Question

The principle of comparative advantage implies that greater levels of international trade increase national income. If presidents oriented their trade policies first around increasing national income, then which of the following policies would they be most likely to support?

a. The elimination of tariffs on manufactured products like cars or electronics even though those tariffs help to keep some American manufacturing firms in the business.
b. The imposition of quotas that limit the number of textile imports from manufacturing competitors like China and India.
c. Government financial support for firms in multiple industries to ensure that the United States has a diverse manufacturing base.

Answer 1

Answer:

Statement a.

Explanation:

The comparative advantage that shall result in the benefit of citizens of the company by increasing the national income of the country with an increase in foreign trade is possible with increase in exports.

The removal of tariffs will allow the manufacturers in the country to produce more and then export which will increase the national income along with increase in international trade. Thus, this will emphasize the quality in the country along with meeting the competitive needs of manufacturing and marketing in international market.