Which of the following are reasons economists consider valid for trade protection?
I. Protection penalizes countries that have weak environmental standards.
II. Protection limits dumping of low-wage jobs into the domestic economy.
III. Protection prevents low-wage jobs in foreign countries from lowering wages in the United States.
A) I and II
B) II and III
C) I, II, and III
D) none of the above
D
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According to Professor Baotai Wang who examined the crowding out phenomenon in Canada between 1961-2000, as discussed in the Case in Point, expenditures for protection of persons and property
A) involve no crowding out. B) may involve some crowding out, but they also stimulated private investment by firms winning government contracts for defense purchases. C) stimulate aggregate demand and aggregate supply. D) may involve some crowding out, which is offset by the strong supply-side effects they generate.
A central bank like the Federal Reserve in the United States can help banks survive a bank run by
A) raising the discount rate. B) acting as a lender of last resort. C) printing money. D) increasing the required reserve ratio.