DONE Chapter 7 mc
If France decides it wants to make it difficult for other countries to export wine to French businesses and creates bottling standards that don't exist anywhere else in the world, it would be implementing ________ policies as a way to restrict these imports.
C) administrative trade
The group that benefits the most from receiving subsidies is
C) domestic producers.
Arguments for international trade typically focus on political and ________ reasons.
C) economic
Dumping takes place when foreign producers
C) eliminate competition by subsidizing prices in a foreign market with home market profits and eventually raising prices to earn substantial profits.
Some countries limit the amount of sugar that can be imported. This restriction is called a(n)
C) import quota.
Paint products containing lead are banned from entering the United States. This ban is in place to
C) protect consumers from unsafe products.
Ultimately, antidumping policies are put in place to
C) protect domestic producers from unfair foreign competition.
Paul Krugman believed that a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to
C) provoke retaliation.
One objective of export tariffs is to
C) reduce exports from a sector to ensure a sufficient supply.
Some governments "threaten" trade sanctions or other measures as a way to get another government to enforce safety standards or enforce intellectual property laws. This method of intervention is known as
C) retaliation.
In some years, the U.S. government has paid wheat farmers an additional 50 cents on every bushel of wheat they sell. This money is an example of a(n)
C) subsidy.
According to Krugman, ________ is the best indicator of the dangers of a strategic trade policy.
C) the occurrence of a trade war
The ________ does not reinforce that the best interests of international business are served by a free trade stance.
C) trend toward greater protectionism
If a country is experiencing a surge of electronic imports from a trading partner, it might ask that country to set a limit on how much can be exported. This limit is known as a
C) voluntary export restraint (VER).
The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something GATT had never done. Two of the first industries targeted for this reform were
A) global telecommunication and financial services industries.
Following the global financial downturn in 2008-2009, some developed nations subsidized automobile makers to help them survive the economic climate. One negative consequence of this action was that
A) the companies had an unfair competitive advantage in the global industry.
One of the reasons why protectionist pressures arose around the world during the 1980s was
A) the different ways many countries found to get around GATT regulations.
A charge of 12-18 percent is levied by the government of a foreign nation on the value of automobile accessories imported from a neighboring country. This increased the price of those imported car accessories for the consumers. This foreign nation is using a(n)
B) ad valorem tariff.
If Indonesia exports vast quantities of cheap textiles to Italy, selling them at below their costs of production, it would be an example of
B) dumping.
For many years, there have been limits set on the amount of sugar that foreign producers can sell in the U.S. market. This is mandated by a
B) tariff rate quota system.
There are seven main instruments used in trade policy with ________ being the oldest and the simplest.
B) tariffs
________ are put in place to make it difficult for imports to enter a country.
D) Administrative trade policies
What is one provision of the Uruguay Round Agreement?
D) Barriers on trade in textiles were to be significantly reduced over 10 years.
According to the ________, U.S. government agencies must give preference to U.S. products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.
D) Buy America Act
If the U.S. Department of Education put out a contract for 150,000 laptop computers and the contract stated that preference would be given to bids that declared at least 51 percent of the materials by value in the computers were produced in the United States, which legislative act is this stipulation based on?
D) Buy America Act
What is the result of the threat of antidumping action?
D) It limits the ability of a firm to use aggressive pricing to gain market share in a country.
The economic prosperity enjoyed by ________ during the 1980s and 1990s strained the world trading system and created the demand for increased protectionist measures.
D) Japan
The Smoot-Hawley Act had a damaging effect on
D) employment abroad.
One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that
D) firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets.
The WTO rules say that a country can impose antidumping duties on
D) foreign goods being sold cheaper than at home.
During the 1980s and 1990s, trade sanctions were put in place by Western governments against South Africa in response to the apartheid policies in place there. These trade sanctions were a response to
D) human rights violations.
The principal function of the trade sanctions the United States has in place against Cuba is to
D) impoverish Cuba to lead to the downfall of the communist government.
Indonesia might have a potential comparative advantage in manufacturing textiles but is unable to compete with established textile manufacturing in Japan, at least for the near future. Indonesia could claim the
D) infant industry argument.
Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries. This demonstrates the
D) infant industry argument.
ComTek Limited has an order to sell 50,000 central processing units (CPUs) to Brazil, but the Brazilian government stipulated that 35 percent of the component parts of those CPUs must be produced in Brazil. This stipulation is an example of a(n)
D) local content requirement.
Bilateral voluntary export restraints, or VERs, circumvented GATT agreements because
D) neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action.
A loophole in antidumping laws that is being exploited by many countries to pursue protectionism is the
D) vague definition of what constitutes "dumping."
Mexico has raised the taxes on cheeses imported from the United States. These taxes are an example of a(n)
E) tariff.
A bound tariff rate is
E) the highest rate that can be charged.
Which multilateral trade agreement was established under U.S. leadership in 1947, with the objective to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like?
A) General Agreement on Tariffs and Trade (GATT)
AllMetal Corp., based in Houston, believes the ideal way for the United States to respond when foreign competitors are already being supported by government subsidies is not to retaliate but to establish rules that help minimize trade-distorting subsidies. Which theorist does AllMetal's management agree with?
A) Krugman
A major reason why many economists remain critical of the infant industry argument is because it
A) makes the domestic industry inefficient.
GATS, a sister body of the World Trade Organization, is responsible for extending free trade agreements in what area?
A) services
A nation that imposes a fixed charge of $3 per barrel of oil imported into the country is relying on which instrument of trade?
A) specific tariff
According to ________, a government should use subsidies to support promising firms that are active in newly emerging industries.
A) strategic trade policy
A(n) ________ is in place when a lower tariff rate is applied to imports within the government quota than those over the quota.
A) tariff rate quota
Firms engage in dumping in order to
A) unload excess production in foreign markets.
The first official government policy for free trade occurred in which country?
B) Great Britain
Why is retaliation by government intervention a risky strategy?
B) It could result in increased tariff barriers by the country that is being pressured.
What is one major advantage the World Trade Organization had over the GATT agreement?
B) Procedures under the WTO had strict time limits.
The Smoot-Hawley Act tried to divert consumer demand away from foreign products by
B) establishing tariff barriers.
In 1975, OPEC did not allow the export of U.S. crude oil in order to drive up the price of oil. This action is an example of a(n)
B) export ban.
For years, the world used a small nation in Central America as a place to assemble goods and benefit from cheap labor. To shift its manufacturing base from simple assembly to full-fledged manufacture of components and finished goods, the nation introduced a policy that stated 35 percent of the value of a product must be produced locally. This is an example of a(n)
B) local content requirement.
Domestic producers experience limited import competition when a VER is in place. As a result, these producers make extra profit because supply is artificially limited by the import quota. This extra profit is called
B) quota rent.
SilverFinn makes high-end jewelry for women. This jewelry is manufactured and patented in Italy. Manufacturers in Argentina create counterfeit SilverFinn jewelry and sell it in local markets at nearly similar prices to the original SilverFinn jewelry sold in other countries. This lack of intellectual property protection is like to result in
B) reduction in the export opportunities for SilverFinn jewelry in Argentina.
Another basis for Krugman's argument is that strategic trade policy can be captured by ________, which will distort the policy so it benefits their own needs.
B) special-interest groups
The country of Plena imposes an ad valorem tariff of 10 percent on 1 million tons of rice imports, after which an out-of-quota tariff of 80 percent is applied. What trade policy instrument is Plena using?
B) tariff rate quota
Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997?
C) It offered a greater ability for companies to offer a global, seamless service for all their corporate needs.
The WTO's Agreement on ________ is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules.
C) Trade-Related Aspects of Intellectual Property Rights (TRIPS)
How do voluntary export restraints affect the prices of goods?
C) VERs always raise the domestic price of an imported good.
The ultimate purpose of GATT was to
E) establish free trade.
One way to ensure that there is sufficient supply of a good within a country is to enact a(n) ________, which discriminates against producers from exporting goods.
E) export tariff
A tiny South Pacific island country produces large quantities of coconut-based products. To protect this industry, the island government mandates that only designated trading companies can import the crop, each of which is allocated the right to import a maximum number of pounds of coconuts each year. This is an example of a(n)
E) import quota.
President Trump has voiced his opposition to many free trade deals. Because of this, some say that he maintains a(n) ________ view on trade.
E) mercantilist
