IB ch.6
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.
selling a product abroad for less than the market price in the export nation
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.
shoes
The United States allocates quotas to 40 countries for specific tonnages of: A. sugar. B. roast beef. C. malt beer. D. soybeans E. two of the above.
sugar
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.
the subsidy
An argument against the protection of an infant industry is that: A. in the long run the industry will have a competitive advantage. B. firms need protection from imports until the required investment capital is obtained. C. protection of emerging industries occurs only in developing nations. D. there can be high costs from subsidizing infant industries. E. Two of the above.
there can be high costs from subsidizing infant industies
The reasons a government may nationalize a firm include: A. to get government contracts. B. to promote the ideology of capitalism. C. to preserve jobs. D. all of the above. E. two of A, B, and C.
to preserve jobs
A variable levy confers benefit on the domestic producer, as with the EU variable levy on grain.
true
Country risks are increasingly political in nature.
true
Duties may be used to encourage local input.
true
New types of dumping include tax dumping.
true
Nuisance tariffs require importers to go through the administrative paperwork connected to paying tariffs, even though the payment itself might be quite small.
true
Policy continuity and government stability are more important to a business than the type of political system.
true
Subsidies that confer a benefit may well evoke countervailing duties.
true
Tariff barriers may be used to protect domestic industry from foreign, lower-cost producers.
true
The Multi-Fiber Arrangement (MFA) was an orderly marketing arrangement to regulate textiles and clothing exports.
true
The national defense argument for trade restrictions suggests that some industries, even if they are not competitive, need protection from imports
true
To hedge the terrorism risk, there are insurance, antiterrorist schools, and even companies to handle negotiations.
true
To protect an infant industry, trade restrictions might be effective
true
Trade restrictions violate the spirit of the WTO.
true
U.S. ocean shipping companies are benefiting from U.S. government subsidies.
true
When the U.S. military contracts out security details in war zones, it is engaged in privatization.
true
Zimbabwe's government offers an example of government instability.
true
Government stability is understood to refer to a government's: A. policies—their ability to endure over time. B. ability to keep itself in power. C. two of A, B, and D. D. ability to adjust to sudden changes by making radical policy changes. E. all of A, B, and D.
two of A B C
With privatization: A. assets are transferred from the public sector to the private sector. B. stock is bought back so that the company no longer has public shareholders. C. state activities are moved into private management through contracts. D. all of the above. E. two of A, B, and C.
two of A B and C
Kidnapping: A. two of B, C, and D. B. is a weapon used by some terrorists to extract ransom. C. can result in counterproductive results if ransom is paid for hostages. D. can be insured against by obtaining kidnapping, ransom, and extraction (KRE) insurance. E. all of B, C, and D.
two of B C D
According to the text, the type of information a firm will need to judge country risks: A. none of B, C, and D. B. varies according to the nature of its business. C. varies according to its size. D. varies according to the length of time required to yield a satisfactory return. E. two of B, C, and D.
two of the above
Among the external businesses that conduct country risk assessment are: A. the Economist Intelligence Unit, Euromoney, the Harvard Business Review B. Moody's, Standard and Poor's, STRATFOR C. The New York Times, Wilson Quarterly, Forum D. two of the above. E. all of A, B, and C.
two of the above
Counterarguments to the "protect domestic jobs from cheap foreign labor" argument include: A. the labor rate is not all of the labor cost or the production cost. B. productivity per worker is what matters. C. cheap foreign labor is a natural occurrence. D. two of the above. E. all of A, B, and C.
two of the above
Cultural dumping is found in: A. Japan's past refusal to import American skis because Japanese snow is different, so the skis should meet different standards. B. Saudi Arabia's refusal to import Playboy magazine. C. The small town of Orleans, Massachusetts, decision to prohibit franchised stores from operating in the town. D. two of the above. E. all of A, B, and C.
two of the above
In the United States, the Smoot-Hawley Tariff Act: A. outlawed tariffs for U.S. imports. B. led to the Wall Street crash of 1929. C. established some of the highest tariffs the United States has known. D. two of the above. E. all of A, B, and C.
two of the above
The United States became one of the first countries to prohibit dumping into its own market, in: A. 2006. B. 1856. C. 1916. D. 1776. E. none of the above.
1916
The oldest orderly marketing arrangement, which was disbanded through the WTO, is the: A. Multi-Fiber Agreement (MFA). B. Jamaica Agreement. C. Textile Co-operation Treaty (CTC). D. Japanese truck export quota. E. Paris Convention.
Multi-Fiber Agreement (MFA)
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.
a historical function of government
International business can be a powerful political force, in part because: A. a recent Supreme Court ruling in the United States allows corporate contributions to political races. B. many top management team members are willing to accept roles with national security agencies. C. about half the world's 100 largest economic units are firms. D. business is all about achieving political goals. E. two of the above.
about half the world's 100 largest economic units are firms
Privately owned companies sometimes complain that government-owned companies have the following unfair advantages: A. higher-cost financing. B. ability to charge higher prices. C. access to government contracts. D. all of the above. E. two of A, B, and C.
access to government contracts
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.
aid export businesses or protect domestic businesses from imports
A nontariff barrier is illustrated by: A. the French requirement in 1982 that all Japanese VCRs be inspected in Poitieres, far from the port and lacking speedy highway connection to the port. B. the widespread Japanese belief that American rice can cause cancer. C. the European attitude toward genetically modified crops. D. all of the above. E. two of A, B, and C.
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.
all of the above
Official prices ensure that: A. imported goods will be sold at minimum prices, to avoid dumping. B. a black market will be healthy and available for imported goods. C. low-priced invoices to avoid tariffs will not be successful. D. two of the above. E. none of A, B, and C.
two 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.
all of the above
Standards are a way to establish nontariff barriers, and examples are: A. all of B, C, and D. B. Japan's refusal to import light mayonnaise. C. Canada's categorization of orange juice with added calcium as a drug and subject to special requirements. D. the prohibition of imported drugs at the consumer level in the United States. E. two of B, C, and 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.
all of the above
Zimbabwe is an example of: A. a richly endowed country that has suffered because of government instability. B. a government that expropriated private property, that is, nationalized it, and then redistributed it. C. a country whose leadership stole the 2008 election. D. all of the above. E. two of A, B, and C.
all of the above
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.
all the above
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. q
allowing a bank to have a low level of capital to total assets
Nuisance tariffs: A. annoy the importers with red tape and administrative paperwork. B. are a historical anomaly. C. are found in developed nations more than in developing nations. D. have no point other than to indicate that tariff regulations change quickly. E. two of the above.
annoy the importers with red tape and administrative paperwork
Cote d'Ivoire uses child labor, often imported and kidnapped, in the cultivation and harvesting of: A. marijuana. B. palm oil. C. cocoa bean. D. poppy. E. none of the above.
cocoa bean
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.
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.
cost consumers billions of dollars per year
Protection of infant industries through trade restrictions is used only in developing nations.
false
Retaliatory trade restrictions are not made for dumping because price competition is protected by the WTO.
false
Sanctions against nations are not a form of trade restriction because the motivation is political.
false
Sanctions are a trade restriction that is effective in forcing change.
false
Subsidies from the United States to its sugar industry have been critical in helping to prevent a loss of jobs from American companies that are high users of sugar.
false
Terrorists avoid kidnapping because the repercussions can be harmful to their movement.
false
The government officials who make decisions about import restrictions are particularly sensitive to their country's broad population of consumers, who will be hurt by international competition.
false
The length of the investment in a foreign country has no impact on the risk assessment for that investment. What matters is the economic and political situations in the country.
false
The national defense argument for trade restrictions is based on the development level of the country.
false
The only reason firms are nationalized is to spread a socialist-communist ideology.
false
The practice of country risk assessment is an exercise in xenophobic and ethnocentric thinking.
false
The types of information a firm will need to judge country risks vary according to the nature of its business and the amount of money invested.
false
The utility of risk analyses of social, political, and economic factors increases rapidly over longer time spans.
false
Trade barriers create costs that are paid by the government erecting the barrier.
false
Unlike the topography, the political climate of a country has relatively little influence on its exports.
false
Voluntary export restraints are imposed by the importing nation to avoid violating WTO rules.
false
When government-owned companies compete with private companies, the private companies have the advantage.
false
When people are kidnapped for ransom, the right response is to pay the ransom, get the hostages released, and then retaliate.
false
What is the role of the home country in risk assessment? A. It has no role. B. It is a significant consideration. C. It is used initially, but then more micro issues become the focus of CRA. D. None of the above. E. Two of A, B, and C.
it is a significant consideration
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.
limits, established by the importer
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.
local input
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.
maintains predictability in fiscal, monetary and political policies
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.
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.
raise the price of imports, to protect domestic goods
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.
sanctions seldom achieve their goal of forcing change in the offending country
Paying ransom makes sense because a life is saved and the payments can be traced.
false
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.
creates unfair competition based on lower costs, which undermines social support systems to the worker
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.
cultural, social, financial services, and tax dumping
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.
discriminate against imports and favor exports
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.
evade allocated quotas
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.
exporting country's government
A comparison based on hourly wages is a reasonable guide to a need to protect domestic jobs.
false
A compound duty is a combination of specific and variable duties.
false
A historical function of capitalist—but not communist—governments has been the protection of the economic activities within their geographic area of control.
false
Businesses favor unstable governments because they present more profit opportunities.
false
Country risk assessment is a measure of the threat of nationalization.
false
Country risk assessment is an evaluation that assesses a country's political situation and policies to determine how much risk exists of a change in that country's government.
false
Fair competition is a strong rationale for trade barriers.
false
Former British prime minister Tony Blair led the privatization movement.
false
Kidnap, ransom, and extortion are techniques often used by terrorists against which no insurance is available.
false
New types of dumping include concession dumping.
false
Nontariff barriers that are not quantitative can be divided into two groups, those that are established by the government participation in trade and those that are administrative.
false
One example of nationalization of private companies is the nationalization of French-owned firms in Europe after World War II.
false
One way that the WTO defines dumping is the selling of a product abroad for less than the average cost of production in the importing nation.
false
Only in communist countries do governments own the factors of production.
false
