Ch. 6- Quiz Flashcards
Which one of the following is the pattern of imports and exports that occurs in the absence of trade barriers?
Free trade
For which one of the following political motives do governments intervene in trade to ban certain defense-related goods from export to other nations?
Preserve national security
According to the infant industry argument, a country’s emerging industries need protection from international competition during their development phase until they become sufficiently competitive internationally. Which one of the following represents a major consequence to this argument?
Complacency toward innovation
Consumers often end up paying more for products because of a lack of competition. Which one of the following is a type of government intervention that leads to this problem?
Protection of infant industries
Which one of the following is a political motive behind government intervention in trade?
Protecting jobs
You are a manager of a U.S. firm that plans on exporting a product that is designated as a dual use product and you need to have a U.S. government approval before export can take place. What is the political motive behind this intervention?
To preserve national security
The United States has banned all trade and investment with Cuba since 1962. This is an example of which type of government political intervention?
Gaining influence
Which one of the following is considered government subsidy?
Providing tax breaks and product price support
Governments often promote exports by helping companies finance their export activities. Which U.S. financing entity finances the export activities of companies in the United States and offers insurance on foreign accounts receivable?
Ex-Im Bank
One of the most common instruments that governments use to promote trade with other nations is the establishment of a foreign trade zone. Which one of the following is an advantage of a foreign trade zone?
Lower taxes on merchandise passing through the foreign trade zone
Governments of most nations have special agencies responsible for promoting exports. Which of the following is a type of export promotion?
Arranging meetings with suitable distributors and partners
Which one of the following is a restriction on the amount (measured in units or weight) of a good that can enter or leave a country during a certain period of time?
Quota
An export tariff is levied mostly by the government of a country that is exporting ________.
products that consist mostly of low-priced natural resources
A(n) ________ is levied as a percentage of the stated price of an imported product.
ad valorem tariff
A government may impose an import quota to protect its domestic producers by placing a limit on the amount of goods allowed to enter the country. Who are the winners of imposing such quotas?
Domestic producers
In 1980, the closing of U.S. carmakers’ production facilities in the United States was creating a volatile anti-Japan sentiment among the population and the U.S. Congress. Fearing punitive legislation, the Japanese government and its carmakers decided to limit its automobile exports to the United States. This an example of _______________.
Voluntary export restraint (VER)
What method of trade restriction is the U.S. using with Cuba?
Embargo
When a certain portion of the end product must consist of domestically produced goods or that a certain portion of the final cost of a product must come from domestic sources, this is the result of _________.
local content requirements
Which one of the following describes administrative delays?
Regulatory controls or bureaucratic rules designed to impede the flow of imports into a country
Abyssinia believes its automobile industry is threatened by foreign car makers who have flooded its market with Toyota, Volvos, and Buicks. These foreign car makers require payment in Euros and U.S. dollars and will not accept Abyssins, the national currency of Abyssinia. To discourage the importation of these foreign cars, the Abyssinian government has restricted the amount of its own currency that can be converted into these foreign currencies by demanding that importers obtain a license, a practice known as ____________.
currency controls
Tariffs that are called specific tariffs are levied based on ________.
a specific fee for each unit (measured by number, weight, etc.) of an imported product
Western European plastic producers considered retaliating against Asian competitors whose prices were substantially lower in European markets than at home. The practice of selling at below-home prices is an example of ____________.
dumping
The General Agreement on Trade in Services (GATS) created during the Uruguay Round identifies four different forms that international trade in services can take. Which of the following is NOT one of those forms?
Agriculture subsidy
The creation of the ________ was perhaps the greatest achievement of the 1986 Uruguay Round.
World Trade Organization
Which one of the following is an additional tariff placed on an imported product that a nation believes is receiving an unfair subsidy?
Countervailing duty
