IBA Chapter 7
Which form of government intervention in trade dictates that a company's exports must contain a certain amount of home-country inputs? A. Managerial and governmental procedures B. Ownership restrictions C. Local content requirements D. Quotas E. Regulations and technical principles
C
Which of the following primarily focuses on ensuring the reduction of tariffs among certain countries and settling trade disagreements? A. United Nations B. World Bank C. General Agreement on Tariffs and Trade D. European Union E. Smoot-Hawley Tariff Act
C
Which of the following statements BEST describes the European Union (EU)? A. Labor and capital are unable to move freely among the EU members. B. Multiple currencies make trade easier for firms doing business within the EU. C. Trade among the EU members takes place unobstructed. D. The EU is a political union with the same laws throughout. E. Eleven EU countries belong to a monetary union that uses the pound.
C
The government of Nobula has created a specific region that is within Nobula but is treated as if it were outside the nation's borders. Firms use the region to receive imported parts for assembly and then to re-export the finished products. This region in Nobula can be described as a(n) ________. A. foreign trade zone B. common market C. regional economic relationship D. nontariff trade barrier E. economic union
A
T/F: Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc.
T
Although Belgium has a population of only 10 million, EU membership gives Belgian firms access to nearly 500 million EU buyers. Based on this information, a Belgian firm primarily benefits from EU membership by ________. A. having access to a larger market B. monitoring production efficiency C. developing a stronger defense against local competitors D. developing a stronger brand image E. attracting investors from outside the bloc
A
Due to the larger market size of an economic bloc, member country firms are able to reduce their product prices because they can ________. A. attain economies of scale B. gain political support C. impose duties on block members D. seek investments from external sources E. implement a different organizational structure
A
Gaining political power in world affairs has enabled the EU to compete more effectively with the U.S. by ________. A. developing a stronger defensive posture B. improving manufacturing productivity C. attracting direct investment from outside the bloc D. expanding the regional market size E. achieving scale economies
A
If ABC International establishes export assembly locations in order to create mechanisms and completed goods that are destined for other countries, it is countering government-imposed regulations on trade by ________. A. utilizing a foreign trade zone B. scanning the business environment C. seeking preferable customs categorizations for exported goods D. relying on government subsidies E. selecting suitable entrance approaches
A
In the European Union, which one of the following makes decisions regarding economic policy, budgets, foreign policy, and the admission of new member countries? A. Council of the European Union B. European Parliament C. European Commission D. European Free Trade Association (EFTA) E. European Court of Justice
A
In a(n) ________, barriers to trade within a participating country are reduced or eliminated, shared external barriers are established, and unrestricted movement of goods, services, and factors of production is permitted. A. common market B. overseas trade region C. free trade area D. customs union E. unrestricted trade location
A
Members of ________ benefited the most from the maquiladora program. A. NAFTA B. EFTA C. MERCOSUR D. EU
A
TDC Industries, a U.S. firm, has established operations in Germany, so TDC Industries has free trade access to ________of the EU market. A. all B. a limited part C. a specific percentage D. a large part E. none
A
Which of the following BEST defines maquiladoras? A. Export-assembly plants B. Transfer payments made directly to foreign firms C. Tariffs imposed on products imported into a country D. Taxes imposed on products that will be dumped E. Areas within a country that receive imported goods for assembly
A
Which of the following primarily focuses on ensuring the reduction of tariffs among certain countries and settling trade disagreements? A. General Agreement on Tariffs and Trade B. European Union C. Smoot-Hawley Tariff Act D. United Nations E. World Bank
A
Which one of the following involves reducing or removing barriers to trade, establishing shared external barriers, and permitting the unrestricted movement of goods, services, and factors of production within participating countries? A. Common market B. Customs union C. Unrestricted trade location D. Foreign trade zone E. Economic union
A
Which one of the following is a major factor in the growth of global commerce and in rising incomes worldwide? A. Reducing trade barriers B. Increasing antidumping duties C. Increasing countervailing duties D. Reducing subsidies E. Reducing investment incentives
A
Which one of the following was the first major effort to systematically reduce trade barriers worldwide? A. GATT B. FTZ C. EU D. NAFTA E. WTO
A
________ pertains to national economic policies that restrict free trade and protect domestic industries from foreign competition. A. Protectionism B. A nontariff trade barrier C. A tariff D. A quota E. A custom
A
________ represent locations at the ports of entry in each country where government authorities inspect imported products and levy tariffs. A. Customs B. Export trade zones C. Regional economic blocs D. Foreign trade zones E. Maquiladoras
A
A government policy or procedure that restricts trade through means such as quotas is known as a(n) ________. A. export control B. nontariff trade barrier C. import control D. currency control E. import license
B
Financing or other resources that a government grants to a firm or group of firms, to ensure their survival or success is referred to as a ___________. A. grant B. subsidy C. quota D. premium
B
In which stage of regional integration do member countries strive to have common fiscal and monetary policies? A. Foreign trade zone B. Economic union C. Unrestricted trade location D. Customs union E. Common market
B
In a(n) ________, barriers to trade within a participating country are reduced or eliminated, shared external barriers are established, and unrestricted movement of goods, services, and factors of production is permitted. A. customs union B. common market C. overseas trade region D. unrestricted trade location E. free trade area
B
Manuel Aguilar, a Bolivian shoe store owner, wants to import shoes from Vietnam. An average pair of shoes costs $10 from the supplier in Vietnam. However, the Bolivian government requires Manuel to pay the government an additional $3.50 for each pair of shoes he imports. This extra payment is an example of a ________. A. subsidy B. tariff C. quota D. local content requirement E. nontariff trade barrier
B
Melissa Chitembo wants to internationalize her Canadian syrup business. Rather than expanding too far too fast, Melissa decides to market her syrup to new customers in the northern part of the U.S. Which one of the following BEST describes Melissa's actions? A. Harmonization of product standards B. Internationalization inside the economic bloc C. Formation of an economic union D. Internationalization outside the economic bloc E. Restructuring of operations
B
Regional integration enables member countries to gain bargaining power in world affairs by ________. A. attracting direct investment from outside the bloc B. establishing a stronger political position as a united bloc C. expanding the market size of member country firms D. helping member country firms to achieve economies of scale E. enhancing the productivity of member countries
B
Which of the following is the world's most advanced and largest regional economic bloc? A. Asia Pacific Economic Cooperation B. European Union C. MERCOSUR D. Association of Southeast Asian Nations E. North American Free Trade Agreement
B
Which one of the following BEST explains why an American firm would establish a factory in the EU? A. To acquire government subsidies from both the EU and U.S. B. To obtain free trade access to the EU market C. To provide standardized products to both EU and U.S. customers D. To gain preferable customs categorizations for U.S. and EU exports E. To monitor licensing and franchising activities in the EU
B
Which one of the following is a global economic principle created to limit unrestricted trade while guarding home-country businesses from overseas competition? A. Foreign trade zone B. Protectionism C. General Agreement on Tariffs and Trade (GATT) D. Currency controls E. Regional economic assimilation
B
Which one of the following is a major factor in the growth of global commerce and in rising incomes worldwide? A. Increasing antidumping duties B. Reducing trade barriers C. Reducing subsidies D. Increasing countervailing duties E. Reducing investment incentives
B
Which one of the following is a tariff imposed on goods brought into a country to offset subsidies awarded to manufacturers or exporters in the exporting country? A. Export control B. A countervailing duty C. Quota D. Import authorization E. Currency control
B
Which one of the following represents government approval given to a company that allows it to bring in certain products from foreign countries? A. Nontariff trade barrier B. Import license C. Local content requirements D. Subsidy E. Protectionism
B
Which one of the following terms defines a government strategy aimed at handling or preventing the shipment of specific goods or trade with particular nations? A. Regional economic assimilation B. Export control C. Countervailing duty D. Currency control E. Nontariff trade barrier
B
Which one of the following was the first major effort to systematically reduce trade barriers worldwide? A. WTO B. GATT C. FTZ D. EU E. NAFTA
B
Which term refers to exported goods being priced lower than their typical value whether in home-country markets or foreign markets? A. Countervailing duties B. Dumping C. Subsidizing D. Export controls E. Nontariff trade barriers
B
Why would a nation choose to be a member of an economic bloc? A. A nation can then become part of the World Trade Organization. B. It is easier to reach an agreement on free trade with a few nations rather than with numerous countries. C. An economic bloc imposes restrictions on labor. D. Nations can pursue economic integration by reducing tariffs. E. An economic bloc imposes restrictions on the cross-border flow of products.
B
If you are a business looking for a foreign market in which to sell goods, what does economic freedom in a country mean to your business? A. The government will support foreign business by enacting laws that increase export controls. B. The government will pass legislation that increases protectionism. C. The government will support foreign business by enacting laws that decrease import quotas. D. The government will enact laws that limit the amount of currency that can be taken out of the country. E. The government will increase tariffs.
C
Regional integration leads to increased ________ by firms inside their economic bloc. A. localization B. dumping C. internationalization D. isolation E. costs
C
Since the 1970s, Singapore, Hong Kong, Taiwan, and South Korea have accomplished rapid economic growth by following ________. A. centralized economic planning B. import authorization efforts C. an export-led development model D. normal trade relations E. the Japanese miracle
C
Which of the following was formed by three countries to increase market entrance, remove barriers to trade, establish investment standards, and encourage bidding on government contracts within the three countries participating in it? A. Association of Southeast Asian Nations B. MERCOSUR C. North American Free Trade Agreement (NAFTA) D. European Union (EU) E. Asia Pacific Economic Cooperation
C
A(n)________ is a designated location within a country that receives imported goods for assembly and then re-exports finished products. A. economic bloc B. regional bloc C. foreign trade zone D. political union E. free trade agreement
C
________ imposes limitations on the expenditure or outflow of tangible currency from a certain nation or on the influx of foreign currencies. A. A nontariff trade barrier B. Export control C. Currency control D. A countervailing duty E. A quota
C
A specific region that is located within a nation is treated as if it were outside the nation's borders. This region is designated to receive imported products that are not subject to tariffs and that are intended for assembly and subsequent re-export. Which term best describes this region? A. Free trade area B. Common market C. Economic union D. Foreign trade zone E. Regional economic integration
D
Governments impose defensive barriers to ________. A. promote national security B. safeguard industries C. protect workers D. all of the above
D
In a(n) ________, which is the second level of regional integration, participating countries harmonize their external trade policies and adopt the same tariff and nontariff barriers on imports from nonparticipating countries. A. unrestricted trade location B. economic union C. foreign trade zone D. customs union E. common market
D
The passage of which economic bloc was smoothed by the existence of the maquiladora program? A. Gulf Cooperation Council (GCC) B. Closer Economic Relations Agreement (CER) C. El Mercado Comun del Sur (MERCOSUR) D. North American Free Trade Agreement (NAFTA) E. European Free Trade Association (EFTA)
D
Which of the following statements about NAFTA is TRUE? A. NAFTA implemented tariffs for products and services traded in the bloc. B. NAFTA decreased market access among Canada, Mexico, and the United States. C. NAFTA does not offer dispute settlement in areas of investment, unfair pricing, labor issues, and the environment. D. NAFTA allowed member-country firms to submit bids for government contracts in the three signing countries (Canada, Mexico, and the United States). E. NAFTA caused a reduction in U.S. exports to Canada and Mexico.
D
Which one of the following is TRUE of a foreign trade zone (FTZ)? A. FTZs are created by industries. B. FTZs are used only to assemble finished products needed in the same location. C. Products in FTZs are subject to high tariffs. D. An FTZ receives goods meant for export. E. All FTZs are the same size.
D
Which one of the following was established in 1967 with the objective of sustaining governmental stability and encouraging financial and social growth among members? A. MERCOSUR B. North American Free Trade Agreement C. Australia and New Zealand Closer Economic Relations Agreement D. The Association of Southeast Asian Nations E. European Union
D
Which type of government intervention encourages foreign companies to enter a host-country market? A. Dumping B. Currency controls C. Tariffs D. Investment incentives E. Countervailing duties
D
________ are taxes placed on imported goods that increase the final purchase price for consumers. A. Export controls B. Quotas C. Subsidies D. Tariffs E. Nontariff trade barriers
D
________ involves countries establishing agreements with one another for the purpose of minimizing obstacles concerning trade and business ventures. A. The General Agreement on Tariffs and Trade B. Centralized economic planning C. A foreign trade zone D. Regional economic integration E. Investment motivation
D
________ are measurable limits set on the import of certain goods for a designated period of time. A. Subsidies B. Tariffs C. Maquiladoras D. Quotas E. Customs
D
Government intervention and trade barriers imposed by developed countries raise ______ for developing economies that supply them because tariffs are often disproportionately high. A. export controls B. quotas C. economic freedom levels D. subsidies E. ethical concerns
E
Government intervention and trade barriers imposed by developed countries raise ______ for developing economies that supply them because tariffs are often disproportionately high. A. quotas B. economic freedom levels C. subsidies D. export controls E. ethical concerns
E
Regional integration enables member countries to gain bargaining power in world affairs by ________. A. attracting direct investment from outside the bloc B. enhancing the productivity of member countries C. helping member country firms to achieve economies of scale D. expanding the market size of member country firms E. establishing a stronger political position as a united bloc
E
South Korea faced a quota on the export of non-rubber footwear exported to the United States. By shifting manufacturing to rubber-soled shoes, South Korean firms greatly increased their footwear exports. Which one of the following strategies for responding to government intervention did the South Korean firms choose? A. Switching from exporting to foreign direct investment B. Taking advantage of investment incentives C. Using a different entry strategy D. Taking advantage of foreign trade zones E. Seeking favorable customs classifications
E
The ________ is a multinational organization of more than 160 member countries dedicated to reducing barriers to international business worldwide. A. MERCOSUR B. ASEAN C. EU D. NAFTA E. WTO
E
Which of the following coordinates economic, social, and cultural affairs among Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates? A. Asia Pacific Economic Cooperation (APEC) B. The Australia and New Zealand Closer Economic Relations Agreement (CER) C. Association of Southeast Asian Nations (ASEAN) D. European Free Trade Association E. The Gulf Cooperation Council (GCC)
E
Which of the following is a stage of regional integration in which member countries decide to remove tariffs and other barriers to trade within the bloc, but maintain trade barriers with nonmember countries? A. Economic union B. Common market C. Customs union D. Foreign trade zone E. Free trade area
E
________ are monetary or other resources granted to a company by a government to assist in the manufacturing and promotion of products at decreased prices to improve the company's success. A. Export controls B. Tariffs C. Maquiladoras D. Quotas E. Subsidies
E
________ involves countries establishing agreements with one another for the purpose of minimizing obstacles concerning trade and business ventures. A. A foreign trade zone B. Centralized economic planning C. The General Agreement on Tariffs and Trade D. Investment motivation E. Regional economic integration
E
________ involves 21 nations, from both sides of the Pacific, and aims for increased, unrestricted trade and economic alliances among member and potential member countries. A. ASEAN B. NAFTA C. The EU D. MERCOSUR E. APEC
E
T/F: Obtaining economic development incentives from host-or home-country governments increases the cost of trade and investment barriers.
F
T/F: Tariffs and most nontariff trade barriers impact importers by making products more expensive.
T