IB quiz #4

________ has no barriers to trade between member countries, includes a common external trade policy, and allows factors of production to move freely between members.

A common market

According to Adam Smith, a country should specialize in the production of a good when it has....

Absolute Advantage

________ eliminates trade barriers between member nations, adopts a common external policy, and permits factors of production to move freely between member countries but it also requires a common currency, harmonization of members' tax rates, and a common monetary and fiscal policy

An economic union

Unlike other trade policies, local content regulations tend to benefit consumers and not producers...

False

The Single European Act committed EU countries to adopting a common currency by January 1, 1999.... T of F

False, feb of 1992

Which of the following refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country?

Free Trade

Which of the following theories stress the role of luck, entrepreneurship, and innovation in the production and export of a good or service by the firms in a country?

New Trade Theory

The establishment of the euro required participating countries to

give up national control over monetary policy

Which of the following is seen as a benefit of the euro?

lower foreign exchange and hedging costs

The majority of cross-border investment in the developed world is in the form of..

mergers and acquisitions

Who benefits from an import tariff?

the Government

Foreign producers typically agree to voluntary export restrictions because..

they fear that harmful tariffs will follow if they dont

A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets...

true

By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing... t of f

true

Countries adopting a pragmatic stance pursue policies designed to maximize the national benefits and minimize the national costs.... t or f

true

Local content regulations provide protection for a domestic producer of parts by limiting foreign competition....

true

Research supports the view that multinational firms often transfer significant technology when they invest in a foreign country...t of f

true

Which of the following best describes an industry composed of a limited number of large firms?

an oligopoly

Which of the following was required for new applicants to qualify for EU membership?....

deregulation of markets

FDI occurs when a firm...

directly invests in a product of a foreign country

Offshore production refers to FDI undertaken to serve the host market.... t or false

false, the home market not host

Tariffs do not benefit...

Consumers

The theory of comparative advantage provides strong rationale for supporting the idea of....

Free Trade

A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.....

True

Charlyce lives in a country where there are no barriers to the trade of goods and services. This is called a free trade area...

True

Coordination and policy harmonization problems are largely a function of the number of countries that seek agreement... t of F

True

Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them... t or f

True

The WTO supports the promotion of international trade in services....

True