INTB 3080 Practice Exam 1
Which activity engaged in by Big Town Billiards best exemplifies innovation?
Big Town Billiards developed a new business model by selling directly to customers.
The infant industry argument suggests that protecting infant industries from foreign competitors will allow them time to become large enough to enjoy economies of scale. Who typically wins and who loses from a government policy to protect infant industries?
Domestic consumers and foreign producers lose, while the home government and home producers gain.
__________ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.
Dumping
India, China, and Indonesia have all focused on improving their education systems and implementing market reforms. Which of the following is true about education and economic development?
India, China, and Indonesia should rank higher on the Human Development Index as compared to countries that have not invested in education.
Which of these individuals can be considered an entrepreneur?
Kellen started a company that processes cable wire into fabric used in blankets.
Using the information on political economy in your text and the case above, how would you characterize Venezuela's political economy under President Nicolas Maduro?
Pseudo-democracy
Using your knowledge of New Trade Theory, choose the reason why Boeing has not challenged Airbus for market share in the super large capacity aircraft sector.
The global market is not big enough to support multiple producers of this type of aircraft.
Aircraft like the Airbus 380 and Boeing 747 are cost efficient only on long haul flights that are relatively heavily traveled. According to New Trade Theory, which statement is true?
The market for large jet aircraft is limited to those airlines providing long haul flights in highly traveled routes.
In 2008, the Trump Administration imposed 25 percent tariffs on imports of foreign steel into the United States. Which statement is true?
The policy is attempting to influence what U.S. citizens and companies buy from foreign countries.
Based on the information provided in the video, which philosophy best describes Donald Trump's perspective on trade between nations?
Trump has a mercantilist philosophy toward trade.
President Trump claims the 25 percent tariffs on imported steel are necessary to protect U.S. steel jobs. Which is a potential outcome of his policy?
U.S. consumers will pay higher prices for domestic steel than they would for imported steel.
When considering the cost of doing business in another country, what would be considered the most attractive market or investment site?
a country that has a well-developed body of business contract law
China's economic growth from the late 1970s to the present can largely be attributed to
a shift toward more private enterprises
what best characterizes the political system in china
china is a one-party state
A __________ economy follows the principles of collectivism as resources are allocated based on "the common good."
command
Historically, communist countries focused on collectivist goals. The government planned production, fixed commodity prices, and also directed investments to ensure they benefitted the nation as a whole and not only a few individuals. What type of economy did this represent?
command
Under common law, __________ refers to the ways in which laws are applied in specific situations.
custom
A country that abolishes laws that regulate private enterprises and removes price controls is in the process of
deregulation
The main reason that gross national income figures can be misleading is because they
don't consider differences in the cost of living.
The United States has accused China of
exacerbating the global glut of steel by investing in additional production.
According to the product life-cycle theory, the ultimate result is that production of goods becomes concentrated in the country where a product originated—typically, a developed nation.
false
Under a tariff rate quota, a higher tariff rate is applied to imports within the quota than those over the quota.
false
Simone lives in a country in which the government does not impose quotas on what can be imported or on what businesses can produce and sell to another country. What type of situation does this describe?
free trade
In a pure command economy, the prices at which goods and services are sold are planned by the
governemnt
China, India, and Indonesia are expected to be among the world's seven largest economies by 2050. Economic development in a country can be measured using
gross national income
A South American nation has a direct restriction on the amount of vegetables that may be imported into the country. Which instrument of trade policy does this reflect?
import quota
The development of new products, processes, organizations, management practices, and strategies is called
innovation
The global pandemic of 2020 forced retail stores to create online shopping opportunities and adopt curbside delivery practices—somewhat similar to what Amazon had been doing for years. This new strategy adopted by retail stores is an example of
innovation
U.S.-based Nelson Corporation is hesitant about entering into a licensing agreement with Lapson, Inc., a company from another nation, due to the likelihood that Lapson will break a contract or expropriate property rights. What specific type of risk is Nelson Corporation trying to avoid?
legal
What is one of the three measures used to determine the Human Development Index (HDI) of a country?
life expectancy at birth
When the management team reviewed its government contract on office chairs, they noticed that in order to bid on the project, at least 37 percent of the value of the office chairs had to be produced in the United States. This stipulation is an example of a(n)
local content requirement.
As democracy has spread since the 1980s, so has the development of more __________ economies.
market-bsed
The government of a South American nation enforces tariffs and quotas to limit imported goods, while exports are subsidized. By using these instruments, the government seeks to achieve a surplus in the balance of trade. Based on this information, which approach is influencing the international trade efforts in this nation?
mercantilism
Before Hugo Chavez took power in 1999, what type of economic system was in place in in Venezuela?
mixed
How can Venezuela's economic system best be described during Hugo Chavez's years as president?
mixed
Hugo Chavez's move to nationalize troubled firms is consistent with a
mixed economy
what is not a factor contributing to economic growth in China since the 1970s
nationalization of most vital industrial sectors
Which theory stresses that in some cases, countries specialize in the production and export of particular products not because of underlying differences in factor endowments, but because in certain industries the world market can support only a limited number of firms?
new trade theory
__________ justifies some limited government intervention to support the development of certain export-oriented industries.
new trade theory
Subsidies and quotas are examples of __________ barriers a county might impose.
nontariff
Ocean Athletics is hesitant about entering Ukraine, because the country has been experiencing social unrest in recent years. Based on this information, what type of risk is Ocean Athletics trying to avoid?
political
One reason a government might intervene in foreign trade is to protect consumers from a potentially dangerous product that's being imported. This would be an example of a(n) _____ argument for government intervention.
political
In 2017, the Brazilian government transferred the state ownership of the electric company, the airports, highways, and ports to private investors to stimulate the economy. This is an example of
privitization
By 2050, India will be one of the largest economies in the world. A disadvantage of using data such as GNI and PPP to understand the attractiveness of India as an export or investment market is that they
provide a static picture of development
China, India, and Indonesia are all expected to grow faster than the United States in the next few decades. ________ allows us to better understand cost of living differences between these countries.
purchasing power parity
A tax of 14 cents is levied for each ceramic plate imported into a nation. This is an example of a(n)
specific tariff
The United States is demanding that China reduce overcapacity in which industry?
steel
If China provides cash assistance to its companies in the steel industry, China is using which type of trade instrument?
subsidy
In his theory of absolute advantage, Adam Smith advocated that __________ should determine what a country imports and what it exports.
the market mechanism
A country that has __________ lowers the risk of doing business in that country.
the presence of a strong legal system
The geographical location of a Pacific island is advantageous for the seafood industry because it has access to a variety of aquatic life forms and also a number of freshwater sources. The lack of arable land drives local demand for seafood, and the island is one of the world's major exporters of seafood products. Which theory of international trade best explains this island's dominance as an exporter of seafood?
theory of national competitive advantage
Raymond Vernon's product life-cycle theory was based on the observation that for most of the twentieth century a very large proportion of the world's new products were developed by firms situated in the United States and sold first in the U.S. market.
true
Foreign producers agree to __________ imposed by an exporting country because they fear more damaging punitive tariffs or import quotas might follow if they do not.
voluntary export restraints
Consumer Agriculture Inc. is planning an international expansion. In terms of the costs involved in conducting business in a country, it will be most economical for the company if it chooses a country
where politicians are held accountable by the electorate.
Using your knowledge of New Trade Theory, which statement best explains the advantage Airbus has in the production and export of super large capacity aircraft?
Airbus has been able to capture scale economies that make it difficult for later entrants to match.
New Trade Theory would suggest that Boeing has stayed out of head-to-head competition with Airbus in the super large capacity aircraft sector because
Airbus was first to market with the Airbus 380 aircraft.
China has been accused of prohibiting U.S. companies that offer cloud computing from offering their services in China. Which argument best explains this?
China wants to protect its firms from their more competitive U.S. rivals.
The 2018 tariffs on imported steel implemented by President Trump are the first such tariffs since those implemented in 2002 by President Bush. The 2002 tariffs slightly increased U.S. steel production, yet significantly raised the cost of steel in the United States. Which statement best describes the Trump Administration's philosophy regarding the benefits of trade?
President Trump views trade as a zero-sum game.
For decades, there have been just two producers of large commercial aircraft, Boeing and Airbus. Which statement best explains how New Trade Theory views this situation from a manufacturing perspective?
The economies of scale required to be a profitable manufacturer effectively limit the size of the global market.
Alexander Hamilton argued that tariffs are an effective means of protecting infant industries until they are better able to compete. Which is not true of tariffs used to protect infant industries?
They promote more efficient use of resources.
The mercantilist doctrine promoted government intervention in order to achieve
a surplus in the balance of trade.
a. China: Xi Jinping, the new party chief, has said officials need to guard against corruption as its spread would doom the party and the state. b. France: State-owned enterprises allow for the "public good rather than the private profit." c. Saudi Arabia: Ruled by an Islamic absolute monarchy. d. United States: Two major political parties field candidates for federal, state, and local elections. e. Zimbabwe: Defeated in 2008 parliamentary elections, President Mugabe remains in power today. f. Italy in the 1930s: Benito Mussolini's dictatorship.
a. Communist Totalitarianism b. Social Democracy c. Theocratic Totalitarianism d. Representative democracy e. Tribal Totalitarianism f. Right-Wing totalitarianism
As part of its effort to protect its auto makers from foreign competition, suppose Brazil levied a tariff based on a proportion of the value of the product. Brazil would be imposing a(n) _______ tariff.
ad valorem
China's state-owned enterprises
are less productive than its private sector businesses
Brazil used tariffs to protect its auto industry in the 1950s. Tariffs
are taxes levied on imports or exports.
Contracts in a common law system tend to be shorter and less detailed than those created in a civil law system.
false
When considering the violation of property rights, blackmail is a form of public action.
false
A textbook author would apply for a trademark to obtain the exclusive legal rights associated with their written piece.
false (should be copywrite)
A country that has lax intellectual property laws will find that
firms will be reluctant to enter into such a country.
Wise Eyes Corporation has developed a new oral supplement to prevent macular degeneration. Which type of legal protection grants Wise Eyes Corporation exclusive rights for a defined period to the manufacture, use, or sale of this new supplement?
patent
In order to encourage the wine production industry, the Italian government provided low-interest loans for the purchase of equipment and plants. The government also gave cash grants and made tax reductions. Which instrument of trade policy is being used by the Italian government?
subsidies
Based on the information on political economy in the text and the case on Venezuela above, which statement best characterizes the situation in Venezuela?
there is probably a high level of corruption within the government
Alexander Hamilton promoted the idea that government should support a new industry with government intervention tactics until the industry is strong enough to face international competition.
true
During the past three decades, South Korea adopted a more democratic government. This illustrates that democracy can be a consequence of economic progress.
true
Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic growth, define innovation broadly to include not just new products but also new processes, new organizations, new management practices, and new strategies.
true
Factor endowments refer to the availability of land and labor which affect the ability of a country to produce goods.
true
Governments sometimes rely on trade policy to try to improve the human rights policies of trading partners.
true
Judges under a civil law system have less flexibility than those under a common law system.
true
When the government provides a low-interest loan to a failing industry to bolster business, it is an example of a subsidy.
true
A situation in which an economic gain by one country results in an economic loss by another is called a
zero-sum game.