Chapter 2 SmartBook Flashcards
An ever-expanding variety of goods and services are in demand by consumers all around the world. Given the importance of world trade, countries are inclined to
Attempt to control the trade for their own benefit.
International trade patterns were disrupted in the last half of the twentieth century because of the:
Ideological split between countries with a socialist Marxist approach and those with a democratic capitalist approach
Which of the following enabled U.S. companies to expand exports and investment worldwide following World War II?
A: Establishment of colonial power
B: Growing consumer and industrial markets
C: A rise in standards of living
D: Suppression of capitalism and infusion of communism
B and C
Money constantly flows into and out of a country in which of the following ways?
A: When a country makes foreign investments
B: When a country exports and imports products and services
C: When a country receives cash receipts or makes cash payments
D: When a country has no tourist industry
E: When countries exchange monetary gifts
A, B, C and E
The international financial transactions of a nation are recorded by a system of accounts. This system of accounts is known as the
Balance of payments
With increasing competition in world markets, there is growing tendency to adopt
Protectionism
Which of the following are features of international trade in the twenty-first century?
A: Countries are more interdependent economically
B: Countries are more self-sufficient than ever before
C: The potential for increased demand is low
D: There are greater opportunities for international trade
A and D
A country’s balance-of-payments statement serves which of the following purposes?
Evaluating the country’s international economic position
Which of the following led to the creation of new global marketing opportunities?
A: Countries that were previously underdeveloped and economies that were war-torn grew rapidly
B: Conflicts between the socialist Marxist approach and the democratic capitalist approach began
C: Major worldwide recessions catapulted the world’s economies to new heights
D: Economic cooperation and assistance developed at a large scale
A and D
Which of the following are receipts (the plus side) on the U.S. balance-of-payments statement?
A: Payments of interest and dividends on investments abroad
B: Money spent by U.S. tourists overseas
C: Foreign government payments to the United States
D: Export sales of merchandise
A, C and D
When there is Blank______ among countries, financial transactions take place between businesses or consumers of the countries.
Trade
Which of the following are accurate statements about a nation’s balance-of-payments statement?
A: It determines whether the nation is in good or poor financial condition
B: It records all financial transactions between residents and the rest of the world
C: It provides a record of the nation’s political status
D: It maintains records through a double-entry bookkeeping system
B and D
How many accounts are included in a balance-of-payments statement?
Three
To impede the entry of unwanted goods into its markets, countries commonly impose which of the following types of barriers?
A: Cultural
B: Legal
C: Psychological
D: Exchange
B, C and D
Balance-of-payment statements are mainly used by
Government agencies
Which of the following arguments in favor of protectionism do economists support?
A: Protecting infant industries
B: Protecting foreign markets
C: Industrializing underdeveloped nations
D: Strengthening national defense
A, C and D
Which of the following are international investments (the minus side) on the U.S. balance-of-payments statement?
A: Payments of dividends and interest on investments abroad
B: New overseas investments
C: Costs of goods that are imported
D: Money spent by U.S. tourists overseas
E: Cost for foreign military and economic aid
B, C, D and E
Which of the following are nontariff barriers?
A: Quotas
B: market barriers
C: monetary barriers
D: union strikes
E: boycotts
A, B, C and E
A country wants to maintain a record of its direct investment. The entry should be made in the Blank______ account.
Capital
The government of a nation imposes a tax on goods that enter its borders. This tax is known as a(n)
Tariff
A country resorts to protectionism in order to
Prevent foreign companies from intruding on domestic markets
Which of the following statements about tariffs is true?
They are arbitrary
Which of the following are reasons that protectionists want government to impose restrictions on trade?
A: To protect natural resources
B: To protect foreign markets
C: To maintain the standard of living
D: To keep up employment and reduce unemployment
E: To discourage the accumulation of capital
A, C and D
Trade barriers are primarily encouraged by
Local industries
The limit that a government places on imports in terms of number of units or dollar amounts is called a(n)
Quota
Match the types of customs duties used in the United States (in the left column) with what they are based on (in the right column).
Ad valorem duties = percentage of the value
Specific duties = set amount per unit weight or other measure
Compound duties = rate based on weight plus a percentage of value
Countries use import licenses to
Regulate the flow and amount of imported goods
Which of the following are the consequences of imposing tariffs?
A: Balance-of-payments positions gain strength
B: International relations are weakended
C: Government control in economic matters become greater
D: The sources of supply for manufacturers become restricted
B, C and D
True or false: A voluntary export restraint is called “voluntary” because limits on the volume of exported goods are set by the exporting country.
True
The complete restriction that a government places on buying or bringing in specific goods from another country is called a
Boycott
Which of the following are accurate statements about a quota?
A: It places an absolute limit on imported items.
B: It minimizes the risk of a trade war because it boosts international relations.
C: It limits certain types of imports but only on a case-by-case basis.
D: It tends to raise prices.
A and D
In the context of controlling imports, which of the following is a true statement about an import license?
It can be used to restrict imports on a case-by-case basis
The country of Cileria refuses to sell goods to its neighboring country Isotola after a series of armed border clashes with Isotola troops. In this scenario, Cileria’s decision is an example of
an embargo
Which of the following are typical reasons for exchange-control restrictions enacted by a government?
A: Balance-of-payments positions are preserved
B: Particular industries are encouraged
C: Health safety and product quality are protected
D: Perceived injustices in trade practices are corrected
A and B
Voluntary export restraints (VERs) impose restrictions on the
Volume of exports
A political dispute arises between the governments of two trading countries, Ataya and Hembark. Consequently, the government of Ataya decides to restrict the import of goods from Hembark and sever all trading relations with it. In this scenario, Atava’s decision is an example of a government
Boycott
The limit that a government places on imports in terms of number of units or dollar amounts is called a(n)
quota
The monetary barrier of blocked currency is used for which of the following purposes?
to help protect a balance-of-payments position
Which of the following refers to the situation in which a country does not allow goods or services to be exported to a specified country?
An embargo
True or false: Sometimes trade can be restricted by using standards.
True
Which of the following are types of exchange-control restrictions?
A: Embargoes
B: Government approval for foreign exchange
C: Formal or informal public boycotts
D: Blocking currency
B and D
Laws related to antidumping policies are permitted under the rules of the
World Trade Organization
True or false: A voluntary export restraint is called “voluntary” because limits on the volume of exported goods are set by the exporting country.
True
Which of the following are crucial for U.S. trade, according to the Omnibus Trade and Competitiveness Act?
A: Reduction of market competition
B: Access of market
C: Expansion of exports
D: Import relief
B, C and D
Which of the following barriers impede market access?
A: tariffs and quotas
B: optional distribution systems
C: restrictive technical standards
D: restrictive licensing requirements
E: customs barriers
A, C, D and E
A government can accomplish currency blockage by
Not allowing importers to exchange their national currency for the sellers’ currency
Which features of the Omnibus Trade and Competitiveness Act have helped to improve export trade?
A: Prohibiting entry of foreign goods into domestic markets
B: Filing and tracking of export license requests using computer-based procedures
C: Introduction of optional exports distribution systems and tariffs
D: Access to trade data through the National Trade Data Bank
B and D
Which of the following are reasons for imposing certain nontariff barriers to trade?
A: to ensure safety
B: to safeguard product quality
C: to lower the cost of imported goods
D: to protect health
A, B and D
Trade treaties before the General Agreement on Tariffs and Trade tended to
Raise barriers
Antidumping laws
Keep out certain imports
The Omnibus Trade and Competitiveness Act is designed to
A: provide equal employment opportunities to individuals in all trades
B: help businesses increase their international competitiveness
C: deal effectively with trade deficits
D: handle what appear to be unjust trading practices
B, C and D
The General Agreement on Tariffs and Trade was signed by the United States and 22 other countries in the years immediately following
World War II
The issue of how open foreign markets are for the entry of U.S. goods is addressed by way of market
Access
Which of the following issues and laws were addressed in the export expansion section of the Omnibus Trade and Competitiveness Act?
A: promotion of exports
B: the Sherman Antitrust Act
C: the Foreign Corrupt Practices Act
D: export controls
A, C and D
Negotiations of trade treaties were historically made on a Blank______ basis.
Bilateral
A country signs the General Agreement on Tariffs and Trade treaty and becomes a member. In doing so, the country agrees to which of the following?
The country will use consultation in resolving global trade issues.
Violators are assessed antidumping duties when
goods are sold in a market below cost
Which of the following are accurate statements about the General Agreement on Trade in Services?
A: It created substantially higher standards of protection for intellectual property rights.
B: It sought to make additional changes in opening up the telecommunications and financial services sectors.
C: The agreement was symbolic and not legally enforceable.
D: It set up procedures concerning business and investment.
B and D
Which of the following statements about the original General Agreement on Tariffs and Trade is true?
It created an agency to oversee international business transactions.
The World Trade Organization was created following the signing of the
Uruguay Round trade agreement
True or false: The World Trade Organization (WTO) has strict means of enforcing decisions that are made by the panel of experts.
False
The International Monetary Fund was formed so that
unstable currencies would not become barriers to trade.
Which of the following are elements of the General Agreement on Tariffs and Trade?
A: Problems in global trade will be solved through consultation.
B: Customs tariffs can be used to protect domestic industries.
C: Trade will be nondiscriminatory.
D: Import quotas can be used to help local businesses.
A, B and C
True or false: Protests against global organizations, such as the WTO and IMF, stem from the basic complaint that globalization hinders international trade efforts.
False
An objective of the General Agreement on Trade in Services (GATS) is to
eliminate barriers that discriminate against foreign services.
Which of the following statements about the World Trade Organization are accurate?
A: It is an agreement, just as GATT was.
B: It issues binding decisions on members.
C: It encompasses the structure of GATT.
D: It is an institution.
B, C and D
Which of the following can be presented before a panel of experts selected by the World Trade Organization?
A: issues related to foods that are genetically modified
B: matters regarding country-of-origin labeling
C: disagreements over central bank monetary policy
D: disputes related to quotas for raw materials
A, B and D
Which of the following are objectives of the International Monetary Fund?
A: to establish freely convertible currencies
B: to protect domestic industries from international competition
C: to help expand international trade
D: to stabilize foreign exchange rates
A, C and D
Which of the following are unintended consequences of globalization? (Check all that apply.)
A: Exploitation of workers
B: Diminished world trade
C: Cultural extinction
D: Higher oil prices
E: Diminished national sovereignty
A, C, D and E
