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Question

The practice of imposing import restrictions to protect a newly developing domestic economy typically results in

a. lower prices of domestic products. b. a rapid improvement in the standard of living. c. a misallocation of domestic resources. d. expanded trade relations with other nations. e. greater cost efficiency in domestic production.

What is the main reason that import-substitution strategies fail to generate rapid economic growth?

a. Lack of self-interested behavior by entrepreneurs b. Deteriorating terms of trade c. Scarce natural resources d. Inefficient use of labor and capital e. Insufficient subsidies to domestic producers

The reason why the traditional classical school ceased to be widely accepted was mainly because

a. when Keynes received the Nobel price, the academic establishment started believing his ideas.

b. it could not explain the persistence of the high levels of unemployment seen during the great depression. c. it could not explain the

Answer 1

1. C. a misallocation of domestic resources

2. D. Inefficient use of labor and capital

3. B. it could not explain the persistence of the high levels of unemployment seen during the great depression