. C) the new growth theory. D) real growth theory.
Refer to Table 9-6. Select the statement that accurately interprets the data in the table
A) Celeste has an absolute advantage in making saddles and spurs. B) Mateo has an absolute advantage in making saddles and spurs. C) Neither Mateo nor Celeste has an absolute advantage in making spurs. D) Neither Mateo nor Celeste has an absolute advantage in making saddles.
A commercial bank sells a $10,000 government bond to a securities dealer. The dealer pays for the bond in cash, which the bank adds to its vault cash. The money supply has:
A. Decreased by $10,000 multiplied by the reciprocal of the required reserve ratio B. Decreased by $10,000 C. Increased by $10,000 D. Not been affected