Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
International Business
Q:
Trade barriers encourage firms to disperse their productive activitiesdesign, production, and assemblyto foreign nations.
Q:
Antidumping actions seem to be concentrated in certain sectors of the economy such as basic metal industries (e.g., aluminum and steel), chemicals, plastics, and machinery and electrical equipment.
Q:
Governments of developed nations are setting an example by unilaterally lowering their trade barriers.
Q:
In the Uruguay Round of the WTO, member countries sought to exempt trade in services from GATT rules.
Q:
One of the reasons for the trend toward greater protectionism was that many countries found ways to get around GATT regulations.
Q:
Pressures for greater protectionism increased around the world during the 1980s and early 1990s due to the strain caused by the persistent trade deficit in the world's largest economy, Japan.
Q:
The Smoot-Hawley Act aimed to liberalize trade by eliminating tariffs, subsidies, and import quotas.
Q:
Free trade as a government policy was first officially embraced by Germany in 1846, when the Bundestag repealed the Corn Laws.
Q:
Paul Krugman argues that although strategic trade policy looks unappealing in theory, in practice it is most likely to be workable.
Q:
The strategic trade policy arguments of the new trade theorists suggest an economic justification for government intervention in international trade and this justification challenges the rationale for unrestricted free trade.
Q:
Paul Krugman asserts that a strategic trade policy is almost certain to be captured by special-interest groups within the economy, who will distort it to their own needs.
Q:
Dumping is variously defined as selling goods in a foreign market at below their costs of production, or as selling goods in a foreign market at below their "fair" market value.
Q:
The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.
Q:
Both import quotas and voluntary export restraints (VERs) benefit domestic producers by limiting import competition.
Q:
According to Paul Krugman, a country that adopts a strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry will probably provoke retaliation.
Q:
According to Alexander Hamilton, governments must temporarily support new industries until they have grown strong enough to meet international competition.
Q:
The main gains from subsidies accrue to importers, whose international competitiveness is increased as a result of these subsidies.
Q:
The Common Agricultural Policy (CAP) established by the European Union was designed to reduce prices of domestic produce and protect consumers from unfair premiums.
Q:
Some countries argue that government intervention to protect certain domestic industries can compromise national security.
Q:
Governments can protect consumers from unsafe products by issuing a limit or a ban on such products.
Q:
Political arguments for government intervention are usually concerned with protecting consumer interests within the country.
Q:
Government intervention in international trade can take the form of reducing restrictions on imports and encouraging foreign direct investment.
Q:
Specific tariffs are levied as a proportion of the value of the imported good.
Q:
In recent decades, a fall in subsidies, quotas, and voluntary export restraints has been accompanied by a rise in tariff barriers.
Q:
By lowering production costs, subsidies help foreign competitors gain export markets.
Q:
Import tariffs protect domestic producers against foreign competitors.
Q:
Subsidies are a trade policy instrument.
Q:
How does the increasing integration of the world economy and internationalization of production affect the selection of a trade policy?
Q:
How do trade barriers constrain a firm's ability to disperse its productive activities?
Q:
What are the issues that are at the forefront of the current agenda of the WTO?
Q:
Explain the organizational structure and the key functions of the WTO.
Q:
During the 1980s and early 1990s, why did the world trade system, erected by GATT, come under strain due to increased pressures for greater protectionism?
Q:
Give a brief description of the origin, functions, and successes of GATT from 1947 to 1979, before protectionist trends gained momentum across the world.
Q:
What constitutes the revised case for free trade?
Q:
Briefly describe the implications of the strategic trade policy as applied to international trade.
Q:
What is the "infant industry argument"? What are its implications for the world economy? What are the criticisms of this argument?
Q:
Describe briefly, with examples, the use of trade policies by governments to support their foreign policy objectives.
Q:
What are the political arguments for government intervention into international trade? Give examples.
Q:
Explain with an example the administrative trade policies used by governments in addition to the formal instruments of trade policy.
Q:
What is a voluntary export restraint? Why do exporting countries agree to VERs? Explain with an example.
Q:
What conclusions can be derived from economic analysis of the effect of import tariffs?
Q:
Define local content requirements. Explain how this helps domestic firms.
Q:
The threat of antidumping action:
A.helps the firm raise capital in the primary market.
B.limits the ability of a firm to raise prices in response to high demand.
C.enhances the firm's ability to disperse its productive activities in an efficient manner.
D.limits the ability of a firm to use aggressive pricing to gain market share in a country.
E.enhances a firm's competitive advantage to indigenous competitors in that country.
Q:
Which of the following has been excluded from the agenda for the Doha round of WTO talks that began in 2001?
A.Reducing barriers to cross-border investment
B.Phasing out subsidies to agricultural producers
C.Limiting the use of antidumping laws
D.Attempts to tie trade to labor standards in a country
E.Cutting tariffs on industrial goods and services
Q:
Which of the following does NOT reinforce that the best interests of international business are served by a free trade stance?
A.The increasing integration of the world economy
B.The internationalization of production
C.The trend toward greater protectionism
D.The drawbacks of government intervention
E.The dispersion of production activities
Q:
Myra is a firm producing premium handbags for women. These bags are manufactured and patented in the country of Ceria. Manufacturers in the country of Argonia create counterfeit Myra bags and sell them in the local markets of Argonia. These bags are sold at almost similar prices to the original in other countries. Which of the following is likely to happen?
A.Expansion of world market for Cerian products
B.Reduction in the export opportunities for Myra's hand bags in Argonia
C.Reduction in import of all Argonian goods
D.Increase in the prices of handbags produced by Myra in Argonia
E.Reduction in opportunities of export from Argonia to other countries
Q:
Which of the following is a loophole in antidumping laws that is being exploited by many countries to pursue protectionism?
A.The slackness of enforcement agencies
B.WTO's noncommittal approach to antidumping laws
C.Bilateral VERs which subvert antidumping laws
D.The rather vague definition of what constitutes "dumping"
E.Lack of consensus among member nations
Q:
Which of the following is NOT a constraint on a firm's ability to disperse its productive activities to foreign countries?
A.Tariff barriers raising the costs of exporting products to a country
B.Quotas restricting the quantity of a good that can be imported into a country
C.Local content requirements demanding a specific fraction of domestic production
D.The increasing integration of the world economy
E.Antidumping policies limiting the ability of a firm to use aggressive pricing
Q:
The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were:
A.global telecommunication and financial services industries.
B.scientific research and defense sector.
C.pharmaceuticals and heavy metal industry.
D.pharmaceuticals and biotechnology.
E.scientific research and global telecommunication.
Q:
Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997?
A.It enhanced protection of patents, copyrights, and trademarks (intellectual property).
B.It helped resolve deadlock situations arising out of the unwillingness to lower trade barriers between neighboring countries.
C.It offered a greater ability for companies to offer a global, seamless service for all their corporate needs.
D.It liberalized trade policies by eliminating tariffs, subsidies, import quotas, antidumping duties, and local content requirements.
E.It reduced the export of pirated imitations of patented innovations pioneered in a different country.
Q:
Which of the following is true regarding the difference between GATT and WTO?
A.The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment unlike GATT.
B.WTO operates on the basis of consensus unlike GATT.
C.GATT gives trading partners the right to compensation or, in the last resort, to impose (commensurate) trade sanctions unlike WTO.
D.GATT's verdict is binding unlike that of WTO's.
E.WTO allows member-countries to block adoption of arbitration reports unlike GATT.
Q:
Which of the following indicates the difference between GATT and WTO?
A.WTO has strict time limits unlike GATT.
B.WTO operates on the basis of consensus unlike GATT.
C.GATT gives trading partners the right to compensation or, in the last resort, to impose (commensurate) trade sanctions unlike WTO.
D.GATT's verdict is binding unlike that of WTO's.
E.WTO allows member-countries to block adoption of arbitration reports unlike GATT.
Q:
The WTO's Agreement on which of the following is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules?
A.Intellectual Property Rights Enforcement Directive (IPRED)
B.Court of Arbitration of Intellectual Property (CAIP)
C.Trade-Related Aspects of Intellectual Property Rights (TRIPS)
D.Intellectual Property Rights Enforcement and Resolution (IPER)
E.International Body on Intellectual Property (IBIP)
Q:
The United States accused Libya and Iran of supporting terrorist action and building weapons of mass destruction. The U.S. government, therefore, imposed trade sanctions against the two countries. Which of the following political arguments does this exemplify?
A.Retaliation and trade war
B.Furthering foreign policy objectives
C.Strategic trade policy
D.Corporate security
E.Protecting infant industries
Q:
Which of the following is a provision of the Uruguay Round Agreement?
A.A wide range of services were to be excluded from GATT fair trade and market access rules.
B.Tariffs on industrial goods were to be raised by more than one-third, and tariffs were to be scrapped on more than 50 percent on a wide range of services.
C.The International Monetary Fund (IMF) was to be created to implement the GATT agreement.
D.Barriers on trade in textiles were to be significantly reduced over 10 years.
E.Average tariff rates imposed by developed nations on manufactured goods were to be raised by 20 percent of the value, the highest level in modern history.
Q:
Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because:
A.these nations withdrew their membership to the GATT.
B.the member nations had ceased to recognize GATT as a regulatory body for international trade.
C.VERs were not a recognized trade barrier under the GATT constitution.
D.neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action.
E.member nations erected a wall of tariff barriers.
Q:
Which of the following best explains the reason for the rise in protectionist pressures around the world during the 1980s?
A.The strict GATT bureaucracy in Geneva controlling trade regulations
B.The opening up of international markets to cheap products from China
C.The fall of the Soviet Union
D.The persistent trade deficit in the world's largest economy, the United States
E.The economic failure of Japan which hampered the global economy
Q:
One of the reasons why protectionist pressures arose around the world during the 1980s was:
A.the different ways many countries found to get around GATT regulations.
B.the opening up of national markets to cheap products from China.
C.the fall of the Soviet Union.
D.the persistent trade lead taken by the United States.
E.the Japanese failure in industries such as automobiles and semiconductors that strained the world trading system.
Q:
Which of the following statements is true regarding GATT?
A.GATT attempted to liberalize trade restrictions in one go.
B.In its early years, GATT was unsuccessful and hence was superseded by the World Bank.
C.GATT regulations were mostly enforced by the EU nations rather than by a mutual monitoring mechanism.
D.Tariff reductions through negotiations were completed in three rounds.
E.The last round for tariff reduction, the Uruguay Round, was launched in 1986 and completed in December 1993.
Q:
Which of the following multilateral agreements was established under U.S. leadership in 1947, with the objective to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like?
A.General Agreement of Tariffs and Trade (GATT)
B.North American Free Trade Agreement (NAFTA)
C.Central American Free Trade Agreement (CAFTA)
D.Free Trade Areas of the Americas (FTAA)
E.North Atlantic Treaty Organization (NATO)
Q:
The Smoot-Hawley Act had a damaging effect on:
A.the balance-of-payment of the United States.
B.cash flow in the domestic economy of the United States.
C.prices of natural resources in the United States.
D.employment abroad.
E.accrued liabilities of the United States.
Q:
The economically damaging effects of the Great Depression were worsened in 1929 by the:
A.First World War.
B.U.S. stock market collapse.
C.spread of communism through Europe.
D.Cold War between the world's superpowers.
E.harvest failure in Great Britain and famine in Ireland.
Q:
Which of the following is an argument against embracing strategic trade policy?
A.It hampers the chances of a country's firms to effectively exploit the first-mover advantages.
B.It is certain to be captured by special-interest groups within the economy, which will distort it to their own ends.
C.It increases the prices of the products for the domestic consumers.
D.It hampers the abilities of the domestic firms to achieve a dominant position in the global industry.
E.It leads to a compromise in national sovereignty.
Q:
According to Krugman, the ideal way for a country to respond, when the foreign competitors of its companies are already being supported by government subsidies, is probably not to engage in retaliatory action, but to:
A.help establish rules that minimize the use of trade-distorting subsidies.
B.adopt the strategic trade policy as a way to establish domestic firms in a dominant position in the global industry.
C.provide a subsidy to a new industry where the foreign competitors have not had the benefit of such strategic trade policies.
D.use a combination of home-market protection and export-promoting subsidies.
E.provide high levels of subsidies to the oldest industry in the country.
Q:
According to Krugman, which of the following best indicates the dangers of a strategic trade policy?
A.Decrease in subsidies
B.Decrease in protectionism
C.Occurrence of a trade war
D.Huge financial debts for the countries involved
E.Occurrence of a global recession
Q:
According to Paul Krugman, a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to:
A.dominate the industry.
B.move away from protectionism.
C.provoke retaliation.
D.incur huge financial debts.
E.upset the special-interest groups within the economy.
Q:
A government should use subsidies to support promising firms that are active in newly emerging industries, according to:
A.strategic trade policy.
B.public policy.
C.absolute advantage.
D.product life-cycle.
E.industrialization.
Q:
Which of the following is a major reason why many economists remain critical of the infant industry argument?
A.It makes the domestic industry inefficient.
B.It does not provide guaranteed employment for the citizens.
C.It affects the standards of living and per capita income of the people.
D.It promotes foreign direct investment.
E.It leads to reduced prices in domestic markets.
Q:
One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that:
A.protection of manufacturing from foreign competition is harmful.
B.absolute advantage cannot sustain productivity of an industry.
C.foreign firms too come under the definition of infant industry when they newly enter a foreign market.
D.firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets.
E.foreign competition will eventually cause domestic firms to improve the quality of their products.
Q:
Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries, according to:
A.economic development argument.
B.comparative advantage theory.
C.national security argument.
D.infant industry argument.
E.mixed economy theory.
Q:
The act that allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution is known as the:
A.Frederick-Peterson Act.
B.D'Amato-Perkins Act.
C.Perkins-Dole Act.
D.Helms-Burton Act.
E.Godfrey-Milliken Act.
Q:
Cadmia banned imports of Mattel toys with high levels of toxic lead, manufactured in Argonia. The underlying motive for such a move could be:
A.protecting domestic businesses from unfair pricing.
B.protesting the pricing of toys below their costs of production.
C.protecting consumers from unsafe products.
D.increasing the trade surplus of the United States.
E.reducing dumping of cheap toys.
Q:
Why is retaliation by government intervention a risky strategy?
A.It encourages dumping by foreign companies.
B.It could result in increased tariff barriers by the country that is being pressured.
C.It may expose certain industries that are important for national security to foreign competition.
D.It allows firms to sell goods in the foreign market at below their fair market value.
E.It makes it difficult for domestic firms to make any investments by borrowing money from the domestic capital market.
Q:
The country of Cadmia, which is a leading producer of bauxite, had to impose trade sanctions on Cerian soda cans in order to get the government of Ceria to enforce export restraints. This imposition by Cadmian government was undertaken to protect domestic producers of soda cans. Which of the following government intervention is being used by Cadmia?
A.Diversification
B.Deregulation
C.Retaliation
D.Liberalization
E.Monopolization
Q:
Which of the following is the most common political argument for government intervention in international trade?
A.Decreasing the prices of products in the domestic market
B.Promoting strategic trade policy
C.Protecting jobs and industries from unfair foreign competition
D.Improving efficiency of domestic labor
E.Protecting human rights
Q:
Which of the following is considered to be the ultimate objective of antidumping policies?
A.Protecting consumers from high prices
B.Preventing domestic firms from unloading their excess production in domestic markets
C.Protecting domestic producers from unfair foreign competition
D.Protecting consumers from substandard and hazardous products
E.Preventing foreign products from entering domestic market
Q:
Which of the following best indicates the motive for foreign firms to engage in dumping?
A.Unloading excess production in foreign markets
B.Cutting labor costs to reduce the costs of production
C.Providing a wider range of products for consumers in foreign markets
D.Meeting the voluntary export requirements imposed on it
E.Obtaining subsidies from the importing country
Q:
Dumping involves foreign producers:
A.attempting hostile takeovers of domestic firms and usurping the available resources for production.
B.indiscriminately exploiting the natural resources of a foreign country to create a later demand that can be met only by imports.
C.eliminating competition by subsidizing prices in a foreign market with home market profits and eventually raising prices to earn substantial profits.
D.capturing the niche market rather than the masses.
E.exporting only a small quantity of their products into an importing country.
Q:
If Argonia exports vast quantities of cheap toys to Cadmia, selling them at below their costs of production, it would constitute:
A.monopolism.
B.dumping.
C.offshoring.
D.nearshoring.
E.subsidizing.
Q:
The Palladian government required that all imported products that came from Lovaskiya be checked by Palladian customs inspectors. The inspection was done at a container freight station that was both remote and poorly staffed. This delayed the Lovaskiyan consignment from reaching the consumers in Palladia. The inspection strategy adopted by the customs officers in Palladia is an example of a(n):
A.antidumping policy.
B.voluntary export restraint policy.
C.administrative trade policy.
D.monopolistic competition policy.
E.tariff rent policy.