POSC 2601 FINAL EXAM QUESTIONS &ANSWERS
The world economy is _________ integrated on a global scale, generating wealth at an
___________ pace. - Answer -Increasingly; Accelerating
A _________ would agree that a government's most useful role is to interfere in
economics only to regulate markets in order to help them function efficiently. That is,
politics should serve the interests of economic efficiency. - Answer -Liberal
Liberals like free trade and free markets.
T/F: In the free market, governments set the prices of goods and services - Answer -
False
Supply and Demand to determine the prices of goods and services.
"The creation of wealth underlies state power. Economics should serve politics" is a
statement in line with _______. - Answer -Mercantilism
The sources of backlash against free trade agreements are unlikely to include
__________. - Answer -Exporting firms
Exporting firms tend to have comparative advantage
Comparative Advantage - Answer -Produce goods more cheaply than other trading
partners
Applying quotas on imports is a policy that would be followed by a __________. -
Answer -Protectionist State
Quotas = Protectionist
What are two types of protectionist policies? - Answer -1. Tariffs
2. Non-tariff barriers
Quotas, Subsidies, Other Restrictions and Regulations
A unilateral method of protecting domestic producers from ___________ by imposing a
limit on the maximum volume of allowable imports is known as a quota. - Answer -
Foreign Competition
Tax breaks, loans, and guaranteed high prices are examples of what type of
protectionism? - Answer -Subsidies
Subsidies - Answer -Payments by a government to a domestic industry
, What are the four objectives of protectionism? - Answer -1. Cater to the demands of
important domestic industries and interests
2. Protect infant industries
3. Protect interests and industries that are vital to national security
4. Defend against predatory practices
Protectionism hurts an economy in which way? - Answer -consumers usually pay
higher prices for products
Protectionism hurts consumers
The balence of trade is the value of a state's imports relative to its _________. -
Answer -Exports
T/F: Comparative advantage is when states try to produce everything it needs by itself -
Answer -False Autarky
Autarky - Answer -A policy of self-reliance, where trade only occurs in one's own state.
Autarkic states tend to exhibit what type of growth? - Answer -Low
When states specialize in producing the goods that they produce best and trading for
goods that other states are better at producing, they are operating according to
____________. - Answer -The comparative advantage
T/F: When national endowments are scarce, prices of goods from those national
endowments are cheap. - Answer -False
No Supply = Expensive
Abundant Supply = Cheap
What are the three types of economic pressure? - Answer -Economic sanctions
Economic warfare
Trade wars
T/F: "Smart" sanctions are when states target individuals and groups over the entire
states. - Answer -True
What is an example of a sanction? - Answer -Embargo
Tariff
Non-tariff barrier
non-tariff barriers - Answer -Indirect tariff; things like regulations, conditions, formalities.
T/F: Sanctions can create a rally-around-the-flag effect - Answer -True
The world economy is _________ integrated on a global scale, generating wealth at an
___________ pace. - Answer -Increasingly; Accelerating
A _________ would agree that a government's most useful role is to interfere in
economics only to regulate markets in order to help them function efficiently. That is,
politics should serve the interests of economic efficiency. - Answer -Liberal
Liberals like free trade and free markets.
T/F: In the free market, governments set the prices of goods and services - Answer -
False
Supply and Demand to determine the prices of goods and services.
"The creation of wealth underlies state power. Economics should serve politics" is a
statement in line with _______. - Answer -Mercantilism
The sources of backlash against free trade agreements are unlikely to include
__________. - Answer -Exporting firms
Exporting firms tend to have comparative advantage
Comparative Advantage - Answer -Produce goods more cheaply than other trading
partners
Applying quotas on imports is a policy that would be followed by a __________. -
Answer -Protectionist State
Quotas = Protectionist
What are two types of protectionist policies? - Answer -1. Tariffs
2. Non-tariff barriers
Quotas, Subsidies, Other Restrictions and Regulations
A unilateral method of protecting domestic producers from ___________ by imposing a
limit on the maximum volume of allowable imports is known as a quota. - Answer -
Foreign Competition
Tax breaks, loans, and guaranteed high prices are examples of what type of
protectionism? - Answer -Subsidies
Subsidies - Answer -Payments by a government to a domestic industry
, What are the four objectives of protectionism? - Answer -1. Cater to the demands of
important domestic industries and interests
2. Protect infant industries
3. Protect interests and industries that are vital to national security
4. Defend against predatory practices
Protectionism hurts an economy in which way? - Answer -consumers usually pay
higher prices for products
Protectionism hurts consumers
The balence of trade is the value of a state's imports relative to its _________. -
Answer -Exports
T/F: Comparative advantage is when states try to produce everything it needs by itself -
Answer -False Autarky
Autarky - Answer -A policy of self-reliance, where trade only occurs in one's own state.
Autarkic states tend to exhibit what type of growth? - Answer -Low
When states specialize in producing the goods that they produce best and trading for
goods that other states are better at producing, they are operating according to
____________. - Answer -The comparative advantage
T/F: When national endowments are scarce, prices of goods from those national
endowments are cheap. - Answer -False
No Supply = Expensive
Abundant Supply = Cheap
What are the three types of economic pressure? - Answer -Economic sanctions
Economic warfare
Trade wars
T/F: "Smart" sanctions are when states target individuals and groups over the entire
states. - Answer -True
What is an example of a sanction? - Answer -Embargo
Tariff
Non-tariff barrier
non-tariff barriers - Answer -Indirect tariff; things like regulations, conditions, formalities.
T/F: Sanctions can create a rally-around-the-flag effect - Answer -True
