MGT 302: Ch 8

Strategic trade policy suggests a(n) ______ justification for government intervention in trade.

economic

What are three main instruments of trade policy?

voluntary export restraints subsidies import quotas

Governments implement _____ trade policies that are designed to make it difficult for imports to enter a country.

administrative

At the end of the fiscal year, Jack's company sells their bicycles in Thailand at below what it costs to produce the bikes in order to unload excess inventory. This is an example of _____.

dumping

One way the GATT hoped to achieve its objective was by _____.

eliminating tariffs

The WTO is more successful than GATT because the WTO has ______ mechanisms that make it more effective.

enforcement

When the government does not use quotas, taxes or other means to restrict what its citizens can buy from or sell to another country, it is called _____ trade.

free

What are two ways trade barriers hamper a firm's productive activities?

They raise the cost of exporting products. Quotas limit the ability to serve a country from outside locales.

Tariff barriers raise the costs of exporting products to a country (or of exporting partly finished products between countries). Which of the following is a likely consequence of these barriers?

This may put a firm at a competitive disadvantage to indigenous competitors in that country.

Tariff rates on agricultural products tend to be ____ tariff rates on a manufactured good.

higher than

Import quotas are based on the _____ of a good.

quantity

In _____ Britain withdrew from the European Union following ____.

2016, Brexit

Which country was the first to officially follow a policy of free trade in the mid 1800s?

Great Britain

Which country is pointed to as the master of administrative trade policies?

Japan

Which economist was a key figure in the early free trade movement in Great Britain?

Ricardo

______ constrain a firm's ability to export its products by raising the price of the exported product, which could put the firm at a competitive disadvantage with domestic firms in that country.

Tariff barriers

Which round of GATT negotiations provided enhanced protection for intellectual property and significantly reduced barriers on trade in textiles?

The Uruguay Round

The government is considering placing additional taxes on foreign steel imports that are a proportion of the value of the imported steel. This is an example of

an ad valorem tariff.

During the 1970s, Congress did not allow US industries to export crude oil production. This action is an example of an export _____.

ban

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, as a way to get rid of excess product, it is called ______.

dumping

Which of the following can a country use to counter-act a country that uses subsidies to support an industry?

establish anti-dumping regulations

Krugman argues that strategic trade policy should not be embraced because many times governments are influenced by politically important _____ to intervene in the economy.

interest groups

Evan works in a country in which the government has stated that 45% of all goods must be produced domestically. What type of requirement does this country have in place?

local content requirement

In order to win a contract from Mexico, QVB Autos Manufacturing must make 65% of the component parts of their autos in Mexico. This is an example of a

local content requirement.

As a result of the Doha Round, _____ countries are entering into multilateral and bilateral trade agreements.

more

Member nations hoped that the WTO would be a facilitator of future trade deals especially in the area of _____.

services

Taxes placed on imports to protect domestic producers from foreign competition and to produce revenue for the government are

tariffs

Subsidies are a form of payment that is provided by _____.

the government

True or false: Governments do not always act in the national interest when intervening in the economy.

true

The Uruguay Round started in 1986 and eventually provided for which three of these provisions?

Reducing tariffs on industrial goods Reducing tariffs on manufactured goods Reducing agricultural subsidies

Following Brexit, Great Britain withdrew from the European Union in 2016. (T/F)

True

As the text notes, unrestricted free trade is impossible if there is a lack of ____ between nations.

Trust

Based on the theories of Ricardo and Smith, the consequences of free trade include ______ economic gains in terms of economic growth and wealth creation.

dynamic

A(n) _____ 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.

import quota

A tariff is a tax levied on _____.

imports or exports

In response to the apparent failure of the current Doha Round, many nations have implemented _____.

multilateral trade agreements

What is considered the most common political argument for government intervention in foreign trade?

protecting jobs and industries

Which instrument of trade policy has been in use the longest?

tariffs

When considering the benefit of free trade in neighboring countries, one government might favor lowering trade barriers but won't do it because of a lack of ______ in the other nation.

trust

The economic success of _____ put a strain on the world trading system in the 1980s and promoted protectionism measures.

Japan

Goods that are taxed as they ship out of a country have a(n) ____ tariff.

export

The strategic trade policy may look good in theory, but in practice it may be unworkable. As a result, the case for ___ trade may come to the forefront.

free

During th 1980s, the trend was for ______ protectionism around the world.

greater

When governments intervene in foreign trade, they often claim they are protecting ______ from unfair foreign competition.

industries

The oldest argument for government intervention in trade where developing nations must protect their domestic industries until they are ready to compete globally is the ______ argument.

infant industry

The WTO argues that by removing all tariff barriers and subsidies to agriculture,

there would be overproduction of products that are heavily subsidized.

The main objective of GATT was to liberalize _____ restrictions.

trade

Krugman promoted the idea that if each country seeks to follow a strategic trade policy to protect its interests, this may lead to ______.

trade war

What industry tends to benefit the most from subsidies in most countries?

agriculture

The infant industry argument for trade intervention states that developing countries need to support new industries until they are strong enough to _____.

compete globally