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Protectionism is an economic policy exclusively focused on increasing the volume of imports to benefit consumers.
Answer: False
Protectionism is an economic policy primarily aimed at restricting imports, rather than exclusively focusing on increasing import volume to benefit consumers.
Tariffs and import quotas are the only methods governments use to implement protectionist policies.
Answer: False
Tariffs and import quotas are not the sole methods governments employ to implement protectionist policies; other measures such as subsidies and non-tariff barriers are also utilized.
Proponents of protectionism argue it helps shield domestic industries from foreign competition.
Answer: True
Proponents of protectionism assert that such policies serve to shield domestic industries from the pressures of foreign competition.
Opponents of protectionism believe it lowers the cost of imported goods for consumers.
Answer: False
Opponents of protectionism contend that these policies tend to increase, rather than lower, the cost of imported goods for consumers.
Economic liberal political parties typically advocate for protectionist measures.
Answer: False
Economic liberal political parties generally advocate for free trade, while economic nationalist positions are more typically associated with protectionist policies.
Governments can use exchange rate controls to make imports cheaper and exports more expensive as a protectionist strategy.
Answer: False
Governments can use exchange rate controls to make imports more expensive and exports cheaper by devaluing their currency, which is a protectionist strategy, not the reverse.
The 'infant industry argument' suggests new domestic industries need protection until they can compete internationally.
Answer: True
The 'infant industry argument' posits that nascent domestic industries may require a period of protection from established international competitors to achieve maturity and competitiveness.
The 'Buy American' campaign is an example of a government-mandated trade restriction.
Answer: False
The 'Buy American' campaign is typically an extra-legal promotion encouraging the preference for domestic goods, rather than a government-mandated trade restriction.
The text mentions a 'Frencher's argument' supporting free trade.
Answer: False
The provided text does not reference a 'Frencher's argument'. It does, however, discuss Friedrich List's view that Adam Smith's advocacy for free trade was disingenuous, suggesting Smith supported it so British industry could block underdeveloped foreign competition.
A potential pitfall of the 'infant industry argument' is that protection might never be removed even after the industry matures.
Answer: True
A significant pitfall of the 'infant industry argument' is the risk that protectionist measures may persist indefinitely, even after the industry has matured and could potentially compete internationally.
Import quotas are limits on the quantity of goods that can be imported.
Answer: True
Import quotas are indeed quantitative restrictions imposed by governments, limiting the volume of specific goods that can be imported into a country over a defined period.
Subsidies are government payments used to increase the cost of domestic production.
Answer: False
Subsidies are government financial assistance intended to decrease the cost of domestic production, thereby making domestic goods more competitive against imports or cheaper for export.
Which of the following is a primary method of protectionism mentioned in the source?
Answer: Implementing import quotas to limit foreign goods.
Import quotas, which set limits on the quantity of imported goods, are identified as a primary method of protectionism.
According to proponents, what is a key benefit of protectionist policies?
Answer: Shielding domestic producers from foreign competitors.
A primary argument advanced by proponents of protectionism is that it shields domestic industries and producers from the competitive pressures exerted by foreign entities.
What negative impact do opponents of protectionism typically highlight?
Answer: Higher costs for consumers due to increased import prices.
Opponents of protectionism frequently emphasize that such policies lead to increased prices for imported goods, thereby raising costs for consumers.
Which political ideology is typically associated with advocating for protectionism?
Answer: Economic Nationalism
Economic nationalism is the political ideology most frequently associated with advocating for protectionist trade policies.
Which of the following is listed as a common protectionist policy besides tariffs and quotas?
Answer: Direct subsidies to domestic firms.
Direct subsidies provided to domestic firms are identified as a common protectionist policy, alongside tariffs and quotas.
How might a government use exchange rate controls for protectionist purposes?
Answer: By weakening its currency to make imports more expensive.
A government can weaken its currency through exchange rate controls, making imports more expensive and exports cheaper, thereby serving as a protectionist strategy.
What is a potential risk associated with the 'infant industry argument' for protectionism?
Answer: Protectionist tariffs may never be removed even when industries mature.
A significant risk of the 'infant industry argument' is the persistence of protectionist tariffs beyond the maturation of the industry, potentially hindering further development and efficiency.
What is the 'common knowledge' explanation for the purpose of tariffs?
Answer: To raise government revenue and protect domestic industries.
The common understanding of tariffs is that they serve the dual purpose of generating government revenue and protecting domestic industries from foreign competition.
There is a strong consensus among economists that protectionism generally benefits economic growth.
Answer: False
The prevailing consensus among economists is that protectionism generally exerts a negative influence on economic growth and overall welfare, contrasting with the widely accepted benefits of free trade.
Economists generally agree that protectionism is the most effective strategy for developing countries to achieve economic growth.
Answer: False
Economists generally concur that free trade, rather than protectionism, is a more effective strategy for developing countries to achieve robust economic growth.
Dani Rodrik argued that a complete return to protectionism is the best solution for globalization's social problems.
Answer: False
Dani Rodrik argued that while globalization presents challenges, a complete retreat into protectionism is not the optimal solution and would likely harm groups benefiting from trade, suggesting alternative approaches are needed.
A 2016 study found that trade disproportionately harms the poor due to higher costs of imported goods.
Answer: False
A 2016 study indicated that trade generally benefits the poor, as they spend a larger proportion of their income on goods, and free trade reduces the costs of these essential items.
Economists favor free trade primarily because it leads to higher prices for consumers.
Answer: False
Economists generally favor free trade because it tends to lower prices for consumers through increased competition and efficiency, not raise them.
What is the general consensus among economists regarding protectionism's effect on economic welfare?
Answer: It has a generally negative effect on economic welfare.
There is a broad consensus among economists that protectionist policies tend to have a negative impact on overall economic welfare.
Dani Rodrik suggested that trade barriers are rarely the best solution for globalization's issues, arguing instead that:
Answer: Retreating into protectionism would harm groups that benefit from trade.
Dani Rodrik argued that a retreat into protectionism would negatively impact those who benefit from global trade, suggesting it is not the optimal solution for globalization's challenges.
A 2016 study found that free trade generally benefits the poor because:
Answer: They spend a larger proportion of income on goods, reducing costs.
A 2016 study suggests that free trade benefits the poor because they allocate a larger share of their income to goods, and reduced trade costs lower the prices of these essential items.
Why do economists generally favor free trade, according to 'common knowledge'?
Answer: It allows countries to specialize based on comparative advantage, increasing efficiency.
Economists generally favor free trade because it enables countries to specialize according to comparative advantage, leading to enhanced efficiency and potentially greater economic growth.
From 1861 to 1933, U.S. trade policy primarily focused on negotiating reciprocal trade agreements.
Answer: False
The period from 1861 to 1933 in U.S. trade policy was primarily characterized by a focus on protecting domestic industries, not negotiating reciprocal trade agreements.
Historically, tariffs in the United States were solely used for revenue generation.
Answer: False
Historically, tariffs in the United States served multiple purposes, including revenue generation, protection of domestic producers, and securing reciprocity in trade agreements.
The Navigation Acts aimed to make the thirteen North American colonies economically independent.
Answer: False
The Navigation Acts were designed to bolster English maritime trade and control colonial economies, directing most colonial trade through Britain and discouraging economic independence.
During the US Civil War era (1861-1933), average tariffs decreased significantly.
Answer: False
During the period from 1861 to 1933, particularly under Republican dominance, U.S. tariffs generally increased significantly, reflecting a focus on protectionism.
The Smoot-Hawley Tariff Act of 1930 is widely agreed by historians to have been the primary cause of the Great Depression.
Answer: False
While the Smoot-Hawley Tariff Act is debated for its role, it is not widely agreed by historians to have been the primary cause of the Great Depression; its impact is considered more complex, involving retaliatory tariffs and reduced global trade.
The Great Depression led to a shift in US trade policy towards prioritizing protectionism.
Answer: False
The Great Depression prompted a shift in U.S. trade policy away from protectionism towards prioritizing reciprocal trade agreements, particularly with the Democratic Party's rise to power.
During the US revenue period (1790-1860), the Democratic Party generally supported high protective tariffs.
Answer: False
During the U.S. revenue period (1790-1860), the Democratic Party, largely supported by the export-oriented South, generally favored a 'tariff for revenue only' approach and opposed high protective tariffs.
The 'American System', an economic plan from US history, promoted protectionist policies.
Answer: True
The 'American System' was an economic program that advocated for protectionist measures, including tariffs, alongside other policies aimed at fostering domestic industry and infrastructure.
Academic historians widely support the view that tariffs were the primary cause of the American Civil War.
Answer: False
While trade restrictions are sometimes cited as a contributing factor, academic historians generally do not widely support the view that tariffs were the primary cause of the American Civil War.
The Jeffersonian embargo (1807-1809) led to significant economic benefits for the United States.
Answer: False
The Jeffersonian embargo (1807-1809) imposed significant economic costs on the United States, leading to near-autarkic conditions and substantial welfare losses, rather than economic benefits.
The Navigation Acts aimed to bolster English maritime trade and control colonial economies.
Answer: True
The Navigation Acts were enacted with the primary objectives of strengthening English maritime commerce and asserting control over the economic activities of its colonies.
Which era of US trade policy (1790-2016) was primarily characterized by the protection of domestic industries?
Answer: 1861-1933 (Protection)
The period from 1861 to 1933 in U.S. trade policy is characterized by a primary focus on the protection of domestic industries.
Historically, which was NOT a primary purpose of tariffs in U.S. history?
Answer: Subsidizing export industries.
While tariffs served purposes such as revenue generation and import protection, subsidizing export industries was not a primary historical purpose of tariffs in the United States.
What was the main economic impact of the Navigation Acts on the North American colonies?
Answer: They directed most colonial trade through Britain, maintaining dependent economies.
The Navigation Acts primarily directed colonial trade through Britain, thereby maintaining the colonies' economic dependence and limiting their industrial self-sufficiency.
The Smoot-Hawley Tariff Act of 1930 is debated for its role in the Great Depression, but it is generally agreed to have:
Answer: Provoked retaliatory tariffs and reduced global trade.
The Smoot-Hawley Tariff Act of 1930 is generally understood to have provoked retaliatory tariffs from other nations, thereby contributing to a reduction in global trade.
How did the Great Depression influence US trade policy according to the source?
Answer: It led to a shift towards prioritizing reciprocal trade agreements.
Following the Great Depression, U.S. trade policy shifted towards prioritizing the negotiation of reciprocal trade agreements, moving away from earlier protectionist tendencies.
The 'American System' economic plan advocated for policies including:
Answer: Tariffs, a national bank, and infrastructure subsidies.
The 'American System' economic plan promoted protectionist policies such as tariffs, alongside the establishment of a national bank and federal subsidies for infrastructure development.
What historical argument suggests that protectionism was a factor in the American Civil War?
Answer: Trade restrictions were a significant factor leading to the South's secession (though debated by historians).
Some historical arguments suggest that trade restrictions, particularly tariffs, played a role in the secession of Southern states and the subsequent American Civil War, although this view is subject to historical debate.
What was a major consequence of the Jeffersonian embargo (1807-1809) on the United States?
Answer: Near-autarkic conditions and substantial economic costs.
The Jeffersonian embargo (1807-1809) resulted in conditions approaching autarky and imposed considerable economic costs upon the United States.
What was the primary goal of the Navigation Acts enacted in late 17th century England?
Answer: To bolster English maritime trade and control colonial economies.
The primary objective of the Navigation Acts was to strengthen England's maritime trade and assert control over the economic activities of its colonies.
The TRIPS Agreement has been criticized for potentially hindering access to affordable medicines in developing countries.
Answer: True
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has faced criticism for its potential to impede access to affordable medicines, particularly within developing nations.
The proposal for a COVID-19 vaccine waiver at the WTO was universally supported by G7 members.
Answer: False
The proposal for a COVID-19 vaccine waiver at the WTO encountered opposition from G7 members, and a subsequent agreement was significantly watered down.
Historically, mercantilist European states' protectionist policies are argued by some to have contributed to warfare.
Answer: True
The theory posits that the protectionist policies characteristic of mercantilist European states in earlier centuries contributed to frequent international conflicts.
The 19th century in Europe was characterized by a consistent trend towards increasing protectionism.
Answer: False
While the 18th century saw increasing protectionism, the 19th century in Europe was marked by a significant shift towards trade liberalization and free trade principles, although some nations maintained protectionist stances.
The repeal of the Corn Laws in the UK marked a move away from free trade principles.
Answer: False
The repeal of the Corn Laws in 1846 in the United Kingdom signified a decisive move towards free trade principles.
Many Latin American countries adopted protectionist policies after gaining independence in the 19th century.
Answer: True
Following their independence in the 19th century, numerous Latin American nations implemented protectionist policies, often driven by concerns about stifling nascent domestic economies.
Argentina experienced consistent economic stagnation due to its early adoption of free trade policies after independence.
Answer: False
Argentina experienced significant economic growth during a period of trade liberalization from the late 19th century to 1930. Economic stagnation occurred later, following the adoption of extensive protectionist policies.
The late-Victorian climacteric in Britain was partly attributed to increased foreign tariffs reducing export demand.
Answer: True
The economic slowdown in Britain during the late 19th century, known as the late-Victorian climacteric, was partly attributed to rising foreign tariffs that diminished demand for British exports.
The Corn Laws in Britain raised food prices and negatively impacted workers' disposable income.
Answer: True
The Corn Laws imposed tariffs on imported grain, leading to elevated food prices in Britain and consequently reducing the disposable income available to workers for other goods and services.
Research indicates that China's entry into the WTO led to higher prices for US consumers on Chinese goods.
Answer: False
Research suggests that China's accession to the WTO resulted in lower prices for U.S. consumers on Chinese goods, primarily due to increased import competition and efficiency.
The 'grain invasion' of Europe in the late 1870s led to a decrease in European agricultural tariffs.
Answer: False
The 'grain invasion' of Europe in the late 1870s prompted an increase, not a decrease, in European agricultural tariffs as nations sought to protect their domestic farming sectors.
Paul Krugman characterized China's 2010 economic policies as predatory due to its undervalued currency and trade surpluses.
Answer: True
Paul Krugman described China's 2010 economic policies as mercantilist and predatory, citing its practice of maintaining an undervalued currency to generate trade surpluses.
Immediately after the Napoleonic Wars, European trade policies were predominantly protectionist.
Answer: True
In the period immediately following the Napoleonic Wars, European nations largely adopted predominantly protectionist trade policies.
The McKenna Duties imposed during WWI in the UK were found to have decreased output in protected sectors.
Answer: False
The McKenna Duties imposed during WWI in the UK were found to have expanded output in certain protected sectors, such as motorcars and watches.
The Washington Consensus generally advocates for increased trade barriers and protectionism.
Answer: False
The Washington Consensus typically advocates for policies promoting trade liberalization and the reduction of trade barriers, rather than increased protectionism.
Findlay and O'Rourke concluded that protectionist policies in the interwar period had a positive overall effect on the world economy.
Answer: False
Findlay and O'Rourke concluded that protectionist policies during the interwar period generally had a detrimental effect on the global economy.
Critics argue that intellectual property provisions in free trade agreements can act as a form of:
Answer: Protectionism benefiting large corporations.
Critics contend that certain intellectual property provisions within free trade agreements can function as a mechanism of protectionism, disproportionately benefiting large corporations.
What was the core issue regarding the TRIPS Agreement and access to medicines?
Answer: It was criticized for potentially limiting access to affordable medicines in developing countries.
The TRIPS Agreement faced criticism for potentially restricting access to affordable medicines in developing countries, despite provisions for public health flexibilities.
Which historical event is cited as potentially being sparked by British tariffs and taxes, according to one theory?
Answer: The American Revolution
The American Revolution is cited as an example of a historical event potentially sparked by British tariffs and taxes, aligning with theories linking protectionism to conflict.
The repeal of which laws in 1846 marked a significant shift towards free trade in Britain?
Answer: Corn Laws
The repeal of the Corn Laws in 1846 in the United Kingdom represented a pivotal move away from protectionist policies and towards free trade principles.
According to research mentioned in the source, what was a major benefit for US consumers following China's entry into the WTO?
Answer: A substantial reduction in the prices of Chinese goods.
Research indicates that China's entry into the WTO led to a significant decrease in the prices of Chinese goods available to U.S. consumers.
How did Paul Krugman characterize China's economic policies in 2010?
Answer: As mercantilist and predatory, using currency undervaluation.
Paul Krugman characterized China's 2010 economic policies as mercantilist and predatory, specifically noting its use of currency undervaluation to achieve trade surpluses.
What was the general state of European trade policies immediately following the Napoleonic Wars?
Answer: Predominantly protectionist.
In the immediate aftermath of the Napoleonic Wars, European trade policies were overwhelmingly protectionist.
The McKenna Duties in the UK during the interwar period had what effect on certain protected sectors?
Answer: They were found to have expanded output.
The McKenna Duties, retained into the interwar period, were found to have resulted in expanded output within certain protected sectors in the UK.
The 'Washington Consensus' generally recommends policies that include:
Answer: Trade liberalization and reduced trade barriers.
The Washington Consensus typically advocates for economic policies that emphasize trade liberalization and the reduction of trade barriers.
What did Findlay and O'Rourke conclude about the overall economic impact of interwar protectionism?
Answer: It harmed the world economy overall.
Findlay and O'Rourke concluded that protectionist policies implemented during the interwar period had a detrimental overall impact on the global economy.
Dumping occurs when firms sell goods in export markets at prices higher than their domestic prices.
Answer: False
Dumping, in international trade, refers to the practice of selling goods in export markets at prices lower than those charged in the domestic market.
The principle of comparative advantage suggests that countries benefit most from free trade by specializing in goods with lower opportunity costs.
Answer: True
The principle of comparative advantage posits that nations achieve greater overall economic benefit through free trade by specializing in the production of goods and services where they possess a lower opportunity cost.
Deadweight loss in economics refers to gains in welfare resulting from protectionist policies.
Answer: False
In economic analysis, 'deadweight loss' signifies a reduction in overall economic welfare, rather than gains, that results from market distortions such as those introduced by protectionist policies.
What practice does 'dumping' refer to in international trade?
Answer: Selling goods in export markets at prices lower than domestic prices.
Dumping in international trade refers to the practice of selling goods in foreign markets at prices lower than those charged domestically.
Which economic principle suggests countries should specialize in producing goods with lower opportunity costs and benefit from free trade?
Answer: Comparative Advantage
The principle of comparative advantage articulates that countries benefit most from free trade by specializing in goods and services where they have a lower opportunity cost.
What does 'deadweight loss' represent in the context of protectionism?
Answer: A net loss in overall economic welfare that benefits no one.
Deadweight loss, in the context of protectionism, represents a net reduction in overall economic welfare that does not benefit any party within the economy.