Two of the better known arguments for protection are the labor and infant indust

Question

Two of the better known arguments for protection are the labor and infant industry arguments. The list in the top portion of the following table gives observations regarding these arguments. Attached to each observation is a response box. The table's lower portion gives a labeling key for these observations. Use the letter X to mark any observation that applies to neither argument and label the remaining observations as belonging to either the labor (L) or infant industry (I) arguments. Fails to consider productivity differences between nations Is the more sophisticated of the two arguments for protection Sometimes lumps a nation's cultural industries in with its military/weapons industries As an employment policy, is inferior to broader macroeconomic policies Holds some validity as an argument if the industry experiences declining costs. Is mainly associated with the tariff policies of developing nations I Applies to the infant industry argument. L Applies to the labor argument. X This is not applicable to either argument.

Explanation / Answer

Solution:

L

Fails to consider productivity differences between nations

I

Is the more sophisticated of the two arguments for protection.

X

Sometimes lumps a nation's cultural industries in with its military/weapons industries

L

As an employment policy, is inferior to broader macroeconomic policies

I

Holds some validity as an argument if the industry experiences declining costs.

I

Is mainly associated with the tariff policies of developing nations

Explanation:

The infant industry argument states that developing nations are justified to put tariffs on imports in case they seeking to develop new industries and diversify the economy of a nation; and thus have economic rationale for trade protectionism. Labor industry targets to protect the interest of labor

L

Fails to consider productivity differences between nations

I

Is the more sophisticated of the two arguments for protection.

X

Sometimes lumps a nation's cultural industries in with its military/weapons industries

L

As an employment policy, is inferior to broader macroeconomic policies

I

Holds some validity as an argument if the industry experiences declining costs.

I

Is mainly associated with the tariff policies of developing nations

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