International Business Ch. 7

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 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 loses from a government policy to protect infant industries?

Domestic consumers and foreign producers lose, while the home government and home producers gain.

The United States and Kenya are exploring the possibility of a trade deal _ refers to a situation in which a government does not attempt to restrict what its citizen can buy from or sell to another country.

Free Trade

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.

Currently, the United States and Kenya do not have a trade agreement. If the United States imposes an import tariff on products from Kenya typically

U.S. consumers lose, U.S. producers gain, and the U.S. government gains.

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

Brazil used tariffs to protect its auto industry in the 1950s. Tariffs

are taxes levied on imports or exports.

The United States has accused China of

exacerbating the global glut of steel by investing in additional production.

Which argument for government intervention in trade best describes the rationale behind the United States' interest in negotiating a trade deal with Kenya?

furthering foreign policy objectives

If the United States levies a tariff of $0.50 on every pound of coffee imported from Kenya, the United States has

levied a specific tariff on imported coffee from Kenya.

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