IBUS 380 Chapter 7

Most economists would probably argue that the best interests of international business are served by a) a laissez-faire stance b) the government aggressively blocking trade c) a free trade stance d) the government efforts to support certain domestic industries in a manner consistent with the recommendations of strategic trade policy

c) a free trade stance

____________ argues that a strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry boosts national income at the expense of other countries a) Adam Smith b) David Ricardo c) Milton Friedman d) Paul Krugman

d) Paul Krugman

Tariff barriers raise the costs of exporting products to a country (or of exporting partly finished products between countries.) Which of the following is a likely consequence of these barriers? a) This may put a firm at a competitive disadvantage to indigenous competitors in that country b) A firm may have to centralize all production activities in their home country c) This may put a firm at a competitive advantage to domestic competitors d) A firm may have to move all production facilities to another country, but thereby reducing their production costs.

a) This may put a firm at a competitive disadvantage to indigenous competitors in that country

The government is considering placing additional taxes on foreign steel imports that are a proportion of the value of the imported steel. This is an example of a) an ad valorem tariff b) a specific tariff c) a subsidy tax d) an import quota

a) an ad valorem tariff

Which trade policy argument suggests that a government should use subsidies to support promising firms that are active in newly emerging industries? a) strategic trade policy b) retaliation policy c) the infant industry argument d) the national security argument

a) strategic trade policy

The WTO argues that by removing all tariff barriers and subsidies to agriculture, a) there would be overproduction of products that are heavily subsidized b) the overall level of trade would decrease c) prices would rise for consumers d) global economic growth would rise

a) there would be overproduction of products that are heavily subsidized

Which of the following is true with respect to multinational firms? a) Government policies ultimately have little direct impact on a multinational business b) Because of their pivotal role in international trade, firms can and do exert a strong influence on government policy toward trade c) Multinational firms generally try to encourage their government to resist the WTO and to keep constraints on trade among nations d) Despite their pivotal role in international trade, firms do not exert a strong influence on government policy toward trade.

b) Because of their pivotal role in international trade, firms can and do exert a strong influence on government policy toward trade

The ____________ benefits inefficient farmers and the politicians in the EU who rely on the farm vote, but not consumers in the European Union, who end up paying more for their foodstuffs. a) General Agreement on Tariffs and Trade (GATT) b) Common Agricultural Policy (CAP) c) Smoot-Hawley Act d) Commerce Department

b) Common Agricultural Policy (CAP)

A lobbyist from California argues that the U.S. government needs to protect the U.S. semiconductor industry from foreign competition. She argues that semiconductors are now such important components of defense products that it would be dangerous to rely primarily on foreign producers for them. This is an example of ________ argument for government intervention. a) an environmental b) a political c) a self-defense d) an economical

b) a political

The farm bill that passed the U.S. Congress in 2007 contained subsidies of $289 billion for the next 10 years. This is an example of a) an ad valorem tariff b) a specific tariff c) a Subsidy d) a transit tariff

c) a Subsidy