chapter 11 - Chapter 11: Controversies in Trade Theory 1....

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Chapter 11: Controversies in Trade Theory 1. The existence of positive externalities due to the impossibility of full appropriability A. Supports the conclusions of the Heckscher-Ohlin model. B. Rejects the usefulness of government protectionism. C. Supports the concept that the government should support only high tech industries. D. Provides support for government protectionism. E. None of the above. Answer: D 2. The United States A. Does not provide more support for R&D as compared to other forms of investment. B. Provides support for R&D by imposing high tariffs on R&D intensive products. C. Provides support for R&D by providing direct subsidies for such activities. D. Provides support for R&D through tax legislation. E. None of the above. Answer: D 3. The Brander-Spencer model identified market failure in certain industries due to A. Unfair competition. B. Wildcat destructive competition. C. Environmental negative externalities associated with pollution. D. Limited competition. E. None of the above. Answer: D 4. In the Brander-Spencer model the subsidy raises profits by more than the subsidy because of A. The "multiplier" effect of government expenditures. B. The military-industrial complex. C. The forward and backward linkage effects of certain industries. D. The deterrent effect of the subsidy on foreign competition. E. None of the above. Answer: D
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5. Criticisms of the Brander-Spencer model include all except which of the following? A. The problem of insufficient information. B. The problem of likely foreign retaliation. C. The problem of harm to interests of consumers. D. The problem of adverse effects of trade policy politics. E. None of the above. Answer: C 6. Japan's protection of its semiconductor (RAM) producers is today seen as an object lesson in A. How strategic planning may backfire and cause a large waste of resources. B. How externalities may be successfully exploited by protectionist policies. C. How excess returns may be successfully exploited by protectionist policies. D. How government intervention may create a meaningful comparative advantage. E. None of the above. Answer: A 7. In today's world markets, poor developing countries tend to rely primarily on exports of A. Agricultural products. B. Primary products. C. Mineral products. D. Manufactured products. E. None of the above. Answer: D 8. In the second half of the 1990s a rapidly growing movement focused on the harm caused by international trade to A. Land owners in poor countries. B. Capital owners in rich industrialized countries. C. Land owners in rich industrialized countries. D. Production workers in both rich and poor countries. E. None of the above.
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Answer: D 9. The Ricardian model of comparative advantage lends support to the argument that A. Trade tends to worsen the conditions of unskilled labor in rich countries. B.
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This note was uploaded on 01/20/2010 for the course BUSINESS A FNC 402 taught by Professor Salaarfarooq during the Summer '09 term at Lahore School of Economics.

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chapter 11 - Chapter 11: Controversies in Trade Theory 1....

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