Question

ndustrial policy is the idea that governments using taxes, _____, regulations, and coordination of the private sectors provide domestic industries a competitive advantage over foreign competitors.

a. deregulations

b. price floors

c. subsidies

d. price ceiling

_____ seeks to answer particular questions or to apply scientific discoveries to new product development.

a. Pragmatic research

b. Basic research

c. Applied research

d. Quantitative research

In which of the following ways can technological change possibly increase unemployment in a country?

a. By causing a fall in the demand for goods and services in a country.

b. By reducing the availability of skilled labor force.

c. By reducing the labor needed to produce a given amount of output.

d. By increasing the cost of production for a firm.

___ can cause unemployment and create dislocations, as displaced workers try to find jobs elsewhere, and at the same time make existing products more affordable.

a. Population changes

b. Technological changes

c. Changes in the rate of interest

d. Changes in the price level

Which of the following is an example of a cluster in economics?

a. A group of theme parks in Orlando.

b. A group of musicians performing at a concert for charity in New York.

c. A grocery store in Manhattan that sells products at discounted rates.

d. A housing cooperative in Brooklyn.

An advantage of clustering is that new entrants can:

a. engage in non-price competition with other firms in the industry.

b. charge higher prices for products as compared to existing firms.

c. benefit from favorable terms of trade.

d. benefit from local knowledge about industrial trends

Identify a statement that is true of an industrial policy.

a. U.S. industrial policy propagates less government involvement in economic planning.

b. U.S. industrial policy is often criticized as being too focused on only the service sector.

c. The idea behind an industrial policy is to promote the import of goods and services, foreign competition and encourage competition from foreign based industries.

d. Individual states engage in their own industrial policy, which can involve states competing with one another by offering special inducements to attract industry and jobs.

U.S. industrial policy:

a. is often criticized as being too focused on only the military sector.

b. is criticized because it gives foreign industries an advantage over domestic producers.

c. discourages spending on basic research in universities.

d. currently focuses on developing Airbus Industries.

Basic research:

a. usually has better commercial possibilities than applied research.

b. results in a lower standard of living in an economy.

c. is carried out for the purpose of specific applications to certain products.

d. yields a higher return to society as a whole than applied research.

Economists have long recognized that firms in some industries gain a performance advantage by:

a. clustering.

b. charging a zero price for products.

c. dumping.

d. reducing R&D spending.

Which of the following is true of R&D spending in the United States?

a. Manufacturers in the United States undertake more R&D spending than other businesses.

b. R&D spending in the United States has fluctuated around 10% to 25% of the GDP.

c. The United States has the highest R&D spending among advanced economies.

d. The U.S. government spends more on R&D than businesses.

Critics of industrial policy believe that:

a. it gives domestic industries a competitive advantage over important trading partners.

b. it could evolve into a government giveaway program.

c. it encourages unfavorable terms of trade with foreign countries.

d. the government allocates scarce resources more efficiently than markets.

Answer 1

1. Industrial policy is an idea that the governments using taxes, subsidies, regulations and the coordination of the private sectors could help nurture the industries and technologies of the future and give domestic industries a competitive advantage over foreign competitors.

Answer: option C

2. Applied research seeks to answer particular questions or to apply scientific discoveries to new product development.

Answer: option C

3. Technological change causes technological unemployment or structural unemployment by reducing the number of labor needed to produce a given amount of output.

Answer: option C