Advocates of industrial policy maintain that government should ?
Correct answer: B. grant subsidies to firms offering potential comparative advantage
- A. pursue free trade as a policy that leads to maximum global efficiency
- B. grant subsidies to firms offering potential comparative advantage
- C. provide loans to domestic workers in exporting industries
- D. increase interest rates on loans made to firms in import-competing industries
Explanation
Industrial-policy advocates support government assistance to industries believed capable of developing comparative advantage, commonly through targeted subsidies. Free trade advocates, rather than industrial-policy advocates, emphasize maximum global efficiency without such intervention.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
By adjusting the model of comparative advantage to include transportation costs along with production costs we would expect ?
According to the factor price equalization theorem, the ________ factor should oppose free. trade policies in any given country?
The amount today that would be needed, at prevailing interest rates, to produce a particular sum in the future is known as ?
In his empirical test of comparative advantage Wassily Leontief found that ?
The Heckshcer-Ohl assumes that are indentical between countries?
One of the predictions of the Heckscher-Ohlin model is that ?