Which of the Following Is True of Government Interventions in a Country's

question 28

Multiple Choice

Which of the following is true of government interventions in a country's trade practices?

• A)A major economic motive behind government intervention in trade is the protection of jobs.
• B)A major political motive behind government intervention in trade is the protection of infant industries.
• C)Government interventions help companies take advantage of economies of scale and be the first movers in their industries.
• D)Governments intervene to protect only imports,as the protection of exports is handled by private agencies.

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Definitions:

Expansionary Gap

A condition where an economy's real GDP exceeds its potential GDP, leading to inflationary pressures.

Recessionary Gap

A situation where the real Gross Domestic Product (GDP) is lower than the potential GDP, indicating an economy operating below its full capacity.

Potential Output

The highest level of output of products and services an economy can achieve when all its resources are employed optimally.

Expansionary Gap

A situation where the actual output of an economy exceeds the potential output, typically indicating inflationary pressures.