• A central policy lesson of the principle of comparative advantage is that a nations gains from international trade:

if it is larger than its trading partners

by producing those goods for which it is relatively more efficient than other nations

by generating larger export surpluses

if GDP grows by more than 5% a quarter

• The current round of the trade negotiations of the World Trade Organization is:

the Doha round

the escape clause

the trade promotion authority

the Tokyo round

• When a nation can produce more of a product in a labor hour than another nation, that nation is said to have:

a.comparative advantage in the production of the product

b.diminishing marginal returns for the product

c.absolute advantage in the production of the product

d.lower opportunity cost of producing the product

• The infant industry argument:

is a tax break offered to multinational enterprises to encourage investment

is a retaliatory measure enacted by the World Trade Organization

is an educational subsidy designed to promote pre-school programs

supports offering shortrun protection for developing industries

• The basis for trade tells us:

which products a nation should produce based upon the principle of comparative advantage

why nations export and import certain products

what policies within a nation help to encourage trade

how open a nation is in comparison to its trading partners

• Placing a tariff on imported steel results in the following for the country placing the tariff:

a.improving terms of trade and rising volume of trade

b.higher steel prices

c.lower profits for domestic steel companies

d.higher unemployment for domestic steel workers

• A tariff that is calculated based upon a fixed percentage of the value of a good is known as:

a quota tariff

a specific tariff

an ad valoremtariff

a compound tariff

• Globalizationhas been driven by all of the followingexcept:

access to information

cultural norms

technology

speedy transportation