POSC 2601 Final Exam Questions with
100% Correct Answers
Mercantilism Correct Answer: the belief that each state must protect its own
interests at the expense of others
According to mercantilism, does trade follow politics or does politics follow
trade? Correct Answer: trade follows politics
Is mercantilism conflictual or cooperative? Correct Answer: conflictual
Does mercantilism focus on relative or absolute gains? Correct Answer: relative
Key actors according to mercantilism Correct Answer: economic transactions to
build up military power
Policy prescriptions and mercantilism Correct Answer: - favor national economic
policies to create a trade surplus
- protectionism
Liberalism Correct Answer: the belief that by building international organizations,
norms, and institutions, states can mutually benefit from economic exchanges
According to liberalism, does trade follow politics or does politics follow trade?
Correct Answer: politics follows trade
Is liberalism conflictual or cooperative? Correct Answer: cooperative
Does liberalism focus on relative or absolute gains? Correct Answer: absolute
Key actors of liberalism Correct Answer: individual households and firms
, Policy prescriptions and liberalism Correct Answer: - government shouldn't
intervene except to regulate markets t help them function efficiently
- free markets and free trade
Free market and the "invisible hand" Correct Answer: according to liberalism,
without government interference, the "invisible hand" of supply and demand will
work out the mot efficient patterns of production, exchange, and consumption
Free trade Correct Answer: - the flow of goods/services across national
boundaries unimpeded by tariffs/other restrictions
- allocates global resources to states that have the greatest comparative
advantage in producing each kind of commodity so prices are lower overall
and more consistent worldwide
Comparative advantage Correct Answer: - states should specialize in trading
goods that they produce with the greatest relative efficiency and at the lowest
relative cost to maximize the overall creation of wealth
- division of labor/specialization
Comparative advantage and national endowments Correct Answer:
foundation of trade rely on each state having different national endowments
Autarky Correct Answer: - a policy of self-reliance by avoiding/minimizing trade
and trying to produce everything one needs by oneself
- ineffective because states pay a lot to produce goods for which they don't
have a comparative advantage --> relative power falls
Problems of free trade Correct Answer: creates winners/losers, long-term
benefits create short-term costs
100% Correct Answers
Mercantilism Correct Answer: the belief that each state must protect its own
interests at the expense of others
According to mercantilism, does trade follow politics or does politics follow
trade? Correct Answer: trade follows politics
Is mercantilism conflictual or cooperative? Correct Answer: conflictual
Does mercantilism focus on relative or absolute gains? Correct Answer: relative
Key actors according to mercantilism Correct Answer: economic transactions to
build up military power
Policy prescriptions and mercantilism Correct Answer: - favor national economic
policies to create a trade surplus
- protectionism
Liberalism Correct Answer: the belief that by building international organizations,
norms, and institutions, states can mutually benefit from economic exchanges
According to liberalism, does trade follow politics or does politics follow trade?
Correct Answer: politics follows trade
Is liberalism conflictual or cooperative? Correct Answer: cooperative
Does liberalism focus on relative or absolute gains? Correct Answer: absolute
Key actors of liberalism Correct Answer: individual households and firms
, Policy prescriptions and liberalism Correct Answer: - government shouldn't
intervene except to regulate markets t help them function efficiently
- free markets and free trade
Free market and the "invisible hand" Correct Answer: according to liberalism,
without government interference, the "invisible hand" of supply and demand will
work out the mot efficient patterns of production, exchange, and consumption
Free trade Correct Answer: - the flow of goods/services across national
boundaries unimpeded by tariffs/other restrictions
- allocates global resources to states that have the greatest comparative
advantage in producing each kind of commodity so prices are lower overall
and more consistent worldwide
Comparative advantage Correct Answer: - states should specialize in trading
goods that they produce with the greatest relative efficiency and at the lowest
relative cost to maximize the overall creation of wealth
- division of labor/specialization
Comparative advantage and national endowments Correct Answer:
foundation of trade rely on each state having different national endowments
Autarky Correct Answer: - a policy of self-reliance by avoiding/minimizing trade
and trying to produce everything one needs by oneself
- ineffective because states pay a lot to produce goods for which they don't
have a comparative advantage --> relative power falls
Problems of free trade Correct Answer: creates winners/losers, long-term
benefits create short-term costs
