2 - Chapter 2 Foundations of Modern Trade Theory CHAPTER 2...

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Chapter 2: Foundations of Modern Trade Theory CHAPTER 2 FOUNDATIONS OF MODERN TRADE THEORY MULTIPLE-CHOICE QUESTIONS 1. The mercantilists would have objected to: a. Export promotion policies initiated by the government b. The use of tariffs or quotas to restrict imports c. Trade policies designed to accumulate gold and other precious metals d. International trade based on open markets 2. Unlike the mercantilists, Adam Smith maintained that: 3. The trading principle formulated by Adam Smith maintained that: 4. Unlike Adam Smith, David Ricardo’s trading principle emphasizes the: 5. When a nation requires fewer resources than another nation to produce a product, the nation is said to have a (an): a. Absolute advantage in the production of the product b. Comparative advantage in the production of the product c. Lower marginal rate of transformation for the product d. Lower opportunity cost of producing the product 1
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