international business chapter 7
When manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production, it is called ______.
dumping
One benefit of free trade is that it stimulates economic growth and wealth creation. In other words, it provides _____ economic gains.
dynamic
In 1975, Congress restricted the export of US crude oil in response to the actions taken by OPEC. This restriction is an example of which trade policy?
export ban
When a country restricts the export of a product, it is implementing a(n) _____.
export ban
A consequence of subsidies paid to companies during difficult economic times -- for example, the Japanese farm subsidies -- is
giving recipients an unfair competitive advantage.
The United States has placed a limit on the amount of tuna in airtight containers that can be imported into this country. This is an example of a(n) _____.
import quota
According to a study cited in the text, if advanced countries stopped providing subsidies to farmers, global trade in agricultural products would
increase by 50%.
The ______ argument for trade intervention states that developing countries need to support new industries until they are strong enough to compete globally
infant industry
The oldest argument for government intervention in trade in which developing nations must protect their domestic industries until they are ready to compete globally is the ______ argument
infant industry
When governments intervene in foreign trade, they often claim they are protecting ______ from unfair foreign competition
jobs
A(n) ______ states that some percentage of a good must be produced domestically.
local content requirement
In order to win a contract in Mexico, QVB Auto Manufacturing must make 65% of the component parts of their vehicles in Mexico. This is an example of a(n)
local content requirement
A government would impose administrative trade policies in order to
make it difficult for imports to enter a country.
A foreign nation is concerned that all jobs in the computer manufacturing industry will be lost to another country. The government decides to step in and prevent this from happening and implements tariffs on certain imports. The leader is praised for this action and reminds voters of this during the next election. In this situation, government intervention is based on a _____ argument
political
Company ABC in Scotland exports a pound of cheese to the US for $100. The US places a 9% tax on the cheese as a proportion of its value. What type of tariff is this?
Ad valorem
As noted in the text, the US government used the threat of trade sanctions to try to convince the _____ government to enforce its intellectual property laws since massive copyright infringements in that country have cost US companies millions of dollars in lost revenue
Chinese
Which two outcomes typically occur with the implementation of local content regulations?
-Local content regulations provide protection for a domestic producer. -The restrictions on imports raise the prices of imported components, which lead to higher prices for consumers.
Which two groups are positively impacted when an import tariff is enacted?
Domestic producers Government
True or false: GATT has NOT recognized the infant industry argument as a legitimate reason for protectionism.
False
Which two groups are negatively impacted when an import tariff is enacted?
Foreign producers Consumers
What are four main instruments of trade policy?
Tariffs Local content requirements Import quotas Antidumping duties
According to the text, what are three economic effects of import tariffs?
Tariffs are anti-consumer. Tariffs reduce the overall efficiency of the world economy. Tariffs are generally pro-producer.
What occurs when a company practices dumping?
The firm is unloading excess production in a foreign market.
When analyzing the economic effects of import tariffs, it has been concluded that tariffs are considered anti-consumer and pro-_____.
producer
By threatening ______ trade sanctions, one country can convince another country to open its markets.
punitive
An import _____ is a type of trade restriction that sets a physical limit on the quantity of a product that can be imported into the country in a set period of time
quota
Sometimes governments pay subsidies to help companies survive challenging economic climates. In effect, these companies have
received an unfair competitive advantage.
If we accept that the tenets of strategic trade policy are correct, then the government _____ intervene in international trade
should
One consequence of free trade is higher domestic consumption and a more efficient use of resources. These would be considered _____ economic gains
static
According to strategic trade policy, governments should use ______ to support development work aimed at commercializing target technologies.
subsidies
A(n) ______ is a payment by the government to a domestic producer to help lower production costs so they are better able to compete with foreign imports.
subsidy
The nationwide company, Nightingale Health Systems, received a tax break from the government when it was faltering and ready to declare bankruptcy. This subsidy helped the company with production costs and allowed it to have a stronger presence in the competitive health industry. This tax break is a type of _____.
subsidy
A tax on goods coming into or leaving a country is called a(n) ______.
tariff
What is considered the simplest instrument of trade policy?
tariffs
Taxes placed on imports to protect domestic producers from foreign competition and to produce revenue for the government are called
tariffs.
One of the greatest benefits of local content regulations for a producer is that _____
they limit foreign competition
True or false: After analyzing current practices, it can be said that subsidies are not that successful at increasing the international competitiveness of domestic producers.
true
Japan imposed a limit on auto exports to the US as a result of pressure by the US government. What instrument of trade policy does this represent?
voluntary export restraint
A self-imposed trade restriction on the quantity of a good that the exporting country is allowed to export to another country is called a(n)
voluntary export restraint.
A(n)______ tariff is a tax that is levied on a good on the basis of its value, not on the basis of its weight or quantity
ad valorem
A country might create safety standards for certain products that other nations can't comply with. As a result, these nations can't be involved with exporting parts for those goods and trade does not exist. These safety standards are a form of _____.
administrative trade policy
The infant industry argument has what potential negative consequence?
causing infant industries to lack efficiency
