Q&A Hero

Q: Write a short note on the World Trade Organization and its influence on the environment.

Q: Describe the three categories of tariffs, and explain how the SmootHawley Act of 1930 influenced tariffs in the United States.

Q: Export/import financing in which an exporter ships merchandise and later bills the importer for its value is called ________. A) advance payment B) open account C) a letter of credit D) documentary collection

Q: Discuss the benefits and drawbacks of strategic trade policy. How are the drawbacks of subsidies similar to the drawbacks of strategic trade policy?

Q: Letters of credit are popular among traders because most of the risks are assumed by ________. A) distributors B) importers C) exporters D) banks

Q: Describe the purpose of a foreign trade zone. How is it used to promote trade?

Q: A(n) ________ is guaranteed by both the exporter's bank in the country of export and the importer's bank in the country of import. A) confirmed letter of credit B) transferrable letter of credit C) revocable letter of credit D) irrevocable letter of credit

Q: Define subsidies. What are their disadvantages? In what ways do the protection of infant industries produce similar drawbacks?

Q: Which of the following letters of credit can be modified without obtaining approval from either the exporter or the importer, by the bank issuing the letter of credit? A) revocable letter of credit B) confirmed letter of credit C) at sight letter of credit D) usance letter of credit

Q: The World Trade Organization can punish a country in which a company accused of dumping is based.

Q: A(n) ________ allows the bank to modify the terms of the letter only after obtaining the approval of both exporter and importer. A) bill of exchange B) bill of lading C) confirmed letter of credit D) irrevocable letter of credit

Q: When one World Trade Organization member files a complaint against another, decisions are to be rendered in less than one year.

Q: Which of the following is a method of export/import financing in which the importer's bank issues a document stating that the bank will pay the exporter when the exporter fulfills the terms of the document? A) sight draft B) bill of lading C) letter of credit D) bill of exchange

Q: The pattern of imports and exports that would result in lesser trade barriers is called free trade.

Q: Which of the following refers to a contract between the exporter and shipper that specifies merchandise destination and shipping costs? A) sight draft B) bill of lading C) letter of credit D) bill of exchange

Q: Konesia has created a hybrid form of trade restriction-a lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota. This is an example of a(n) ________. A) compound tariff B) export quota C) ad valorem tariff D) tariff-quota

Q: A(n) ________ becomes a negotiable instrument that can be traded among financial institutions when inscribed "accepted" by an importer. A) sight draft B) ocean bill of lading C) time draft D) inland bill of lading

Q: Which of the following requires an importer to pay for the imported goods when they are delivered? A) sight draft B) inland bill of lading C) air way bill of lading D) time draft

Q: The belief that Freeland's emerging industries need protection from international competition during their development phase is an example of ________.A) a local content requirementB) a normal trade relationC) the infant industry argumentD) the political motive of Freeland

Q: A requirement that all WTO members extend the same favorable terms of trade to all members that they extend to any single member is called ________. A) normal trade relations B) antidumping duties C) local content requirements D) countervailing duties

Q: A document ordering the importer to pay the exporter a specified sum of money at a specified time is called a ________. A) bill of lading B) letter of credit C) bill of exchange D) management contract

Q: One of the main goals of the World Trade Organization is to ________. A) encourage dumping among trading nations B) restrict the free flow of trade C) provide favorable terms of trade to a few selected countries D) settle trade disputes among its members

Q: ________ is a payment method commonly used when there is an ongoing relationship between the involved parties. A) Advance payment B) Documentary collection C) Letter of credit D) Open account

Q: The Uruguay Round of Negotiations created the TRIPS Agreement to ________. A) help standardize the intellectual property rules around the world B) increase the exposure of national agricultural sectors to market forces C) drastically reduce tariffs and nontariff barriers in agricultural trade D) include international trade in services for the first time

Q: Which of the following financing methods entails the greatest risk for exporters? A) supersedeas bond B) advance payment C) letter of credit D) open account

Q: Which of the following financing methods entails the greatest risk for importers? A) documentary collection B) advance payment C) letter of credit D) open account

Q: In which of the following ways did the Uruguay Round of Negotiations modify the original General Agreement on Tariffs and Trade (GATT) treaty? A) It helped standardize intellectual property rules around the world. B) It called on developing and least-developed economies to cut agricultural tariffs significantly. C) It relaxed the additional tariffs imposed on companies charged with dumping. D) It increased barriers to trade in all developed, developing and least-developed nations.

Q: Export/import financing in which a bank acts as an intermediary without accepting financial risk is called ________. A) documentary collection B) counterpurchase C) buyback D) open account

Q: The ________ altered the U.S. trade policy from a stance of free trade to one of protectionism in the 1930s. A) Norris-LaGuardia Act B) Smoot-Hawley Act C) Wheeler-Lea Act D) Taft-Hartley Act

Q: Which of the following statements is true of embargoes? A) An embargo may be placed on one or a few goods or may completely ban trade in all goods. B) An embargo is the least restrictive nontariff barrier available. C) An embargo is usually employed for economic reasons. D) Embargoes are used frequently today because they are easy to implement.

Q: Advance payment is commonly used for export/import financing when ________. A) two parties are unfamiliar with each other B) the buyer has obtained credit for the transaction C) the transaction is for a relatively high amount D) the buyer has good credit rating at banks

Q: Which of the following normally takes the form of a wire transfer of money from the bank account of the importer directly to that of the exporter prior to shipment of merchandise? A) documentary collection B) letter of credit C) advance payment D) open account

Q: Country A implements a ban on trade in two products with Country B. This is an example of a(n) ________. A) embargo B) tariff-quota C) tariff D) voluntary export restraint

Q: Rice imports to a nation under a quota limit of 8,500 tons are charged a tariff of 15 percent. Imports of rice above the quota limit are charged a tariff of 60 percent. This is an example of a(n) ________. A) export quota B) voluntary export restraint C) ad valorem tariff D) tariff-quota

Q: Which of the following is a method of export/import financing? A) offset B) buyback C) switch trading D) documentary collection

Q: Which of the following is a result of the protection of domestic companies from international competition? A) Consumers need to pay lesser for products. B) There are increased incentives to cut production costs and improve quality. C) Companies become more reliant on protection. D) Protection increases a company's incentives to obtain the knowledge it needs to become more competitive.

Q: Which of the following statements is true of countertrade? A) Countertrade is practiced by countries when there is a lack of hard currency. B) Countertrade involves products whose prices on world markets tend to remain steady. C) Countertrade usually involves industrial products and computer softwares. D) Hedging risk in countertrade is prohibited.

Q: A form of countertrade that usually typifies long-term relationships between the companies involved is called ________. A) barter B) franchising C) offset D) buyback

Q: Which of the following is true regarding the protection of infant industries from international competition? A) It is difficult for governments to identify the industries worth protecting. B) Protection of infant industries helps domestic companies become innovative. C) Protection from competition leads to improved quality and lower prices. D) Protection leads to more economic good than harm.

Q: Buyback is defined as ________. A) the export of industrial equipment in return for products produced by that equipment B) an agreement that a company will offset a hard-currency sale to a nation by making a hard-currency purchase of an unspecified product from that nation in the future C) the sale of goods or services to a country by a company that promises to make a future purchase of a specific product from that country D) the exchange of goods or services for a certain amount of money

Q: According to the ________ argument, as an industry grows and matures, it gains the knowledge it needs to become more innovative, efficient, and competitive. A) maturing industry B) infant industry C) standardized product D) developing economy

Q: Which of the following best describes the infant industry argument? A) It states that small businesses that have just started to export are financially stable and seldom require financing from government agencies. B) It states that protecting a country's emerging industries from international competition will enhance domestic companies' incentives to obtain knowledge to be competitive. C) It states that a country's emerging industries need protection from international competition during their development until they become sufficiently competitive. D) It states that domestic companies that are provided protection from international competition become more competitive and less reliant on protection.

Q: ________ is a countertrade whereby one company sells to another its obligation to make a purchase in a given country. A) Franchising B) Joint venture C) Switch trading D) Barter

Q: Which of the following is prompting farmers in many developed nations to discover new ways to manage risk and increase agricultural efficiency? A) enforcement of trade embargoes and tariffs B) exposure of agribusiness to market forces C) provision of extensive government subsidies D) designation of agricultural products as dual use products

Q: An offset agreement differs from a counterpurchase agreement in that an offset agreement ________. A) fails to specify the type of product that must be purchased B) fails to specify the amount that will be spent on the purchase C) fails to give a business greater freedom in fulfilling its end of a countertrade deal D) fails to make a hard-currency purchase of any product from that nation in the future

Q: The pattern of imports and exports that occurs in the absence of trade barriers is called ________. A) vertical integration B) autarky C) protectionism D) free trade

Q: A company proposes that in exchange for a hard-currency sale, it will make a hard-currency purchase of an unspecified product from the buyer nation in the future. Which of the following is the company proposing? A) a counterpurchase B) an offset C) a buyback D) a barter

Q: What are voluntary export restraints and how are they used?

Q: The sale of goods and services to a country by a company that promises to buy a specific product from that country in the future is called a(n) ________. A) counterpurchase B) offset C) joint venture D) barter

Q: Explain how tariffs protect domestic producers, and describe how a foreign trade zone might offset the effects of tariffs.

Q: Which of the following is the oldest known form of countertrade? A) counterpurchase B) switch trading C) offset D) barter

Q: Describe the different types of tariffs and provide an example of each.

Q: Which of the following allows a country to earn back some of the currency it pays out for imports? A) switch trading B) counterpurchase C) buyback D) barter

Q: Explain why governments impose restrictions on free trade.

Q: Which of the following refers to the exchange of goods or services directly for other goods or services without the use of money? A) offset B) barter C) counterpurchase D) switch trading

Q: When a company exports a product at a price higher than the price normally charged in its domestic market, it is said to be dumping.

Q: Selling goods or services that are paid for, in whole or part, with other goods or services is called ________. A) indirect exporting B) countertrade C) licensing D) a joint venture

Q: Restrictions on the convertibility of one currency into others is called administrative delays.

Q: The biggest advantage of an export management company is usually its ________. A) knowledge of the target market's cultural, political, legal, and economic conditions B) well-developed and extensive distribution channels and storage facilities C) well-rounded experience in countertrade-related activities D) financial understanding of investment projects and its manufacturing expertise

Q: An embargo is the most restrictive nontariff trade barrier available.

Q: A voluntary export restraint refers to a quota that a nation imposes on its exports, usually at the request of another nation.

Q: A(n) ________ exports products on behalf of an indirect exporter. A) local distributor B) subsidiary C) sales representative D) export management company

Q: Consumers are benefitted when a government imposes import quotas on products.

Q: Companies involved in direct exporting typically rely on ________. A) distributors B) agents C) export management companies D) export trading companies

Q: Which of the following occurs when a company sells its products to intermediaries who then resell to buyers in a target market? A) indirect exporting B) counterpurchase C) an acquisition D) a joint venture

Q: Tariffs tend to exact a cost on countries as a whole because they lessen citizens' gains from trade.

Q: Which of the following is true of distributors? A) The use of distributors increases the exporter's control over the price buyers are charged. B) They are compensated with a fixed salary plus commissions based on the value of their sales. C) They are seldom required to take ownership of the merchandise when it enters their country. D) They can stunt the growth of the exporter's market share by charging very high prices.

Q: Tariffs are a source of government revenue mostly among developing nations.

Q: A compound tariff on an imported product is calculated partly as a percentage of its stated price and partly as a specific fee for each unit.

Q: ________ take ownership of the merchandise when it enters their country and accept all the risks associated with generating local sales. A) Agents B) Distributors C) Sales representatives D) Freight forwarders

Q: An import tariff is levied by the government of a country that a product is passing through on its way to its final destination.

Q: Which of the following occurs when a company sells its products to buyers in a target market without going through intermediary companies? A) export through local distributors B) export through agents C) sale through export management companies D) sale through export trading companies

Q: Customs duties decrease the total amount of a good's production cost.

Q: Which of the following is the first step in developing a successful export strategy? A) identification of a potential market B) match market needs to the company's abilities C) initiation of meetings D) commitment of resources

Q: Which of the following steps of the strategy development process for exports involves establishing relationships with potential local distributors? A) identification of a potential market B) match market needs to the company's abilities C) initiation of meetings D) commitment of resources

Q: Products that are of use in both industrial and military applications are designated as dual-use products.

Q: Which of the following steps of the strategy development process for exports involves performing market research and interpreting results obtained from the research? A) identification of a potential market B) match needs of the market to the company's abilities C) initiation of meetings D) commitment of resources

Q: The automobile industry is typically protected for national security reasons.

Q: Which of the following is the most common method of buying and selling goods internationally? A) exporting and importing B) countertrade C) a turnkey project D) A merger or an acquisition

Q: A disadvantage of protection from import competition is the added cost of continuing to produce a good domestically that could be supplied more efficiently by an international supplier.