GB exam 2

Question 1

Which of the following is true of voluntary export restraints?

Answer 1

export quota levied by a country on the quantity of its exports.

Question 2

What theory is based on the assumption that the wealth of the world is fixed?

Answer 2

Mercantilism

Question 3

Which of the following describes the maturing stage in the product life cycle theory?

Answer 3

demand and ability to produce the product grow in developed nations.

Question 4

What theory advocates government intervention in highly capital-intensive, high entry-barrier industries in which domestic firms may have little chance without government assistance?

Answer 4

Strategic trade

Question 5

In the context of tariff barriers, deadweight costs = _____.

Answer 5

total inefficiency – net gain

Question 6

Which of the following is true of the absolute advantage theory of international trade?

Answer 6

the first theory that advocated free trade.

Question 7

What are tariffs levied on imports sold below costs to drive domestic firms out of business?

Answer 7

Antidumping duties

Question 8

Which of the following ideas is closely linked to the theory of absolute advantage?

Answer 8

Free market forces should determine how much to trade with minimal government intervention.

Question 9

Which of the following assumptions is present in the classical theories of international trade?

Answer 9

No complications in foreign exchange transactions

Question 10

Which of the following was the first international trade theory to account for changes in the patterns of trade over time?

Answer 10

Product life cycle theory

Question 11

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?

Answer 11

radical view

Question 12

What term refers to the deal struck by MNEs and host governments, which change their requirements after the initial FDI entry?

Answer 12

Obsolescing bargain

Question 13

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?

Answer 13

free market view

Question 14

An industry dominated by a small number of players is known as a(n) _____.
Correct!

Answer 14

oligopoly

Question 15

Government’s confiscation of foreign assets is known as _____.

Answer 15

expropriation

Question 16

Which of the following is a primary cost of FDI to home countries?

Answer 16

Capital outflow and job loss

Question 17

In Round Two of FDI negotiation process between MNEs and host governments, _____.

Answer 17

MNE enters the host market and earns profits

Question 18

Which of the following terms refers to the clustering of economic activities in certain locations?

Answer 18

Agglomeration

Question 19

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?

Answer 19

Marketing

Question 20

A vertical FDI refers to a type of FDI in which _____.

Answer 20

a firm moves upstream or downstream at different value chain stages in a host country

Question 21

Which of the following regions describes the euro zone?

Answer 21

region that has a common currency

Question 22

In which of the following types of economic integration systems will the establishment of a common currency be possible?

Answer 22

Economic union

Question 23

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?

Answer 23

Doha Round

Question 24

Which of the following characterizes a customs union?

Answer 24

imposes common external policies on non-members.

Question 25

Which of the following is an example of a political union?

Answer 25

The United States

Question 26

Which of the following agreements was in direct violation of the principles of GATT?

Answer 26

Multifiber Arrangement

Question 27

What multilateral agreement was created in 1948 to govern the international trade of goods (merchandise)?

Answer 27

GATT

Question 28

Which of the following is an example of regional economic integration?

Answer 28

The European Union

Question 29

Which of the following terms describes the EU?

Answer 29

Economic union

Question 30

Which of the following is a free trade agreement among Canada, the United States, and Mexico?

Answer 30

USMCA