A Common Argument in Favor of Restricting International Trade in Good

question 21

Multiple Choice

A common argument in favor of restricting international trade in good x is based on the premise that

• A)international trade reduces total surplus in countries that export good x.
• B)international trade reduces total surplus in countries that import good x.
• C)international trade is desirable only when countries with different domestic supplies of natural resources play by different rules when trading with one another.
• D)trade restrictions can be useful when one country bargains with its trading partners.

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Definitions:

Taxes

Compulsory financial charges or levies imposed upon an individual or an organization by a governmental entity to fund various public expenditures.

Real GDP

The measure of the value of economic output adjusted for price changes (inflation or deflation), which reflects the real quantity of goods and services produced.

Stagflation

A situation in economic where slow economic growth and high unemployment occur simultaneously with rising prices (inflation).

Aggregate Demand

Total pull for goods and services in an economy, measured at a specific wide price level during a prescribed time scope.