Chapter 6 Global Business

Social dumping occurs when an exporting country: A. imposes an export tax on domestic businesses that export, to compensate for the opportunity cost to the domestic market. B. creates unfair competition based on lower costs, which undermines social support systems to the worker. C. target-markets to specific vulnerable groups in the importing country. D. exports goods that are not sellable in the domestic environment due to hazards and safety issues. E. two of the above.

B. creates unfair competition based on lower costs, which undermines social support systems to the worker.

Government protection of economic activities is: A. two of the following. B. a historical function of government. C. a recent responsibility of government. D. a socialist characteristic. E. stronger in democracies.

B. a historical function of government.

Subsidies are problematic because they: A. are administered as a form of political patronage. B. aid export businesses or protect domestic businesses from imports. C. encourage nationalization. D. violate UN agreements. E. two of the above.

B. aid export businesses or protect domestic businesses from imports.

The trend for firms in regard to country risk assessment (CRA) is to: A. avoid it as an added cost in competitive markets. B. concentrate much more on CRA in making decisions about foreign activities. C. use CRA in obviously dangerous locations, but only in those situations. D. all of the above. E. two of A, B, and C.

B. concentrate much more on CRA in making decisions about foreign activities.

Barriers to trade: A. are a political issue but affect the cost of imports only marginally. B. cost consumers billions of dollars per year. C. save jobs in unprotected industries at $231,289 per job per year. D. none of the above. E. two of A, B, and C.

B. cost consumers billions of dollars per year.

Customs procedures in many countries often: A. are transparent and fair. B. discriminate against imports and favor exports. C. are online and impersonal. D. two of the above. E. all of A, B, and C.

B. discriminate against imports and favor exports.

Unlike quotas, voluntary export restraints (VERs) are imposed by the: A. importing country's government. B. exporting country's government. C. either the importing or exporting country's government; what matters is that they are voluntary. D. the importing company. E. none of the above.

B. exporting country's government.

Import duties can be set to encourage: A. increased imports based on sales volumes. B. local input. C. price-fixing. D. imports from other suppliers. E. all of the above.

B. local input.

Nationalization and privatization are: A. similar trends. B. opposing trends. C. both risks faced by privately held firms. D. both risks not encountered in capitalist democracies. E. two of the above.

B. opposing trends.

The primary motivation of tariffs is to: A. raise government revenue at the cost of importers. B. raise the price of imports, to protect domestic goods. C. punish countries over political issues. D. encourage foreign consumption. E. none of the above.

B. raise the price of imports, to protect domestic goods.

Dumping is: A. selling a product abroad for less than its production cost in the importing nation. B. selling a product abroad for less than the market price in the export nation. C. exporting a product to a third country without correct documentation. D. two of the above. E. all of A, B, and C.

B. selling a product abroad for less than the market price in the export nation.

Financial dumping is: A. sending excess financial resources to other nations. B. a government's decision to subsidize low interest rates for purchases of its exports. C. allowing a bank to have a low level of capital to total assets. D. all of the above. E. two of A, B, and C.

C. allowing a bank to have a low level of capital to total assets.

Transshipping is used to: A. reduce shipping costs, like consolidation. B. avoid import administration. C. evade allocated quotas. D. all of the above. E. two of A, B, and C.

C. evade allocated quotas.

Government stability is a characteristic of a government that: A. makes sudden radical policy changes. B. readily shifts alliances to maintain power. C. maintains predictability in fiscal, monetary and political policies. D. two of the above. E. all of A, B, and C.

C. maintains predictability in fiscal, monetary and political policies.

The national defense argument for trade restrictions has been used in the United States to argue for restriction on imports of: A. munitions. B. uniforms. C. shoes. D. all of the above. E. two of A, B, and C.

C. shoes.

New types of dumping include: A. cultural, social, financial services, and tax dumping. B. truck, financial services, and black-market dumping. C. gray-market, subsidiary, and transfer-pricing dumping. D. two of the above. E. all of A, B, and C.

A. cultural, social, financial services, and tax dumping.

Quotas are a quantitative barrier that sets: A. limits, established by the importer. B. goals, established by the exporter. C. precise quantities of imports or exports, based on price. D. expectations on domestic and foreign sales. E. two of the above.

A. limits, established by the importer.

An argument against using trade restrictions to punish an offending nation is that: A. sanctions seldom achieve their goal of forcing change in the offending country. B. sanctions are relatively harmful to the citizens of the offending country. C. sanctions are not condoned by the UN. D. sanctions decrease the cost of doing business. E. two of the above.

A. sanctions seldom achieve their goal of forcing change in the offending country.

The most common form of direct government participation in trade is: A. the subsidy. B. shipping on national vessels. C. import duties. D. a combination of the above. E. none of the above.

A. the subsidy.

An example of environmental dumping can be found in the: A. maquiladora plants of Mexico, located near the U.S. border and operating at lower environmental standards than would be required in the United States. B. nuclear waste shipments to developing nations. C. garbage shipments from New Jersey to developing nations. D. all of the above. E. two of A, B, and C.

D. all of the above.

Arguments for trade restrictions include: A. national defense, infant industry, and job protection. B. punishment of offending nations. C. fair competition and retaliation. D. all of the above. E. two of A, B, and C.

D. all of the above.

Nonquantitative nontariff barriers: A. are seen by many to be the most significant nontariff barrier. B. often involve government participation in trade, especially in customs and other administrative procedures. C. often involve standards. D. all of the above. E. two of A, B, and C.

D. all of the above.

The reasons a government may nationalize a firm include: A. to extract more money from the firm. B. to increase the firm's profitability. C. to preserve jobs. D. all of the above. E. two of A, B, and C.

D. all of the above.