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International Economics, 8e (Krugm
an)
Chapter 11 Controversies in Trade Policy
1) The existence of positive externalities due to the impossibility of full appropriability
A supports the conclusions of the Heckscher-Ohlin model.
)
B) rejects the usefulness of government protectionism.
C supports the concept that the government should support only high tech industries.
)
D provides support for government protectionism.
)
E) None of the above.
Answe D
r:
2) The United States
A does not provide more support for RD as compared to other forms of investment.
)
B) provides support for RD by imposing high tariffs on RD intensive products.
C provides support for RD by providing direct subsidies for such activities.
)
D provides support for RD through tax legislation.
)
E) None of the above.
Answe D
r:
3) The Brander-Spencer model identified market failure in certain industries due to
A unfair competition.
)
B) wildcat destructive competition.
C environmental negative externalities associated with pollution.
)
D limited competition.
)
E) None of the above.
1
Answe D
r:
4) In the Brander-Spencer model the subsidy raises profits by more than the subsidy because
of
A the multiplier effect of government expenditures.
)
B) the military-industrial complex.
C the forward and backward linkage effects of certain industries.
)
D the deterrent effect of the subsidy on foreign competit
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