Which of the following statements about trade policy is true ?

Related Mcqs:

1. When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ?

   A. trade diversion
   B. trade channeling
   C. trade creation and trade diversion
   D. trade creation

2. Which of the following statements about stabilization policy is not true ?

   A. Many economists prefer automatic stabilizers because they affect the economy with a shorter lag than activist stabilization policy
   B. None of these answers are true
   C. Long lags enhance the ability of policy makers to fine tune the economy
   D. When policy makers implement activist stabilization policies there is a significant risk that their policies may actually have a destabilizing effect

3. Concerning a government’s trade policy, all the following generally apply except ?

   A. economic downturn and recession generally result in greater protectionism
   B. because domestic consumers outnumber domestic producer’s policy markers usually enact Free-trade policies to satisfy the consumer majority:
   C. When domestic exporting companies are organized, policy tends to favor freer trade
   D. Policy tends to favor freer trade in countries whose imports are inputs into critical industries

4. An example of a trade policy is ?

   A. A tariff on sugar
   B. All are examples of trade policy
   C. capital flight because it increases a country’s net exports
   D. an increase in the government budget deficit because it reduces a country’s net exports

5. Following World War II the United States and other countries sought to liberalize trade among each other the first major postwar step toward trade liberalization was the ?

   A. General Agreement on Tariffs and Trade
   B. World Trade Organization
   C. Smoot Hawley Organization
   D. McKinley Agreement on Trade policy

6. If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?

   A. an increase in the level of output
   B. a decrease in the unemployment rate
   C. an increase in the rate of inflation
   D. All of these answers

7. According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?

   A. The economy will experience an increase in inflation
   B. The economy will experience a decrease in inflation
   C. Inflation will be unaffected if price expectations are unchanging
   D. None of these answers

8. Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ?

   A. decrease government spending Which the shifts the aggregate demand curve to the left
   B. decrease taxes, which shifts the aggregate demand curve to the right
   C. decrease taxes, which shifts the aggregate demand curve to the left
   D. decrease government spending which shifts the aggregate demand curve to the right

9. In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?

   A. decrease; depreciate
   B. decrease; appreciate
   C. increase; depreciate
   D. increase; appreciate

10. The strongest political pressure for a trade policy that results in higher protectionism comes from?

    A. domestic workers lobbying for import restriction
    B. domestic workers lobbying for export restrictions
    C. domestic consumers lobbying for export restrictions
    D. domestic consumers lobbying for import restrictions