Economics of Protectionism and Comparative Advantage

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Questions and Answers

According to Fajgelbaum et al. (2019), which sectors were most negatively affected by retaliatory tariffs?

Sectors concentrated in Democratic-leaning counties

Sectors concentrated in politically competitive counties

Sectors concentrated in Republican-leaning counties (correct)

Sectors concentrated in counties with high levels of trade activity

Which of the following is NOT a factor that can influence a country's long-run comparative advantage?

Resource endowments

Skills

Political climate (correct)

Investment in specific technologies

Investment in specific skills

What is the main argument presented by the author regarding the impact of protectionism on the economy?

Protectionism is beneficial for the U.S. economy, but harmful for the global economy.

Protectionism can be a useful tool for governments to protect domestic businesses, but it should be used cautiously.

Protectionism leads to an overall positive impact on the economy by protecting domestic industries from foreign competition.

Protectionism can negatively affect the economy in the long run, even though it may benefit certain industries in the short term. (correct)

Protectionism has a positive impact on the economy by promoting fair trade and reducing the risk of trade wars.

Protectionism has minimal impact on the economy, as the market will ultimately adjust to any changes in trade policy.

What is the key difference between traditional mathematical theories of comparative advantage and the author's perspective on the dynamic nature of comparative advantage?

Traditional theories view factors like resources and skills as fixed, while the author recognizes their evolution over time. Signup and view all the answers

How can a country increase its long-run comparative advantage?

Investing in education and training for its workforce Signup and view all the answers

What does the author say about the impact of Chinese retaliation on the U.S. economy?

Chinese retaliation primarily targeted agricultural sectors, disproportionately affecting Republican-leaning counties. Signup and view all the answers

What is the main argument presented about the distributional consequences of protectionism?

Protectionism benefits high-skilled labor in the short run, but harms low-skilled labor in the long run. Signup and view all the answers

What is the author's main point about the impact of globalization on comparative advantage?

Globalization has led to a dynamic shift in comparative advantage due to changes in technology and education. Signup and view all the answers

What is the primary responsibility of businesses in a free economy, according to Milton Friedman?

To maximize profits while abiding by legal and ethical regulations. Signup and view all the answers

What is a key distinction between 'anywheres' and 'somewheres' when it comes to globalization?

'Anywheres' are more supportive of globalization, while 'somewheres' are more wary of its consequences. Signup and view all the answers

What is the author's argument regarding the 'culture wars' in Western countries?

The 'culture wars' are fueled by the contrasting views of 'anywheres' and 'somewheres' on globalization. Signup and view all the answers

How can the 'Heckscher–Ohlin model' be used to understand the effects of a US-China trade war?

It can help determine the specific winners and losers in the US economy from a trade war. Signup and view all the answers

How does a unilateral imposition of tariffs by the US on Chinese imports affect the US economy?

It results in a decrease in US consumption and an increase in overall income. Signup and view all the answers

What is the primary reason why China retaliated by imposing tariffs on US imports in a US-China trade war?

To protect Chinese domestic industries from competition. Signup and view all the answers

Which of the following is NOT a potential consequence of a trade war between the US and China, as described in the text?

Increased economic interdependence between the two countries. Signup and view all the answers

What is the main argument of the text regarding the relationship between globalization and the rise of Donald Trump?

Trump's policies were designed to dismantle globalization, addressing the concerns of those who felt left behind by its effects. Signup and view all the answers

What is the author's perspective on the 'anywheres' and their lack of interest in the 'somewheres'?

The author critiques the 'anywheres' self-absorbed nature as contributing to the rise of tribalism and 'culture wars'. Signup and view all the answers

What characterizes the legal system described in medieval Europe?

Privately produced, adjudicated, and enforced rules Signup and view all the answers

What is a critical component of private property according to the provided content?

Self-ownership Signup and view all the answers

In what way does self-ownership limit contractual freedom?

By prohibiting sales into slavery Signup and view all the answers

What are the traditional functions of money?

Medium of exchange, unit of accounting, and storing value Signup and view all the answers

How does money facilitate transactions compared to a barter economy?

By avoiding the double coincidence of want Signup and view all the answers

What role did dried cod play during the Middle Ages and the Age of Discovery?

It served as a crucial non-perishable food for mariners. Signup and view all the answers

What is true about the intrinsic value of money?

Money has no intrinsic value and symbolizes an abstract promise Signup and view all the answers

What major achievement is money recognized for in human history?

Introducing an abstract medium of exchange Signup and view all the answers

How much of the fish consumed in Europe was cod for about 250 years?

60% Signup and view all the answers

What problem does the use of money solve in transactions?

It reduces the need for coincidental wants Signup and view all the answers

What was one of the causes for international conflict over cod fishing in the early 1600s?

Nations attempting to monopolize fishing grounds. Signup and view all the answers

What significant change occurred in the 1970s regarding the Atlantic northwest cod fishery?

A complete collapse of the fishery began. Signup and view all the answers

What does the 2008 UN report suggest about the world’s fishing fleet?

It could be halved with no loss in catch. Signup and view all the answers

What misconception persisted about cod populations for a long time?

Human activities could not negatively impact cod species. Signup and view all the answers

What was the condition of the Northern Cod biomass in the summer of 1992?

It had fallen to 1% of its earlier level. Signup and view all the answers

Which fishery experienced a crash in the 1970s due to overfishing aside from cod?

Peruvian coastal anchovy fisheries. Signup and view all the answers

What is the main idea of the first digression? (Select all that apply)

Economics is not the only field to address scarcity. Signup and view all the answers

What is one implication of the digression regarding the study of scarcity?

Economics must consider how other disciplines approach scarcity to avoid duplication of effort. Signup and view all the answers

Which of the following statements is NOT explicitly stated in the excerpt?

Economics is a social science concerned with scarcity. Signup and view all the answers

Which of the following could be a potential topic for further exploration in the context of 'increasing means or increasing autonomy' explored in this digression?

The relationship between economic growth and individual freedom. Signup and view all the answers

What is the author's likely stance on the relationship between economics and scarcity?

Scarcity is a central concept in economics but not unique to the discipline. Signup and view all the answers

Which of the following describes the author's tone in the digression?

Objective and informative. Signup and view all the answers

What is the main point that the author is trying to convey in this digression?

Economics has no monopoly on the study of scarcity. Signup and view all the answers

Which of the following is a possible implication of the author's statement regarding scarcity and economics?

Economists should collaborate with scholars from other disciplines to study scarcity. Signup and view all the answers

In this digression, the author uses the phrase 'no monopoly on scarcity.' What effect does this choice of words likely have?

It emphasizes that economics is not the only field that studies scarcity. Signup and view all the answers

What is the author's likely intention by suggesting that economics has no monopoly on the study of scarcity?

To promote interdisciplinary collaboration in the study of scarcity. Signup and view all the answers

Study Notes

Microeconomics Digressions Compilation 2025

The compilation is a collection of microeconomics digressions for the year 2025.
The document contains a table of contents listing each digression and its corresponding page number.
Digressions range from increasing means or increasing autonomy to firms as production functions.
Each digression explores a specific economic concept or issue.
Examples of digression topics include: Increasing Means or Increasing Autonomy?, Generosity for Nerds: Opportunity Costs and Donations, Homo Oeconomicus, Transcending Reason, Heckscher-Ohlin and the Losers of Globalization.
Digressions cover a wide array of topics, from ethical considerations in profit maximization to mathematical economic concepts such as Nash Equilibrium, and the role of public space in democratic processes.
Digressions delve into concepts such as the limitations of profit maximization, sunk costs, price discrimination in the digital age, and the role of public space in democracy.
Some specific content covered includes the idea of opportunity costs, different approaches to scarcity and different economic systems like Buddhism, the concept of homo economicus, property rights enforcement, self-ownership, and the concept of money.
The compilation also explores modern economic concepts like externalities, pollination services, and the existence of a Nash Equilibrium.

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Description

This quiz explores key concepts from economic theories regarding protectionism, retaliation tariffs, and comparative advantage, as discussed by Fajgelbaum et al. (2019). It examines the impact of global trade dynamics on various sectors and the long-run factors that influence a country's competitive edge. Test your understanding of how these concepts interact within the global economy.