Recently There Have Been Violent Protests Against the World Bank

question 166

Multiple Choice

Recently there have been violent protests against the World Bank and the World Trade Organization. The protesters argue that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contend that these practices make rich countries richer and poor countries poorer. How would economists feel about these protesters' views?

• A) They would disagree with the protesters because these practices will help make both rich and poor countries richer.
• B) They would disagree with the protesters about free trade, but would agree with the protesters about corporate investment.
• C) They would disagree with the protesters about corporate investment, but would agree with the protesters about free trade.
• D) They would disagree with the protesters about free trade and corporations, but would agree that these institutions are not necessary.

---

Definitions:

Explicit Costs

Direct, out-of-pocket payments for wages, rent, materials, and other inputs necessary for a business to operate.

Economic Profit

The distinction between gross revenue and total expenditures, inclusive of both explicit and latent costs.

Normal Rate

Typically refers to a benchmark interest rate considered to be standard based on historical averages, often used by central banks.

Market Period

The short timeframe in which the supply of a good is fixed, typically because production cannot be adjusted quickly in response to changes in demand.