One Reason for the Success That Firms Have in Getting

question 128

Multiple Choice

One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify.Which of the following is a second reason?

• A)The costs that tariffs and quotas impose on consumers are large in total but relatively small per person.
• B)People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote.
• C)Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers.
• D)The benefits from free trade are less than the costs.

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Definitions:

Par Value

The face value of a bond or stock, as designated by the issuing company, which may not reflect the market value.

Premium

An amount paid for an insurance policy, or the cost above the nominal or face value of a financial instrument.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which is the value written on the face of the security.

Interest Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates.