int'l econ test 2

6.63. Trade adjustment assistance policies a. Can resolve all workers' challenges to free trade b. Attempt to share gains from free trade with disadvantaged workers c. Have never been used to sustain a losing business concern d. Are financed by state and local tax revenues

b. Attempt to share gains from free trade with disadvantaged workers

Multinational corporations: a. Do business only in their home country b. Conduct business commerce in two or more nations c. Refer to organizations such as the IMF and WTO d. are government-owned entities

b. Conduct business commerce in two or more nations

6.18. Throughout the post-World War II era, the importance of tariffs as a trade barrier has: a. Increased b. Decreased c. Remained the same d. None of the above

b. Decreased

Developed countries: a. Refer to nations with low trade per capita b. Denote nations with high average income per capita c. Generally occur in tropical regions d. Suffer higher poverty rates than LDCs

b. Denote nations with high average income per capita

A depreciation (weaker) of the U.S. dollar against the British pound would tend to: a. Discourage the British from buying American goods b. Discourage Americans from buying British goods b/c price of imports increase c. Increase the number of pounds that could be bought with a dollar d. Encourage U.S. tourists to travel to Britain (this would occur if the US dollar gets stronger)

b. Discourage Americans from buying British goods b/c price of imports increase

A main advantage of the European Monetary Union is: a. Each country loses its ability to determine economic growth b. Economic efficiency associated with using the same currency, and stronger economic growth c. The countries as susceptible to recession d. lack of labor mobility across nations

b. Economic efficiency associated with using the same currency, and stronger economic growth

6.7. Under U.S. commercial policy, which clause permits the modification of a trade liberalization agreement on a temporary basis if serious injury occurs to domestic producers as a result of the agreement? a. Adjustment assistance clause b. Escape clause c. Most-favored-nation clause d. Reciprocal-trade clause

b. Escape clause

5.1. The imposition of a tariff on imported steel for the home country results in: a. Improving terms of trade and rising volume of trade b. Higher steel prices and falling steel consumption c. Lower profits for domestic steel companies d. Higher unemployment for domestic steel workers

b. Higher steel prices and falling steel consumption

5.18 Subsidies to domestic firms may lead to a. An increase in prices b. Higher volume of exports c. Higher volume of imports d. Increase in welfare of the trading partner

b. Higher volume of exports

5.9. If the home country's government grants a subsidy on a domestically produced good, domestic producers tend to: a. Capture the entire subsidy in the form of higher profits b. Increase their level of production c. Reduce wages paid to domestic workers d. Consider the subsidy as an increase in production cost

b. Increase their level of production

5.2. Suppose the United States and Japan enter into a voluntary export agreement in which Japan imposes an export quota on its automakers. The largest share of the export quota's "revenue effect" would tend to be captured by: a. The U.S. government b. Japanese automakers c. American auto consumers d. American autoworkers

b. Japanese automakers

Under U.S. policy, the escape clause: a. Provides permanent free trade opportunities to importers b. Provides temporary trade protection against excessive imports c. Offers special tax breaks to minority-owned businesses d. Requires more manufacturing imports from LDCs

b. Provides temporary trade protection against excessive imports

6.13. Countervailing duties are intended to neutralize any unfair advantage that foreign exporters might gain over domestic producers because of foreign: a. Tariffs b. Subsidies c. Quotas d. Buy-national policies

b. Subsidies

7.9. One factor that has prevented the formation of cartels for producers of commodities is that: a. The demand for commodities tends to be price inelastic b. Substitute products exist for many commodities c. Commodity produces have been able to dominate world markets d. Production of most commodities is capital intensive

b. Substitute products exist for many commodities

6.8. Which policy reflects the notion that if society enjoys gains due to increased efficiency stemming from trade liberalization, some sort of compensation should be provided to those who are temporarily hurt by import competition? a. Countervailing duties b. Trade adjustment assistance c. Domestic subsidies d. Most-favored-nation standard

b. Trade adjustment assistance

Throughout the post-World War II era: a. U.S. tariffs have increased b. U.S. tariffs have declined c. U.S. trade has decreased dramatically d. Trade treaties have not taken place

b. U.S. tariffs have declined

Which institution negotiates and helps determine international trade treaties? a. World Bank b. WTO c. IMF d. NATO

b. WTO

The Smoot-Hawley Tariff Act of 1930: a. Brought an end the Great Depression episode b. made the economic depression worse because of the trade war c. Removed all trade barriers upon imports except for agriculture d. Was a major step toward free trade in the world

b. made the economic depression worse because of the trade war

The Tokyo round focused upon a. agricultural policies b. reducing non-tariff barriers c. reducing tariffs on manufactured goods d. increasing neomercantilism

b. reducing non-tariff barriers

6.38. The most recent round of multilateral trade negotiations is the: a. Kennedy Round b. Tokyo Round c. Doha Round d. Geneva Round

c. Doha Round

6.5. The Smoot-Hawley Tariff Act of 1930 has generally been associated with: a. Falling tariffs b. Increases in the volume of trade c. Intensifying the worldwide depression d. Efforts to liberalize nontariff trade barriers

c. Intensifying the worldwide depression

5.3. Which trade restriction stipulates the percentage of a product's total value that must be produced domestically in order for that product to be sold domestically? a. Import quota b. Orderly marketing agreement c. Local content requirement d. Government procurement policy

c. Local content requirement

Which nation is a member of the North American Free Trade Association? a. China b. Greenland c. Mexico d. United Kingdom

c. Mexico

Which of the following is an example of a free trade area? a. EU b. EMU c. NAFTA d. WTO

c. NAFTA

46. A quantity limitation on imports is known as: a. subsidy b. Tariff c. Quota d. Open Trade

c. Quota

6.58. Economic sanctions are most effective in causing the target nation to modify its behavior when the: a. Target nation had negligible economic relationships with the imposing nation prior to the sanctions b. People of the target nation have weak cultural ties to the people of the imposing nation c. Sanctions are levied by a large number of nations d. Target government is supported by the majority of its people

c. Sanctions are levied by a large number of nations

Which country has recently adopted an export-led growth strategy? a. Brazil b. U.S. c. South Korea and other Asian/oriental countries (i.e., Japan, China, India) d. Hawaii

c. South Korea and other Asian/oriental countries (i.e., Japan, China, India)

7.20. Which of the following situations reduces the likelihood of successful operation of a cartel? a. Cartel sales experience a rapid expansion b. The demand for cartel output is price inelastic c. The number of firms in the cartel is large d. It is very difficult for new firms to enter the market

c. The number of firms in the cartel is large

6.32. In U.S. trade law, Section 301 cases involve accusations of: a. International dumping by U.S. companies b. Full-cost pricing by U.S. companies c. Unfair trade practices by foreign nations d. Trade embargoes by foreign nations

c. Unfair trade practices by foreign nations

6.1. The World Trade Organization was established by the ____ of multilateral trade negotiations: a. Kennedy Round b. Tokyo Round c. Uruguay Round d. Clinton Round

c. Uruguay Round

Which round of multilateral trade negotiations opened up trade in agriculture? a. Kennedy Round b. Tokyo Round c. Uruguay Round d. Geneva Round

c. Uruguay Round

Which of the following refers to the U.S. dollar decreasing in value? a. appreciation b. revaluation c. devaluation or depreciation or weakening of the dollar d. fixed exchange rate

c. devaluation or depreciation or weakening of the dollar

When the dollar gets stronger: a. U.S. goods become cheaper to other countries b. Foreign tourists travel in the U.S. at a lower cost c. foreign goods become cheaper to Americans; more imports; and trade deficit worsens d. American products become more expensive to foreigners. Therefore, less exports & the trade deficit worsens. e. U.S. consumers face higher prices on foreign goods

c. foreign goods become cheaper to Americans; more imports; and trade deficit worsens d. American products become more expensive to foreigners. Therefore, less exports & the trade deficit worsens.

Which of the following refers to a common market? a. free movement of trade among countries b. countries adopt the same currency c. labor and capital mobility among member countries d. different tariffs across different countries

c. labor and capital mobility among member countries

The World Bank: a. provides foreign aid to rich nations b. was accomplished through the Obama Round c. provides loans to countries for economic development d. is the same thing as the IMF

c. provides loans to countries for economic development

The International Monetary Fund a. eliminates all loans to LDCs to promote an increase in trade b. was established by the London Round to increase trade deficits c. provides loans to poor countries to deal with financial troubles d. offers loans to rich countries to resolve high tax burdens

c. provides loans to poor countries to deal with financial troubles

Which of the following relates to the Kennedy Round of GATT? a. establishment of the EU b. continuation of gold trade c. reduction in tariff rates on manufactured goods d. creation of WTO

c. reduction in tariff rates on manufactured goods

A customs union involves which of the following? a. Increasing trade restrictions among member countries b. monetary union c. high restrictions on factor movements d. A common tariff levied upon imports from nonmembers

d. A common tariff levied upon imports from nonmembers

For many developing countries: a. GDP tends to high b. Poverty is quite low c. High Tech industries are most important d. Agriculture is the dominant industry

d. Agriculture is the dominant industry

6.4. The Export-Import Bank of the United States encourages American firms to sell overseas by providing direct loans and loan guarantees to foreign purchasers of American goods. To American firms, this represents a: a. Specific subsidy b. Ad valorem subsidy c. Domestic subsidy d. Export subsidy

d. Export subsidy

7.15. Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers, who thus can take over markets already established in the country? a. International commodity agreement b. Export promotion c. Multilateral contract d. Import substitution

d. Import substitution

7.5. A primary goal of international commodity agreements has been the: a. Maximization of members' revenues via export taxes b. Nationalization of corporations operating in member nations c. Adoption of tariff protection against industrialized nation sellers d. Moderation of commodity price fluctuations when markets are unstable

d. Moderation of commodity price fluctuations when markets are unstable

If the U.S. and Canada agree to use the same currency, then their association would be a: a. Free-trade area b. Customs union c. Common market d. Monetary union

d. Monetary union

Which trade law gave the U.S. president more power in determining trade law? a. Smoot-Hawley Act of 1930 b. General Agreements on Tariffs and Trade in 1947 c. Trade Reduction Act of 1962 d. Reciprocal Trade Agreements Act of 1934

d. Reciprocal Trade Agreements Act of 1934

7.18. Which nation accounts for the largest amount of OPEC's oil reserves and production? a. Iran b. Libya c. Iraq d. Saudi Arabia

d. Saudi Arabia

Which nation accounts for the greatest oil reserves and production? a. Venezuela b. Mexico c. Iraq d. Saudi Arabia

d. Saudi Arabia

Concerning the business cycle, slow economic growth is commonly associated with: a. Large or growing trade deficits and current account deficits b. Large or growing trade deficits and current account surpluses c. no change on trade deficits and current account deficits d. Small or shrinking trade deficits b/c less income and less imports; that improves trade balance

d. Small or shrinking trade deficits b/c less income and less imports; that improves trade balance

Lesser-developed countries: a. are nations with high trade per person b. reflect nations with high income levels c. Denote countries with high levels of GDP d. Suffer higher poverty rates than DCs

d. Suffer higher poverty rates than DCs

Which institution was the predecessor to the World Trade Organization? a. U.S. Trade Representative b. Organization for Economic Cooperation and Development c. United Nations d. The General Agreement on Tariffs and Trade

d. The General Agreement on Tariffs and Trade

6.60. In 1995 the General Agreement on Tariffs and Trade was replaced by the ____. a. Agency for International Development b. Organization for Economic Cooperation and Development c. United Nations Center for Trade and Development d. World Trade Organization

d. World Trade Organization

Exchange rate appreciation a. makes imports more expensive b. has no effect on trade c. reduces the value of the currency in the foreign exchange market d. makes imports cheaper and exports more expensive

d. makes imports cheaper and exports more expensive

Trade sanctions a. are never effective in causing other countries to change foreign policies b. are always effective in getting other nations to change foreign policies c. were included as part of the Russia Round of the EU d. seek to penalize a enemy country

d. seek to penalize a enemy country

The Uruguay Round achieved which major accomplishment? a. Increase in NTBs b. reduced trade in services c. the creation of NAFTA d. trade tribunal to resolve trade disputes

d. trade tribunal to resolve trade disputes

Economic trade sanctions (such as boycotts and embargoes) upon other countries: a. Are often not very successful in getting dictators to change their policies b. Are set up to reduce international trade barriers c. were a major achievement of the Kennedy Round d. Consist of unfair trade dumping practices

a. Are often not very successful in getting dictators to change their policies

5.7. Import quotas tend to lead to all of the following except: a. Domestic producers of the imported good being harmed b. Domestic consumers of the imported good being harmed c. Prices increasing in the importing country d. Prices falling in the exporting country

a. Domestic producers of the imported good being harmed

6.26. The strongest political pressure for a trade policy that results in higher protectionism comes from: a. Domestic workers lobbying for import restrictions b. Domestic workers lobbying for export restrictions c. Domestic consumers lobbying for export restrictions d. Domestic consumers lobbying for import restrictions

a. Domestic workers lobbying for import restrictions

The European Union is an example of which type of economic integration? a. Economic union b. Customs union c. Monetary union d. Common market e. FTA

a. Economic union

6.11. For the United States, which organization makes loans to foreign buyers of U.S. manufactured goods? a. Export-Import Bank b. Domestic International Sales Corporation c. Organization for Economic Cooperation and Development d. Commodity Credit Corporation

a. Export-Import Bank

5.5. The practice of Canadian firms dumping their products in Sweden poses a problem for economic policymakers since dumping tends to: a. Favor Swedish consumers over Canadian consumers b. Favor Swedish producers over Canadian producers c. Become widespread as firms operate at full productive capacity d. Result in firms charging prices above the total costs of production

a. Favor Swedish consumers over Canadian consumers

7.17. To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This scheme is referred to as: a. Generalized system of preferences b. Export-led growth c. International commodity agreement d. Reciprocal trade agreement

a. Generalized system of preferences

5.6. From the perspective of the American public as a whole, export subsidies levied by overseas governments on goods sold to the United States: a. Help more than they hurt b. Hurt more than they help c. Are equivalent to an import quota d. Are equivalent to an export quota

a. Help more than they hurt

6.34. Countervailing duties may be imposed: a. In response to a foreign export subsidy b. In response to a foreign antidumping tariff c. To promote exports of domestic companies d. To promote imports of domestic consumers

a. In response to a foreign export subsidy

6.3. Adjustment assistance is sometimes used to assist: a. In retraining workers displaced by imports b. In retraining workers displaced by exports c. Foreign firms injured by our quotas d. Foreign firms injured by our tariffs

a. In retraining workers displaced by imports

5.8. To maintain that South Koreans are dumping their VCRs in the United States is to maintain that: a. Koreans are selling VCRs in the United States below their production cost b. Koreans are selling VCRs in the United States above their production cost c. The cost of manufacturing VCRs in Korea is lower in Korea than in the United States since wages are lower in Korea d. The cost of manufacturing VCRs in Korea is higher in Korea than in the United States since wages are higher in Korea

a. Koreans are selling VCRs in the United States below their production cost

Which of the following is an international commodity cartel? a. OPEC b. IMF c. General Motors d. NATO

a. OPEC

International trade cartels: a. Often seek to raise the price of their commodities b. attempt to sell their traded goods at very low prices c. Relate only to domestic products, not international goods d. Are a sub-organization of the U.N.

a. Often seek to raise the price of their commodities

The Uruguay Round achieved which major accomplishment? a. Set up the WTO b. Trade dumping became a legal trade practice c. the creation of the IMF d. the continuation of NAFTA

a. Set up the WTO

6.12. The high point of U.S. protection culminated with the passage of the: a. Smoot-Hawley Act of 1930 b. General Agreements on Tariffs and Trade in 1947 c. Trade Reduction Act of 1962 d. Adjustment Assistance Act of 1970

a. Smoot-Hawley Act of 1930

5.4. Domestic content legislation applied to autos would tend to: a. Support wage levels of American autoworkers b. Lower auto prices for American autoworkers c. Encourage American automakers to locate production overseas d. Increase profits of American auto companies

a. Support wage levels of American autoworkers

6.2. Under U.S. commercial policy, the escape clause results in: a. Temporary quotas granted to firms injured by import competition b. Tariffs that offset export subsidies granted to foreign producers c. Tax advantages extended to minority-owned exporting firms d. Duties which offset commercial dumping on the part of foreign firms

a. Temporary quotas granted to firms injured by import competition

In U.S. trade law, Section 301 cases (of the Trade and Competitiveness Act) involve accusations of: a. Unfair trade activities by foreign companies in the U.S. market b. Partial-cost pricing by American companies c. Fair trade practices by foreign nations d. Free trade practices by domestic firms

a. Unfair trade activities by foreign companies in the U.S. market

6.37. Which international organization stipulates procedures for the settlement of international trade disputes? a. World Trade Organization b. World Bank c. International Monetary Fund d. Organization of Economic Development

a. World Trade Organization

The Generalized System of Preferences (GSP): a. allows LDCs to have reduced tariffs on their exports to DCs. b. Opposes export-led growth policies c. Was part of the Tokyo round d. Is a reciprocal trade arrangement

a. allows LDCs to have reduced tariffs on their exports to DCs.

Which of the following refers to the U.S. dollar increasing in value? a. appreciation or revaluation or strengthening of the dollar b. depreciation c. devaluation d. flexible exchange rate

a. appreciation or revaluation or strengthening of the dollar

A country has a balance of trade surplus when its: a. exports exceed its imports b. imports exceed its exports c. Goods and services exports exceed zero d. Goods and services imports equal zero

a. exports exceed its imports

Trade adjustment assistance: a. helps workers who lose their jobs because of imports b. Refers to a particular kind of import quota c. Provides aid to foreign firms injured by our tariffs d. Opposes government interference in international trade

a. helps workers who lose their jobs because of imports

High economic growth and rising incomes is associated with which of these? a. more imports and the trade deficit gets worse b/c more income leads to more spending on imports. b. more exports c. improving trade balance d. lower inflation

a. more imports and the trade deficit gets worse b/c more income leads to more spending on imports

The Export-Import Bank of the United States: a. provides loans to foreign buyers of American goods. b. Is a part of the World Bank system c. Determines the tariff rate upon U.S. imports d. Was implemented through the success of the Doha Round

a. provides loans to foreign buyers of American goods.