The loss of jobs due to international trade is often

51.The loss of jobs due to international trade is often: A.more visible than the decline in consumer prices due to international trade. B.less visible than…

51.The loss of jobs due to international trade is often:

A.more visible than the decline in consumer prices due to international trade.

B.less visible than the decline in prices due to international trade.

C.greater than the benefit of trade in the form of decline in prices.

D.spread across all sectors while decline in prices is concentrated in one sector.

See the text for the four reasons laypeople and economists differ in their views of trade. The loss of jobs is concentrated in the tradable sector in particular industries and therefore more visible than the decline in prices enjoyed by many consumers.

52.When considering outsourcing, most laypeople:

A.recognize its benefits to raising foreign wages.

B.oppose it because of the visible loss of jobs.

C.support it because they enjoy lower consumer prices.

D.recognize it frees resources for other jobs for which the U.S. has a comparative advantage.

See the text for the four reasons laypeople and economists differ in their views of trade. Most people focus on the visible loss of jobs concentrated in the tradable sector rather than the benefits of lower prices spread across many consumers.

53.Most economists:

A.focus on the costs of international trade and discount its benefits in lower consumer prices.

B.include the effects of trade on the distribution of income.

C.recognize both the costs of international trade in lost jobs and the benefits in terms of lower prices.

D.support free trade because it raises the wages of those in countries who can hardly meet their basic needs.

See the text for the four reasons laypeople and economists differ in their views of trade. Economists try to include all costs and benefits of international trade, including its effect on lower consumer prices that are less visible, but enjoyed by consumers.

54.Most laypeople:

A.fear that the United States is losing its comparative advantage in all goods.

B.don’t see the effect of trade on the distribution of income.

C.recognize both the costs of international trade in lost jobs and the benefits in terms of lower prices.

D.recognize that if China has a comparative advantage in one good, the United States has a comparative advantage in another good.

See the text for the four reasons laypeople and economists differ in their views of trade. Laypeople tend to believe the United States is losing comparative advantage in all goods and that eventually the United States will be left with no jobs.

55.The fact that the United States has a trade deficit means that:

A.the United States is producing more than it is consuming.

B.foreign countries can have comparative advantages in all goods.

C.foreign countries can have comparative advantages in more goods compared to the United States.

D.the United States is lending more to foreign countries than it is borrowing from foreign countries.

A trade deficit means that the United States is consuming more than it is producing. The comparative advantage model assumes that there is no trade deficit or surplus. Since there is a trade deficit, foreign countries can have more comparative advantages compared to the United States as long as they are willing to buy U.S. assets or lend to the United States to pay for those imports.

56.When countries decide they will no longer buy U.S. assets or lend to the United States:

A.adjustments will be set in motion to equalize comparative advantages.

B.adjustments will be set in motion so that the U.S. has more comparative advantages.

C.the United States can begin to run a trade deficit.

D.The is no reason foreign countries will not want to buy more U.S. assets than the U.S. buys of foreign assets.

The trade deficit is supported by foreign countries’ willingness to buy U.S. assets and lend to the United States. Once that ends, the U.S. will have to find a way to increase exports and decrease exports. This means that comparative advantages will have to equalize.

57.Economists:

A.are not concerned with the distributional effects of trade.

B.cannot measure the distributional effects of trade.

C.do not generally include the distributional effects of trade in their models.

D.disagree with laypeople that the distributional effects of trade are important.

Economists do recognize the distributional effects of trade. The standard models don’t take these effects into account. The government collects data on the distribution of income.

58.What percent of all jobs in the United States are in manufacturing?

A.10 percent.

B.30 percent.

C.50 percent.

D.70 percent.

About 25 percent of jobs were in manufacturing in the 1970s. Today only 10 percent are in manufacturing.

59.Which of the following puts downward pressure on U.S. manufacturing wages?

A.A declining value of the dollar.

B.Rising foreign wages.

C.Technological innovation.

D.Immigration.

Immigration increases the supply of workers, which lowers wages. A declining value of the dollar would make U.S. goods more competitive, which would put upward pressure on U.S. wages.

60.The group that benefited the most from international trade has been people who:

A.financed international trade.

B.managed firms.

C.owners of firms.

D.No one has benefited.

The United States has a comparative advantage in facilitating trade, including its financing. This is why incomes have gone up in this sector. While those who manage and own firms might have seen their incomes rise, this was largely true in firms that finance trade. It was largely not true for firms that manufactured tradable goods.
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