Multiple Choice
Which of the following best explains how trade agreements can affect the location of jobs in the context of externalities?
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7. Externalities
Public Solutions to Externalities
Multiple Choice
One goal of U.S. economic sanctions against North Korea would be:
A
to reduce negative externalities associated with North Korea's nuclear program
B
to promote free trade between North Korea and neighboring countries
C
to subsidize North Korea's domestic industries
D
to increase North Korea's exports to the United States
Verified step by step guidance1
Step 1: Understand the concept of economic sanctions. Economic sanctions are penalties or restrictions imposed by one country (or group of countries) on another, often to influence political or economic behavior.
Step 2: Identify the purpose of sanctions in the context of negative externalities. Negative externalities occur when an activity imposes costs on others not involved in the activity, such as security threats from nuclear programs.
Step 3: Analyze each option in the problem: promoting free trade, subsidizing industries, increasing exports, and reducing negative externalities. Economic sanctions typically aim to restrict or penalize, not promote trade or subsidies.
Step 4: Recognize that sanctions against North Korea are designed to discourage harmful activities, such as nuclear weapons development, which create negative externalities affecting global security.
Step 5: Conclude that the goal of U.S. economic sanctions against North Korea is to reduce the negative externalities associated with North Korea's nuclear program, by applying economic pressure to change behavior.
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