Protectionist measures are enacted because they: A. allow countries to preserve

Question

Protectionist measures are enacted because they:

A. allow countries to preserve culturally important ways of life at very low cost.

B. typically benefit a large number of people at a cost to only a very small number.

C. typically benefit a small number of people greatly and impose small costs on a large number of people.

D. make everyone in an economy better off.

E. preserve a nation’s critical natural resources.

Restrictions on imports of foreign steel into the U.S. will:

A. help both U.S. steel producers and U.S. automobile producers.

B. help U.S. steel producers and hurt U.S. automobile producers.

C. hurt U.S. automobile producers, but help U.S. automobile consumers.

D. hurt foreign steel producers and help U.S. steel consumers.

E. help both U.S. steel producers and foreign steel producers.

Say that the exchange rate between the U.S. dollar and the Melnik bop is expressed in terms of bops per dollar. All of the following will cause this exchange rate to rise, ceteris paribus, except for:

A. an increase in Melnik residents’ demand for U.S.-made cigarettes.

B. a big increase in the number of American tourists visiting the beautiful archeological sites of Melnik.

C. a decrease in interest rates in the U.S.

D. an increase in U.S. demand for intricate carvings made exclusively by artists in Melnik.

E. an increase in interest rates in Melnik.

Which of the following transactions would be recorded as a credit in the U.S. current account?

A. A Mexican bank’s purchase of Microsoft stock (Microsoft is an American-owned firm)

B. An American tourist’s payment to a Mexican hotel

C. A Mexican consumer’s purchase of a computer produced in the U.S. by a U.S. firm

D. An American consumer’s purchase of a Mexican-made VCR

E. A German citizen’s receipt of a $50 dividend check on shares of stock she owns in a U.S. corporation

Explanation / Answer

Q1. It has been seen that protectionist measures with respect to foriegn trade are generally enacted by countries under lobbying by a particular industry.

Such protectionist measures provides benefit to a great deal to such industry but the cost of such measures is so widely distributed that a very large number of persons bears small cost.

Thus, protectionist measures are enacted because they typically benefit a small number of people greatly and impose small costs on a large number of people.

Hence, the correct answer is option (C).

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