Question

In​ 2002, President George W. Bush imposed tariffs on certain types of imported steel. He argued that foreign steel producers were dumping their steel on the U.S. market at low prices. The foreign steel producers were able to sell steel cheaply because they received subsidies from their governments. The Bush administration argued that the influx of steel was disrupting the U.S.​ economy, harming the domestic steel​ industry, and causing unemployment among U.S. steel workers.​ _____ economists are most likely to be sympathetic to these​ claims, because they​ _____ government intervention in the economy.

A. ​Keynesian; oppose
B. ​Classical; oppose
C. ​Classical; favor
D. ​Keynesian; favor

Answer 1

Keynesian economists favor government intervention and would likely support the steel tariffs imposed in 2002 by President George W. Bush. These tariffs aimed to protect the U.S. steel industry from subsidized foreign competition, though they may have resulted in higher costs and less economic efficiency.

Step-by-step explanation:

Keynesian economists are most likely to be sympathetic to the claims that President George W. Bush made in 2002 regarding tariffs on imported steel. Keynesians typically support government intervention in the economy to correct market imbalances and provide economic stability. They argue that strategic use of tariffs can protect domestic industries from the negative effects of foreign competition, especially when that competition is perceived as unfair due to subsidies.

In the context of international trade, protectionist policies such as imposing tariffs can raise the price of imports, making domestically-produced steel more competitive. This was intended to support the U.S. steel industry, which was facing challenges due to cheap steel imports. However, these measures come at a cost, including higher prices for consumers, greater profits for the domestic industry without necessarily creating new jobs, and potential losses in economic efficiency due to a departure from comparative advantage.