Module 5 SmartBook International Business

True or false: In most parts of the world, you will not find government-owned businesses.

False

True or false: A compound duty is a combination of specific and nontariff barriers.

False; A compound duty is a combination of specific and ad valorem duties.

True or false: Import duties mean lower prices for the consumer.

False; Import duties raise the price of the good for the consumer.

True or false: Sanctions are effective at achieving their goal of forcing change in the targeted country.

False; Sanctions seldom achieve their goal of forcing change in the targeted country.

A pharmaceutical firm pays import duties that are stated as a percentage of the invoice value of the product. This is an example of what type of tariff?

ad valorem

Which duty is stated as a percentage of the invoice value of the product?

ad valorem

What area, particularly related to the Internet, is of increasing concern to governments as they try to protect the business activities of their citizens?

cybercrime

Economists argue that the best way to protect national security and provide for national defense is through ______.

direct government subsidies

Supporters of fair competition suggest that an import ______ will bring the cost of imported goods up to the cost of domestically produced goods.

duty

Voluntary export restraints are export quotas imposed by the ______.

exporting nation

In __________ kidnapping, the victim is kidnapped, often near an airport or international hotel, and forced to withdraw money from cashpoints or an ATM before being released.

express

Quotas are usually global in nature, with the total amount _______ regardless of the source.

fixed

As a result of WTO agreements, nontariff barriers have ______.

gained greater importance.

Subsidies can take the form of ______. (Check all that apply.)

government participation in ownership preferential tax treatment cash payments to the firm

Which of the following cybercrimes are most often targeted at businesses? (Check all that apply.)

hacking domain-related offenses data espionage

When comparing production levels at automotive plants in Mexico and the United States, productivity per worker is ______ in the United States than in Mexico.

higher

Tariffs are also called ______ duties

import

Customs is a general term for duties paid on

imports

Which of the following challenges can unstable governments present to businesses? (Check all that apply.)

inability to ensure peace a pattern of unpredictable change

When governments impose trade restrictions, the cost of the traded goods will ______.

increase

What are some of the reasons a government would restrict trade? (Check all that apply.)

protect domestic infant industries promote national defense preserve domestic jobs

A tariff-rate ______ permits a stipulated amount to enter duty-free or at a low rate, but a much higher duty is charged for additional quantities.

quota

Which one of the following would be recognized in a country risk assessment?

revolution against the government

A(n) country ________ assessment reviews a country's economic situation and politics to determine how much risk to employees, property, and investment exists for firms doing business there.

risk

Unlawful acts of violence committed to achieve a variety of objectives are collectively known as

terrorism

Piracy

is hijacking that includes kidnapping on the seas.

Nationalization

is when a government takes a private firm to public ownership.

What are the four areas of increasing concern to governments as they try to protect business activities?

kidnapping terrorism piracy cybercrime

A request for ransom is associated with the extreme act of

kidnapping or terrorism

Productivity per worker is greater in more developed countries because of ______. (Check all that apply.)

more capital per worker superior management advanced technologies

Which methods can a government use to minimize unfair international competition? (Check all that apply.)

national laws institutions such as the WTO negotiations between governments

When governments ______ private firms, they take them from private to public ownership.

nationalize

During Margaret Thatcher's tenure as prime minister of Britain, she decreased the number of state-owned companies and sold more than 30 companies, thereby raising $65 billion for the country. This is an example of ______.

privatization

Which is an example of a government-owned business in the United States?

Export-Import Bank

What are the potential drawbacks to placing a ban on the export of advanced technologies? (Check all that apply.)

It impedes efforts to sustain international market share. It impedes the funding of continued innovation. It reduces export revenues for the country's manufactures.

What was the result of the Smoot-Hawley Tariff Act?

It increased tariffs on many items in many industries.

Because ______ has a national trade policy, its government intervention in trade reflects a government trade strategy.

Japan

In 2020, U.S. trade policy included active sanctions against which three countries?

North Korea Libya Sudan

Currently, which area is labeled as one of the highest risk areas for kidnapping?

South America

Why do so many kidnappers target businesspeople?

They assume businesses have a lot of money and want to protect their workers.

Which of the following are characteristics of nontariff barriers? (Check all that apply.)

They can be quantitative and nonquantitative. They impose additional costs on producers. They are forms of discrimination against imports. They impose additional costs on customers.

True or false: A national system of law can minimize unfair international competition.

True; through national laws, negotiations between governments, and the efforts of institutions such as the World Trade Organization

Match the characteristic of a quota to its correct definition.

absolute Once the specified amount has been imported, further importation for the rest of the period is prohibited. global The total amount is fixed without regard to source. allocated allocated The government of the importing nation assigns quantities to specific countries.

Economists agree that political barriers to trade ______. (Check all that apply.)

are detrimental to trade reduce economic efficiencies

Instability as it pertains to government means that the government ______.

cannot maintain itself in power.

Those who believe it is important to protect infant industries claim that, in the long run, these industries will have a(n) ______advantage, but in the meantime these firms need protection from imports.

comparative

A(n) _______ duty is a combination of specific and ad valorem duties.

compound

What is the general term for duties paid on imports?

customs

Any illegal Internet-mediated activity that takes place in electronic networks is called ______.

cybercrime

Direct government participation in trade, customs and other administrative procedures, and standards are all

nonquantitative nontariff barriers

A(n) ________ is a formal agreement between the governments of exporting and importing countries that stipulate the import or export quotas each nation will have for a good in order to restrict international competition and preserve some of the national market for local producers.

orderly marketing arrangement

U.S. cargo ships have been hijacked by groups from West Africa who demand money for the release of the ship. This form of hijacking is called Blank______.

piracy

When a manufacturer lowers its export price to force the importing nation's domestic producers out of business, expecting to raise the price once it has accomplished that objective, the manufacturer is engaged in ______.

predatory dumping

Dumping is defined in several ways. Which of the following are definitions of dumping? (Check all that apply.)

selling a product abroad for less than the cost of production selling a product abroad for less than the price to third-party countries selling a product abroad for less than the price in the home market

A(n) ________ duty is a fixed sum of money charged for a specified physical unit of the product.

specific

Regardless of the value of the invoice, Kendall's company charges $0.14 per pound of butter exported. This tax is an example of a(n) ______ duty.

specific

A government that has achieved _______ has the ability to maintain itself in power and hold to predictable fiscal and political policies.

stability

Businesses like peace and predictability because they provide ______.

stability

What are the three major groupings of nonquantitative nontariff barriers? (Check all that apply.)

standards customs and other administrative procedures direct government participation in trade

In the past, the U.S. government provided payments to farmers as a way to manage surplus food resulting from increased production needed to fuel WWII and to feed Europe. The government offset and controlled the overproduction of these crops so as to prevent them from flooding the market. These payments to farmers were an example of

subsidies

Which of the following permits a stipulated amount of a good to enter duty-free or at a low rate, but when that amount is reached, a much higher duty is charged for additional quantities?

tariff-rate quota

Al Qaeda, the Irish Republican Army (IRA), Hamas, and Hezbollah are groups associated with ______.

terrorism

Which of the following are reasons why governments nationalize private firms? (Check all that apply.)

to increase profitability to extract more money from the firms to control an earlier investment in a firm to follow an economic or political ideology

What are three reasons why a government would privatize a business?

to raise money to reduce the size of government to ensure that a business runs more efficiently

Advocates for the protection of an infant industry claim that firms need protection from imports until they ______. (Check all that apply.)

train the labor force master production techniques obtain the required investment capital achieve economies of scale

An orderly marketing arrangement is a type of ______.

voluntary export restraint

Which of the following is issued by the exporting country rather than imposed by the importing one?

voluntary export restraints