GB exam 2 Flashcards
Which of the following is true of voluntary export restraints?
export quota levied by a country on the quantity of its exports.
What theory is based on the assumption that the wealth of the world is fixed?
Mercantilism
Which of the following describes the maturing stage in the product life cycle theory?
demand and ability to produce the product grow in developed nations.
What theory advocates government intervention in highly capital-intensive, high entry-barrier industries in which domestic firms may have little chance without government assistance?
Strategic trade
In the context of tariff barriers, deadweight costs = _____.
total inefficiency – net gain
Which of the following is true of the absolute advantage theory of international trade?
the first theory that advocated free trade.
What are tariffs levied on imports sold below costs to drive domestic firms out of business?
Antidumping duties
Which of the following ideas is closely linked to the theory of absolute advantage?
Free market forces should determine how much to trade with minimal government intervention.
Which of the following assumptions is present in the classical theories of international trade?
No complications in foreign exchange transactions
Which of the following was the first international trade theory to account for changes in the patterns of trade over time?
Product life cycle theory
Which of the following political views treats FDI as an instrument of imperialism and as a vehicle for exploitation of domestic resources by foreign capitalists and firms?
radical view
What term refers to the deal struck by MNEs and host governments, which change their requirements after the initial FDI entry?
Obsolescing bargain
Which view suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantages by specializing in the production of certain goods or services?
free market view
An industry dominated by a small number of players is known as a(n) _____.
Correct!
oligopoly
Government’s confiscation of foreign assets is known as _____.
expropriation
Which of the following is a primary cost of FDI to home countries?
Capital outflow and job loss
In Round Two of FDI negotiation process between MNEs and host governments, _____.
MNE enters the host market and earns profits
Which of the following terms refers to the clustering of economic activities in certain locations?
Agglomeration
If a firm engages in final assembly in its home operations, then which of the following operations of the firm in a foreign country would be considered a downstream vertical FDI?
Marketing
A vertical FDI refers to a type of FDI in which _____.
a firm moves upstream or downstream at different value chain stages in a host country
Which of the following regions describes the euro zone?
region that has a common currency
In which of the following types of economic integration systems will the establishment of a common currency be possible?
Economic union
Which of the following was the only round of trade negotiations sponsored by the WTO to reduce agricultural subsidies, slash tariffs, and strengthen intellectual property protection?
Doha Round
Which of the following characterizes a customs union?
imposes common external policies on non-members.
Which of the following is an example of a political union?
The United States
Which of the following agreements was in direct violation of the principles of GATT?
Multifiber Arrangement
What multilateral agreement was created in 1948 to govern the international trade of goods (merchandise)?
GATT
Which of the following is an example of regional economic integration?
The European Union
Which of the following terms describes the EU?
Economic union
Which of the following is a free trade agreement among Canada, the United States, and Mexico?
USMCA
