Global Business ch7b

8/19/2019 Global Business ch7b

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Chapter 7 quiz

1. Which of the following is not one of the main instruments of trade policy?a. Credit portfoliosb. Administrative policiesc. ocal content requirementsd. !ariffs

". After the #ruguay $ound of %A!! e&tended global trading rules to cover trade inservices' the first two industries targeted for reform by the W!( werea. Telecommunications and financial servicesb. Automotives and aerospacec. !e&tiles and technologyd. Agriculture and consulting services

). *dentify the incorrect statement pertaining to trade barriers.a. !hey raise the costs of e&porting products to a countryb. !o conform to local content regulations' a firm may have to locate more

production activities in a given mar+et than it would otherwisec. !hey may put a firm at a competitive advantage to indigenous competitorsd. They may limit a firm's ability to serve a country from locations outside

of that country

,. *n the 1-/ #ruguay $ound' %A!! members sought to write rules for promotingall of the following e&cepta. Agricultural subsidiesb. %A!!0s monitoring and enforcement mechanismsc. GATT rules to cover trade in services

d. *ntellectual property protection

. !his is levied as a proportion of the value of the imported good.a. Ad valorem tariff b. 2pecific tariff c. 2pecial tariff d. !ariff quota

/. 3oreign producers typically agree to voluntary e&port restrictions becausea. They fear far more damaging punitive tariffs or import quotas might

follow if they do not

b. !heir manufacturing capacity is limitedc. !hey can divert their e&ports to other countries and charge more for their

productsd. !hey are required to by the World !rade (rganization

7. 44444 has occurred when foreign goods are being sold cheaper than at home orbelow their cost of production.a. 5roduction efficiency



b. 6ar+et saturationc. Dumpingd. 5rice elasticity

. !he #0s Common Agricultural 5olicy is an e&ample of a ta& policy designed to

a. 8enefit consumersb. 8enefit ta&payersc. Benefit special interest politicsd. 8enefit free trade in a developed country

-. 44444 suggests that a government should use subsidies to support promisingfirms that are active in newly emerging industries.a. !he national security argumentb. !he infant industry argumentc. trategic trade policyd. $etaliation policy

19.A common hybrid of a quota and a tariff is +nown as aa. Tariff rate quotab. :uota rentc. Ad valorem tariff d. ;oluntary e&port restraint

11. !he 44444 specifies that government agencies must give preference to Americanproducts when putting contracts for equipment out to bid unless the foreignproducts have a significant price advantage.a. <0Amato Act

b. Anti=<umping Actc. !elms"Burton Actd. 8uy America Act

1".According to the 44444 policy' subsidies can help a firm achieve a first=moveradvantage in an emerging industry.a. 3ree tradeb. Antidumpingc. trategic traded. !ariff quota

1).According to the 44444 argument' governments should temporarily support newindustries until they have grown strong enough to meet international competition.a. $etaliatory actionb. Anti=dumpingc. #nfant industryd. >uman rights



1,.Administrative trade policies area. <esigned to punish foreign firms that engage in dumpingb. Bureaucratic rules designed to ma$e it difficult for imports to enter a

countryc. :uotas on trade imposed by the e&porting countryd. $equirements that some specific fraction of a good be produced domestically

1.!hese are requirements that some specific fraction of a good be produceddomestically.a. Antidumping dutiesb. %ocal content requirementsc. *mport quotasd. ;oluntary e&port restraints

1/.All of the following are true of tariffs' e&cepta. They reduce the revenue for the governmentb. !hey can be levied as a proportion of the value of the imported goodc. !hey impose significant costs on domestic consumersd. !hey can be levied as a fi&ed charge for each unit of a good imported

17.Which of the following is not a reason why W!( is being criticized by thoseopposing free trade?a. !he adverse impact that some of its rulings have had on environmental

policiesb. *ts trade laws allow imports from low=wage countries and result in a loss of

obs in high=wage countriesc. *ts rules outlawing the ability of nations to stop imports from countries wherewor+ing conditions are hazardous

d. #ts lac$ of ability to force any member nation to ta$e an action to whichit is opposed.

1.!he W!( argues that by removing all tariff barriers and subsidies to agricultureall of the following would occur' e&cepta. There would be overproduction of products that are heavily subsidi&edb. %lobal economic growth would risec. !he overall level of trade would increased. 5rices would fall for consumers

1-.conomic problems during the %reat <epression were compounded in 1-)9when the #.2. Congress passed the 44444' aimed at avoiding risingunemployment by protecting domestic industries and diverting consumer demandaway from foreign products.a. Antib. >elms



c. mootd. <0Amato Act

"9.44444 are the highest rate that can be charged' which is often' but not always'the rate that is charged.a. !ariff rents

b. 2pecific tariff ratesc. Ad valorem tariff ratesd. Bound tariff rates

"1.#ntil 1--' %A!! rules applied to all of the following' e&cepta. ervicesb. !e&tilesc. 6anufactured goodsd. Agricultural products

"".!he 6illennium $ound ended in 1--- with

a. A new agenda for the ne&t round focusing on financial servicesb. o agreement on the reduction of barriers to cross"border trade inagricultural products and trade and investment in services

c. A decision to avoid 3<*d. A successful record on agricultural products

").!ariffs do not benefita. %overnmentsb. Consumersc. <omestic firmsd. <omestic producers

",.2pecific tariffs area. %overnment payment to domestic producersb. *n the form of manufacturing or production requirements of goods.c. %evied as a fi(ed charge for each unit of a good importedd. evied as a proportion of the value of the imported good

".Antidumping duties are often calleda. 2pecial circumstance dutiesb. 5ositive dutiesc. Countervailing dutiesd. $etroactive duties

"/.44444 argues that a strategic trade policy aimed at establishing domestic firms ina dominant position in a global industry is a beggar=thy=neighbor policy thatboosts national income at the e&pense of other countries.a. 6ichael 5orter b. )aul *rugmanc. <avid $icardo



d. Adam 2mith

"7.A quota on trade imposed by the e&porting country' typically at the request of theimporting country0s government is referred to as aa. 2pecific tariff quota

b. !rade reconciliationc. Ad valorem tariff d. +oluntary e(port restraint

".According to the 1-/ #ruguay $ound 44444 was to be created to implement the%A!! agreement.a. World 8an+b. #nited @ationsc. ,orld Trade -rgani&ationd. *nternational 6onetary fund

"-.!he !$*52 regulations established at the 1-- #ruguay $ounda. (rganized (C< countries to eliminate tariffs on te&tilesb. 2et a new level of agriculture subsidiesc. stablished new tariff levels on technologyd. stablished regulations on patents and copyrights

)9.Which of the following is not a reason for the pressure for greater protectionismthat occurred during the 1-9s and early 1--9s?a. !he persistent trade deficit in the #.2. strained the world trading systemb. apanese economic success strained the world trading systemc. 6any countries found ways to get around %A!! regulationsd. The growing U.S. trade surplus with Japan strained the world

trading system

)1.!his act allows Americans to sue foreign firms that use property in Cubaconfiscated from them after the 1-- revolution.a. Anti=<umping Actb. 8uy America Actc. !elms"Burton Actd. <0Amato Act

)".2ubsidies have been criticized for all of the following reasons e&cepta. !hey allow inefficient farmers stay in business

b. !hey encourage countries to produce products that could be grown morecheaply elsewhere and imported

c. They increase international trade in agricultural productsd. !hey encourage to overproduce heavily subsidized agricultural products

)).8y lowering production costs' 44444 help domestic producers compete againstforeign imports.a. :uotas



b. !ariffsc. <utiesd. ubsidies

),.*n recent decades' tariff barriers have been 44444 while non tariff barriers have

been 44444.a. $ising' fallingb. 3alling' levelingc. eveling' risingd. /alling0 rising

).A quota rent isa. evied as a fi&ed charge for each unit of a good importedb. evied as a proportion of the value of the imported goodc. A quota on trade imposed by the e&porting countryd. The e(tra profit producers ma$e when supply is artificially limited by an

import quota

)/.*n the #nited 2tates only firms allowed to import cheese are certain tradingcompanies' each of which is allocated the right to import a ma&imum number ofpounds of cheese each year. *dentify the trade restriction being imposed by the#.2. here.a. 2ubsidyb. Ad valorem tariff c. *mport quotad. 2pecific tariff

)7.!$*52 regulations oblige W!( members to all of the following e&cepta. Comply with the rules within 19 years in the case of the poorest countriesb. Comply with the rules within 1 years in the case of rich countriesc. %rant and enforce copyrights lasting 9 years.d. Grant and enforce patents lasting at least 20 years.

).!his is a direct restriction on the quantity of some good that may be imported intoa country.a. 2pecific tariff b. Ad valorem tariff c. #mport quotad. 2ubsidy

)-.3ree tradea. <escribes the range of policy instruments that governments use to intervene

in international tradeb. *s a government payment to a domestic producer c. $educes the overall efficiency of the world economy.d. 2efers to a situation in which a government does not attempt to restrict

what its citi&ens can buy from or sell to another country



,9.Which of the following observations pertaining to government subsidies isincorrect?a. !hey mainly benefit domestic producers' whose international competitiveness

is increased

b. !hey must be paid for' typically by ta&ing individuals and corporationsc. Whether they generate national benefits that e&ceed their national costs isdebatable

d. They help foreign producers gain a competitive advantage overdomestic producers

,1.!he #.2. government using the threat of punitive trade sanctions to try to get theChinese government to enforce its intellectual property laws is an e&ample ofgovernment intervention based ona. >uman rights protectionb. 2etaliation

c. Consumer protectiond. @ational security

,".*f a government grants preferential trade terms to a country it wants to buildstrong relations with' the government is employing a policya. !o protect national securityb. To further foreign policy ob3ectivesc. (f retaliationd. (f human rights protection

,).Which of the following statements concerning a voluntary e&port restraint is not

true?a. *t is a variant of the import quotab. *t raises the domestic price of an imported goodc. #n most cases0 it benefits consumers.d. *t benefits domestic producers by limiting import competition

,,.Which of the following is variously defined as selling goods in a foreign mar+et atbelow their costs of production or as selling goods in a foreign mar+et at belowtheir BfairB mar+et value?a. Dumpingb. &port restraintc. Ad valoremd. ocal content requirement

Global Business ch7b

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