Ch. 6- Quiz

Question 1

Which one of the following is the pattern of imports and exports that occurs in the absence of trade​ barriers?

Answer 1

Free trade

Question 2

For which one of the following political motives do governments intervene in trade to ban certain​ defense-related goods from export to other​ nations?

Answer 2

Preserve national security

Question 3

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?

Answer 3

Complacency toward innovation

Question 4

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?

Answer 4

Protection of infant industries

Question 5

Which one of the following is a political motive behind government intervention in​ trade?

Answer 5

Protecting jobs

Question 6

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?

Answer 6

To preserve national security

Question 7

The United States has banned all trade and investment with Cuba since 1962. This is an example of which type of government political​ intervention?

Answer 7

Gaining influence

Question 8

Which one of the following is considered government​ subsidy?

Answer 8

Providing tax breaks and product price support

Question 9

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?

Answer 9

​Ex-Im Bank

Question 10

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?

Answer 10

Lower taxes on merchandise passing through the foreign trade zone

Question 11

Governments of most nations have special agencies responsible for promoting exports. Which of the following is a type of export​ promotion?

Answer 11

Arranging meetings with suitable distributors and partners

Question 12

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?

Answer 12

Quota

Question 13

An export tariff is levied mostly by the government of a country that is exporting​ ________.

Answer 13

products that consist mostly of​ low-priced natural resources

Question 14

​A(n) ________ is levied as a percentage of the stated price of an imported product.

Answer 14

ad valorem tariff

Question 15

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?

Answer 15

Domestic producers

Question 16

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​ _______________.

Answer 16

Voluntary export restraint​ (VER)

Question 17

What method of trade restriction is the U.S. using with​ Cuba?

Answer 17

Embargo

Question 18

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​ _________.

Answer 18

local content requirements

Question 19

Which one of the following describes administrative​ delays?

Answer 19

Regulatory controls or bureaucratic rules designed to impede the flow of imports into a country

Question 20

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​ ____________.

Answer 20

currency controls

Question 21

Tariffs that are called specific tariffs are levied based on​ ________.

Answer 21

a specific fee for each unit​ (measured by​ number, weight,​ etc.) of an imported product

Question 22

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​ ____________.

Answer 22

dumping

Question 23

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?

Answer 23

Agriculture subsidy

Question 24

The creation of the​ ________ was perhaps the greatest achievement of the 1986 Uruguay Round.

Answer 24

World Trade Organization

Question 25

Which one of the following is an additional tariff placed on an imported product that a nation believes is receiving an unfair​ subsidy?

Answer 25

Countervailing duty