国际经济学理论与政策习题11

Chapter11:ControversiesinTradeTheory

Theexistenceofpositiveexternalitiesduetotheimpossibilityoffullappropriability

SupportstheconclusionsoftheHeckscher-Ohlinmodel.

Rejectstheusefulnessofgovernmentprotectionism.

Supportstheconceptthatthegovernmentshouldsupportonlyhightechindustries.

Providessupportforgovernmentprotectionism.

Noneoftheabove.

Answer:D

TheUnitedStates

DoesnotprovidemoresupportforR&Dascomparedtootherformsofinvestment.

ProvidessupportforR&DbyimposinghightariffsonR&Dintensiveproducts.

ProvidessupportforR&Dbyprovidingdirectsubsidiesforsuchactivities.

ProvidessupportforR&Dthroughtaxlegislation.

Noneoftheabove.

Answer:D

TheBrander-Spencermodelidentifiedmarketfailureincertainindustriesdueto

Unfaircompetition.

Wildcatdestructivecompetition.

Environmentalnegativeexternalitiesassociatedwithpollution.

Limitedcompetition.

Noneoftheabove.

Answer:D

IntheBrander-Spencermodelthesubsidyraisesprofitsbymorethanthesubsidybecauseof

The"multiplier"effectofgovernmentexpenditures.

Themilitary-industrialcomplex.

Theforwardandbackwardlinkageeffectsofcertainindustries.

Thedeterrenteffectofthesubsidyonforeigncompetition.

Noneoftheabove.

Answer:D

CriticismsoftheBrander-Spencermodelincludeallexceptwhichofthefollowing?

Theproblemofinsufficientinformation.

Theproblemoflikelyforeignretaliation.

Theproblemofharmtointerestsofconsumers.

Theproblemofadverseeffectsoftradepolicypolitics.

Noneoftheabove.

Answer:C

Japan'sprotectionofitssemiconductor(RAM)producersistodayseenasanobjectlessonin

Howstrategicplanningmaybackfireandcausealargewasteofresources.

Howexternalitiesmaybesuccessfullyexploitedbyprotectionistpolicies.

Howexcessreturnsmaybesuccessfullyexploitedbyprotectionistpolicies.

Howgovernmentinterventionmaycreateameaningfulcomparativeadvantage.

Noneoftheabove.

Answer:A

Intoday'sworldmarkets,poordevelopingcountriestendtorelyprimarilyonexportsof

Agriculturalproducts.

Primaryproducts.

Mineralproducts.

Manufacturedproducts.

Noneoftheabove.

Answer:D

Inthesecondhalfofthe1990sarapidlygrowingmovementfocusedontheharmcausedbyinternationaltradeto

Landownersinpoorcountries.

Capitalownersinrichindustrializedcountries.

Landownersinrichindustrializedcountries.

Productionworkersinbothrichandpoorcountries.

Noneoftheabove.

Answer:D

TheRicardianmodelofcomparativeadvantagelendssupporttotheargumentthat

Tradetendstoworsentheconditionsofunskilledlaborinrichcountries.

Tradetendstoworsentheconditionsofownersofcapitalinrichcountries.

Tradetendstoworsentheconditionsofworkersinpoorcountries.

Tradetendstoworsentheconditionsofworkersinrichcountries.

Noneoftheabove.

Answer:E

TheHeckscher-Ohlin,factor-proportionsmodellendssupporttotheargumentthat

Tradetendstoworsentheconditionsofunskilledlaborinrichcountries.

Tradetendstoworsentheconditionsofownersofcapitalinrichcountries.

Tradetendstoworsentheconditionsofworkersinpoorcountries.

Tradetendstoworsentheconditionsofworkersinrichcountries.

Noneoftheabove.

Answer:A

Mostdevelopingcountriesopposeincludinglaborstandardsintradeagreementsbecause

Theybelievethiswouldinvolvealossoftheirnationalsovereignty.

Theybelievethiswouldlimittheirabilitytoexporttorichmarkets.

Theybelievethiswouldcreateanunevenplayingfield.

Multinationalcorporationscontrolthem.

Noneoftheabove.

Answer:A

Freetradeandglobalizationisgenerallyargued

Tocauseadegradationintheworld'senvironment.

Toimprovetheenvironmentbycorrectingfordistortionscausedbyimportcompetingpolicies.

Tohelpspreadthebestofeachcountry'sculture,soastoupliftglobalculturalstandards.

Tohelpeachcountrysafeguardthebestofitsownculture.

Noneoftheabove.

Answer:A

Iffirmsinanindustryaregeneratingknowledgethatotherfirmscanusewithpayingforit,thisindustryischaracterizedby

Socialcoststhatexceedprivatecosts.

Socialbenefitsthatexceedprivatebenefits.

Socialcoststhatexceedsocialbenefits.

Privatebenefitsthatexceedsocialbenefits.

Noneoftheabove.

Answer:B

14. Itisarguedthathigh-techindustriestypicallygeneratenewtechnologiesbutcannotfullyappropriatethecommercialbenefitsassociatedwiththeirinventionsordiscoveries.Ifthisistruetheninordertomaximizeacountriesrealincome,thegovernmentshould

Taxthehigh-techfirms.

Subsidizethehigh-techfirms.

Protectthehigh-techfirms.

BothBandC

Noneoftheabove.

Answer:B

Ineffect,theU.S.doessubsidizehigh-techfirmsbysubsidizingR&D.Thisisdonethrough

ThebudgetoftheDepartmentofEducation.

Systematicprotectionthroughthelevyingoftariffs.

SystematicprotectionthroughtheestablishmentofNTBs.

Relativelyaccelerated"depreciation”ofR&DinvestmentintheFederaltaxcodes.

Noneoftheabove.

Answer:D

Thebesteconomiccaseonecanmakeforanactiveindustrialpolicyinvolves

Thenationalsecurityargument.

Thetechnologicalspilloverargument.

Theenvironmentpreservationargument.

Thehighvalueaddedargument.

Noneoftheabove.

Answer:E

SpencerandBrander'smodelhighlightstheexistenceof

Aircraftindustries.

Excessreturnspresentinhighlycompetitivemarkets.

Excessreturns,orrents,availableinnon-competitivemarkets.

Thefutilityofgovernmentbureaucrats'attemptstobuildanairplane.

Noneoftheabove.

Answer:C

SpencerandBrander'smodelhighlightstheconventionalassumptionthat

Governmentinvolvementinbusinessorintheeconomytendstofail.

Governmentsubsidiestendtowastetaxpayer'smoney.

Governmentsubsidiescannotcreateasuccessfullycompetingexport.

GovernmenttendstodistortwhenitdisplacesAdamSmith'sInvisibleHand.

Noneoftheabove.

Answer:E

ThereasonAirbussucceededintheBranderSpencerexampleisthat

Boeingmadethefirstmoveinthisstrategicgame.

Europeanstendtobebetterstrategiststhancorn-fedAmericans.

TheairbusactuallywasabetterplanethantheBoeing747.

U.S.lawsactuallyprohibitU.S.exportersfrombribingforeignofficials.

Noneoftheabove.

Answer:E

ThereasonAirbussucceededintheBranderSpencerexampleisthat

TheEuropeangovernmentmadeanexplicitsubsidyoffer,buttheU.S.governmentdidnot.

Airbus'priceswerebetterwhenadjustedforqualityandwarrantyservices.

Boeingtraditionallyrefusedtoundertakeanyexchangerateriskinitstransactions.

TheU.S.actedinaccordancewithitsideologicalrelianceonmarketsolutions,whereastheEuropeansignoredmarketandtechnologicalfactors.

Noneoftheabove.

Answer:A

Theargumentthatstrategicplanningisnotlikelytobepracticalduetoinsufficientinformationmeansthat

Becauseoftradesecrets,thegovernmentdoesnotknowtruecostrelationshipsinanygivenindustry.

Ifthegovernmenthadalltherelevantinformationinagivenindustrythenitcoulddecidewhetherasubsidywouldenhancethepublic'swelfare.

Evenifthegovernmenthadalltherelevantinformationinagivenindustry,itstillcouldnotdecidewhetherasubsidywouldenhancethepublic'swelfare.

DuetorecentcutsintheDepartmentoftheCensus'samplingbudgets,industrysurveysarenolongerreliable,sothatthereisnowaytodetermineifasubsidyisinthepublic'sinterest.

Noneoftheabove.

Answer:C

Theinvocationofbeggar-thy-neighborargumentswithrespecttoindustrialpolicies

Strengthenstheargumentforsubsidies.

MakessenseiftheinternationalKeynesianmultipliersexceedunity.

Appliesonlytorichcountriesmostofwhosetradepartnersareverypoorcountries.

Weakenstheargumentforsubsidies.

Noneoftheabove.

Answer:D

ThebeliefthatU.S.subsidieswillevokeforeignrepercussionsiscalledthe________argument.

Technologicalspillover

Foreignmultiplier

Beggar-thy-neighbor

Positiveexternality

Noneoftheabove.

Answer:C

WhenJapan'sMITI(MinistryofInternationalTradeandIndustry)focusedresourcesonthesemiconductorindustry,thiswasseenasatypicallysuccessfulJapaneseforayintoanewdynamicstrategicsector.Theresults,asviewedbythelate1990s

Justifiedthisview.

LedtosimilarstructuringofindustrialpolicyintheU.S.

LentsupporttotheBrander-Spencermodel.

HelpedshiftthefocusofeconomistsawayfromJapanese-styleindustrialpolicy.

Noneoftheabove.

Answer:D

25. LowwagesandpoorworkingconditionsinmanyoftheU.S.'tradepartners

Provethatthegains-from-tradeargumentsoftheRicardianmodelarefalse.

Maybeafactoflife,buteconomistsdon'tcare.

ArefactsemphasizedbyU.S.laborinitscontractnegotiations.

Provethatthegains-from-tradeargumentsoftheRicardianmodelaretrue.

Noneoftheabove.

Answer:C

ThefactthatclothingsoldinWal-MartareproducedbyverypoorlypaidworkersinHonduras,isafactthatiftakenintoaccount

WouldprovetoeconomiststhattheRicardianmodelofcomparativeadvantageisfalse.

Wouldprovetoeconomiststhattheequal-valueintradeconceptsummedupinthetradetrianglesisincorrect.

Provestoeconomiststhattradeisanegativesumgame.

ProvestotheAnti-GlobalizationMovementthattradeisanegativesumgame.

Noneoftheabove.

Answer:D

WhentheWTOmetinSeattletoinitiateafurthermovetowardsfreeinternationaltrade,thousandsofactivistsmet

InordertopromotetheWTO'sgoalsof"Trade-notAid".

InordertolaudtheWTOpolicyorientationwhichwouldbustlocalmonopoliesandthereforehelpordinaryrelativelypoorconsumerseverywhere.

InordertolaudtheWTOpolicyofdisallowinggovernmentsweetheartdeals,whichtypicallymeantthatcorruptgovernmentssubsidizedtheirin-laws'conglomeratesonthebacksofpoortaxpayers.

InordertosupporttheWTOeffortsofbringingaboutauniversalshiftofresourcesinpoorcountriestohigherefficiencyandproductivityuses,whichwouldraisetherealincomesofeveryone.

Noneoftheabove.

Answer:E

WhenoneappliestheHeckscher-Ohlinmodeloftradetotheissueoftrade-relatedincomeredistributions,onemustconcludethatNorthSouthtrade,suchasUS.-Mexicotrade,

Musthelplowskillworkersonbothsidesoftheborder.

Islikelytohurthigh-skilledworkersintheU.S.

Islikelytohurtlow-skilledworkersintheU.S.

Islikelytohurtlow-skilledworkersinMexico.

Noneoftheabove.

Answer:C

Theevidenceusuallycitedtoprovethatglobalizationhurtsworkersindevelopingcountries

Isinconclusiveduetopoorstatisticaldesignoftheunderlyingsamples.

IsinconclusiveduetothepoorlyfundedCentralStatisticalOfficeofMexico.

Isinconclusiveduetotheambiguoustheoreticalimplicationsofthefindings.

Isconclusive.

Noneoftheabove.

Answer:C

Facedwiththeevidenceofpoorworkingconditionsandlowwagesinthebordermaquiladoras,Economists

Shrugtheirshouldersandignoretheissue.

Agreethattradetheoryisthusprovenhollowandinternallyinconsistent.

ArguethatU.S.consumersshouldnotconsumelettuce.

ArguethatthepoorconditionsandlowwagesareactuallyimprovementsfortheMexicanworkers,andmaybecitedasgains-from-trade.

Noneoftheabove.

Answer:D

Theproposalthattradeagreementsshouldincludeasystemwhichmonitorsworkerconditionsandmaketheresultsavailabletoconsumersintherichimportingcountry

A. IsconsistentwiththeInvisibleHandparadigm.

Isconsistentwiththemarketfailureapproach.

IsconsistentwiththeRicardiantheoryofcomparativeadvantage.

Isconsistentwiththescaleeconomiesapproachtotradetheory.

Noneoftheabove.

Answer:B

Laborstandardsintradearetypicallyopposedbymostdevelopingcountrieswhobelievethattheywillbeused

Tofurtherneo-imperialistcolonialexploitation.

Tochargethesecountrieswithcrimesagainstchild-laborstandardsattheHague.

Asaprotectionisttoolbyimport-competingproducersinindustrialcountries.

AsameansofspreadingU.S.CorporateValuesanddestroyinglocalcultures.

Noneoftheabove.

Answer:C

TheWTOseemsattimestobeinterferingindomesticpolicysince

Thelinebetweendomesticpoliciesanddefactorprotectionismisoftenfuzzy.

Itisasupra-nationalorganizationwiththepowertooverturngovernments.

Itdetermineswhichnationsmaytradewhatwithwhom.

Itpunishesnaughtynations.

Noneoftheabove.

Answer:A

TheShipbreakersofAlangare

A. AmetaphysicalrepresentationoftheWTO,derivingfromEdgarRiceBurroughs'PrincessofMars.

AnearlyversionoftheRussianIce-breakeroftheDnieper-Alangclass.

Acapital-intensiveindustry.

Competingwithcapital-intensiveindustriesincountriesoutsideofIndia.

Noneoftheabove.

Answer:D

TheShipbreakersofAlangutilizemuchlaborandlittlecapital,therebysupportingtheapplicabilityofthe

Factorproportionsexplanationofthesourcesofcomparativeadvantage.

Specificfactortheoryofcomparativeadvantage.

Monopolisticcompetitiontheoryofcomparativeadvantage.

Scaleeconomiestheoryofcomparativeadvantage.

Noneoftheabove.

Answer:A

TheShipbreakersofAlangarousetheireofGreenpeacebecauseof

India'snon-repentantnuclearstance.

India'simport-competingindustrializationpolicies.

ThedifficultyofavoidingshipaccidentsbetweenGreenpeace'ssailboatandthereconstructedContainershipsofAlang.

ThelargeamountofpollutionassociatedwiththeoperationsatAlang.

Noneoftheabove.

Answer:D

TheShipbreakersofAlangrepresentaperfectexampleofhowadevelopingcountrycanapplytheprinciplesoftheHeckscher-Ohlinmodel,since

Shipbreakingisgenerallyconsideredtobeacapital-intensiveoperationandIndia,beingalargecountryhasmuchcapital.

Shipbreakingisalabor-intensiveoperationinIndia,andIndiahasmanyworkerssinceitissuchalargecountry.

Shipbreakingisalabor-intensiveoperationinIndia,andIndia'savailabilityofcapitalperworkerislessthanthatofitstradepartners.

Shipbreakingisacapital-intensiveoperationelsewhereintheworld,andthereforerepresentsacaseofafactorintensityreversal.

Noneoftheabove.

Answer:C

EssayQuestions

ItmaybearguedthatJapan'sexplicitpromotionofitsmicrochipindustrywasanexcellentexampleofsuccessfulindustrialpolicy.Whatcriteriawouldyouapplytodeterminewhethersuchapolicyisorisnotsuccessful?Judgingfromyourownstatedcriteria,wasJapan'sexercisesucessful?Whyorwhynot?Whatinformationwouldagovernmentrequireinordertoincreasetheprobabilitythatitsindustrialpolicywouldpromotelongtermself-generatedeconomicgrowth?

Answer:ItisarguedthatJapan'ssubsidiestoitsnascientmicrochipindustrywasanimportantfactorinputtingJapanontheworldmapinthisarea.However,aminimalcriteriaforasuccessfulindustrialpolicywouldbethattheinfantindustrymature,andthatitprovetobeaprofitableareaofthecountry'scomparativeadvantage.Inthiscase,onemightarguethatthelatterpartoftheabovestatementwasnotfulfilled,sincethemicrochipindustrywasadoptedbysomanycountries,thatitbecamea"commodity".Thatis,itbecameaproductwithaverylowprofitmargin,whichwasnotreallyagooduseofJapan'sresources,giventheiralternativeuses.

Inrecentcases,theU.S.placedquotasorprotectionisttariffsonimportedsteelandimportedmicrochips.Inbothcasesthedamageto"downstream"industrieswasobvioustoallandrelativelyeasytoquantifyanddemonstrate.AssumingthattheU.S.lawmakersarenotplaindumb,whydidtheyenacttheseprotectionistpolicies?

Answer:Thesystembywhichtheseprotectionistpoliciesaresetintolawisbiasedinfavoroftheproducersofimportcompetitivegoods.OthersectorsoftheeconomythatmaybeaffectedarenotpartiesinthepetitionsmadetotheITCseekingredress.

TheU.S.isprobablythemostopeninternationalmarketamongtheindustrializedcountries.WhatthendoestheU.S.havetogainbyjoiningtheWTO?

Answer:Therearetwoanswers.First,theU.S.exportersstandtogainprofitablemarketsifforeignprotectionisminareasofU.S.comparativeadvantage(e.g.soy)isremovedduetoWTOefforts.ThesecondisthattheWTOofferstheU.S.governmentadministrationacounterweighttoregionalandsectoralinterestsdemandingprotection.Itisalwayspoliticallyeasiertobringaboutmoreefficientresourceallocationsofthecomplaintsofthelosersmaybedeflectedbythepresenceofabindingtreatywithaninternationalorganization("outhandsaretied").

IthasbeenclaimedthattheChineseburstofmodernizationwhichhasbeenpropellingitsmanufacturedexportsthroughouttheworldatanunprecedentedrate,ismadepossiblebytheuseofslave(penal)labor.IfthisistrueshouldChinahavebeenacceptedasafullfledgedmemberoftheWTO?Why(orwhynot)?

Answer:IftheanswertoEssayQuestion#3iscorrect,thenitfollowsthattheanswerhereisYes