How Might the Prisoner's Dilemma from Chapter 9 Apply to Free

question 29

Multiple Choice

How might the Prisoner's Dilemma from Chapter 9 apply to free trade and protectionism?

• A) All states have an incentive to cooperate in free trade policies, and those who do not cooperate are excluded from the global system.
• B) Even though it is in everyone's best interest for all states to have free trade, individual states have an incentive to enact protectionist policies.
• C) Free trade is the most desirable outcome in the global economy; therefore, all states will comply with the global norms of cooperation.
• D) Trade is bad for people who are incarcerated.

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Definitions:

Domestic Demand

The total demand for goods and services within a country, encompassing both consumer and industrial demand.

Tariff Revenue

Income generated by the government from imposing taxes on imported goods, aimed at making foreign products more expensive and protecting domestic industries.

Free Trade

A policy by which governments do not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas.

Domestic Producers

Local manufacturers or producers who create goods and services within a country's borders, contributing to the domestic economy.