Ch. 3 (Pros and Cons of Free Trade)

Question 1

Pro of free trade (1/5)

Answer 1

the global market contains more than 7 billion potential customers for good and services

Question 2

Pro of free trade (2/5)

Answer 2

productivity improves when countries produce goods and services in which they have a comparative advantage

Question 3

Pro of free trade (3/5)

Answer 3

global competition and less-costly imports keep prices down, so inflation does not curtail economic growth

Question 4

Pro of free trade (4/5)

Answer 4

free trade inspires innovation for new products and keeps firms competitively challenged

Question 5

Pro of free trade (5/5)

Answer 5

the uninterrupted flow of capital gives countries access to foreign investments, which helps keep interest rates low

Question 6

Con of free trade (1/4)

Answer 6

domestic workers (particularly in manufacturing-based jobs) can lose their jobs due to increased imports or production shifts to low-wage global markets

Question 7

Cons of free trade (2/4)

Answer 7

workers may be forced to accept pay cuts from employers who can threaten to move their jobs to lower-cost global markets

Question 8

Con of free trade (3/4)

Answer 8

moving operations overseas because of intense competitive pressure often means the loss of service jobs and white-collar jobs

Question 9

Con of free trading (4/4)

Answer 9

domestic companies can lose their comparative advantage when competitors build advanced production operations in low-wage countries