Module 5 Flashcards by Glennis Stott

When the government does not use quotas, taxes, or other means to restrict what its citizens can buy from or sell to another country, it is called ___________
_ trade.

free

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What are four main instruments of trade policy?

Multiple select question.

Unions

Import quotas

Local content requirements

Tariffs

Antidumping duties

Arbitration

Foreign direct investment

Import quotas

Local content requirements

Tariffs

Antidumping duties

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A tax on goods coming into or leaving a country is called a(n) ______.

Multiple choice question.

subsidy

embargo

arbitrator

tariff

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The nationwide company, Nightingale Health Systems, received a tax break from the government when it was faltering and ready to declare bankruptcy. This subsidy helped the company with production costs and allowed it to have a stronger presence in the competitive health industry. This tax break is a type of _____.

Multiple choice question.

embargo

subsidy

tariff

quota

subsidy

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The United States has placed a limit on the amount of tuna in airtight containers that can be imported into this country. This is an example of a(n) _____.

Multiple choice question.

import quota

subsidy

voluntary export restraint

export tariff

import quota

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______ trade is the economic policy of not discriminating against exports to or imports from foreign countries.

Multiple choice question.

Free

Restricted

Fair

Balanced

Free

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What’s the main reason a country would use export tariffs?

Multiple choice question.

To achieve economies of scale

To ensure sufficient supply of a good within the country

To foster competition and ultimately lower costs to the consumer

To take advantage of lower production costs

To ensure sufficient supply of a good within the country

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What is considered the simplest instrument of trade policy?

Multiple choice question.

Tariffs

Quotas

Subsidies

Antidumping duties

Tariffs

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A(n) ______ states that some percentage of a good must be produced domestically.

Multiple choice question.

antidumping policy

local content requirement

voluntary export restraint

quota rent

local content requirement

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Taxes placed on imports to protect domestic producers from foreign competition and to produce revenue for the government are called

Multiple choice question.

embargoes.

income.

quotas.

tariffs.

tariffs

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A country might create safety standards for certain products that other nations can’t comply with. As a result, these nations can’t be involved with exporting parts for those goods and trade does not exist. These safety standards are a form of _____.

Multiple choice question.

antidumping policy

voluntary export restraint

quota rent

administrative trade policy

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A(n) ______ is a payment by the government to a domestic producer to help lower production costs so they are better able to compete with foreign imports.

Multiple choice question.

tariff

voluntary export restraint

subsidy

import quota

subsidy

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What occurs when a company practices dumping?

Multiple choice question.

The firm is asking the government for financial assistance to be more competitive.

The firm is moving all manufacturing processes to a foreign nation to lower costs.

The firm is unloading excess production in a foreign market.

The firm is placing a quota rent on goods but not services.

The firm is unloading excess production in a foreign market.

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An import _____ is a type of trade restriction that sets a physical limit on the quantity of a product that can be imported into the country in a set period of time.

Multiple choice question.

quota

arbitration

subsidy

tariff

quota

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By threatening ______ trade sanctions, one country can convince another country to open its markets.

Multiple choice question.

punitive

favorable

supportive

short-term

punitive

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If a country places a 20 percent tax on dairy products exported to other nations in order to limit exports and have sufficient supplies of dairy products for the home country, it is using a(n) ______.

Multiple choice question.

import quota

subsidy

export tariff

embargo

export tariff

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The oldest argument for government intervention in trade in which developing nations must protect their domestic industries until they are ready to compete globally is the ______ argument.

Multiple choice question.

infant industry

voluntary export restraint

local content

national security

infant industry

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In order to win a contract in Mexico, QVB Auto Manufacturing must make 65 percent of the component parts of their vehicles in Mexico. This is an example of a(n)

Multiple choice question.

local supplier requirement.

local distribution requirement.

international content requirement.

local content requirement.

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Paul Krugman would agree that while strategic trade policy seems appealing in theory, in reality, strategic trade policy is _____.

Multiple choice question.

best for the service industry

only beneficial to the agricultural industry

unavoidable

unworkable

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A government would impose administrative trade policies in order to

Multiple choice question.

foster goodwill among trading nations.

make it difficult for imports to enter a country.

limit the amount of exports going out of a country.

ensure that there is sufficient supply of a good within a country.

make it difficult for imports to enter a country.

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Country A subsidizes oil development and Country B is losing any competitive advantage because of it. Krugman would agree that Country B hopes to minimize subsidies to prevent a

Multiple choice question.

global response.

trade exchange.

trade war.

union action.

trade war.

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When manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production, it is called ______.

Multiple choice question.

arbitration

dumping

embargo

phishing

dumping

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The European Union’s support for the Common Agricultural Policy illustrates why strategic trade policy is problematic. In this instance, the government was influenced by ______ to the detriment of consumers.

Multiple choice question.

interest groups

election fraud

start-ups

foreign producers

interest groups

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As noted in the text, the U.S. government used the threat of trade sanctions to try to convince the _____ government to enforce its intellectual property laws since massive copyright infringements in that country have cost U.S. companies millions of dollars in lost revenue.

Multiple choice question.

Mexican

Russian

British

Chinese

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Country A wants to lower trade barriers with its neighbor, Country B. While both countries support free trade, they are both reluctant to lower their barriers because they are not sure the other country will reciprocate. What obstacle is preventing the advancement of free trade between these countries?

Multiple choice question.

Fear of rising producer costs

Lack of resources

Lack of trust

Fear of rising consumer costs

Lack of trust

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The ______ argument for trade intervention states that developing countries need to support new industries until they are strong enough to compete globally.

Multiple choice question.

infant industry

purchasing power parity

tragedy of the commons

balance sheet

infant industry

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Which economist was a key figure in the early free trade movement in Great Britain?

Multiple choice question.

Ricardo

Samuelson

Keynes

Marx

Ricardo

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The argument for strategic trade policy suggests a(n) ______ justification for government intervention in trade.

Multiple choice question.

economic

political

social

cultural

economic

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______ is the acronym for the multilateral agreement established in 1947 aimed at the abolition of quotas, tariffs, and subsidies in order to liberalize trade.

Multiple choice question.

WTO

IMF

GATT

JIT

GATT

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Krugman argues that if each country seeks to follow a strategic trade policy to protect its interests, this may lead to a ______.

Multiple choice question.

trade exchange

government subsidy

voluntary export restriction

trade war

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During the 1980s and 1990s, the world trading system was strained by the persistent trade deficit in the world’s largest economy, which was:

Multiple choice question.

the United States.

China.

the United Kingdom.

Japan.

the United States.

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Krugman advocates that it is logical to expect the U.S. government to ignore special-interest politics when forming policy.

True false question.
True

False

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Unilateral lowering of trade barriers has not occurred mostly due to a lack of _____ among governments.

Multiple choice question.

ethnocentrism

trust

parity

production

trust

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GATT rules initially only dealt with trade in manufactured goods and commodities. With the increase in trade in the ______ sector, the Uruguay Round sought to establish agreements to cover this area.

Multiple choice question.

technology

agriculture

communication

service

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In the mid-1800s, ______ was the first nation to officially follow free trade.

Multiple choice question.

Sweden

the United States

Great Britain

France

Great Britain

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Which function did the creators of the WTO hope it would perform?

Multiple choice question.

Prevent worldwide recessions

Facilitate future trade deals

Advocate for government subsidies

Eliminate trade surpluses or deficits

Facilitate future trade deals

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GATT was put into place under the leadership of the U.S. government as a way to

Multiple choice question.

eliminate FDI.

foster free trade.

foster isolationism.

eliminate free trade.

foster free trade.

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Today, many nations are _____ new trade policies associated with the WTO.

Multiple choice question.

in agreement with

advocating for

opposed to

What are three reasons that caused the global trading system erected under GATT to be strained during the 1980s and early 1990s?

Multiple select question.

Countries found ways to get around GATT regulations

The economic success of Japan

A wave of economic recession throughout Europe

The persistent trade deficit in the United States

The economic distress of many African countries

Countries found ways to get around GATT regulations

The economic success of Japan

The persistent trade deficit in the United States

Reciprocal trade agreements between two or more partners are called _____ trade agreements.

Multiple choice question.

mutual

mass

monopolistic

multilateral trade

multilateral

Multiple choice question.

foreign producers

election fraud

interest groups

start-ups

interest groups

Following Brexit, Great Britain withdrew from the European Union in 2016.

True false question.
True
False

True

Select all that apply

GATT negotiations continue to deal with additional issues such as (Check the three that apply.)

Multiple select question.

intellectual property.

income inequality.

exchange rates.

services.

agricultural subsidies.

intellectual property.

services.

agricultural subsidies.

Select all that apply

What are two ways trade barriers hamper a firm’s productive activities?

Multiple select question.

Quotas limit the ability to serve a country from outside locales.

They increase the ability to operate at full capacity.

They raise the cost of exporting products.

They allow access to the imports a firm may need.

Quotas limit the ability to serve a country from outside locales.

They raise the cost of exporting products.

The WTO is more successful than GATT because the WTO has ______ that make it more effective.

Multiple choice question.

consumer confidence

monetary discretion

enforcement mechanisms

corporate lobbying

enforcement mechanisms

What are the four issues currently at the forefront of the WTO agenda?

Multiple select question.

Antidumping policies

High tariffs on nonagricultural goods and services

Protectionism in agriculture

Lack of intellectual property protection

Local content requirements

Entrepreneurial activities

Antidumping policies

High tariffs on nonagricultural goods and services

Protectionism in agriculture

Lack of intellectual property protection

The stalled Doha Round has caused many nations to use _____ to foster trade.

Multiple choice question.

strict quota rents

voluntary export restraints

multilateral trade agreements

local content requirements

multilateral trade agreements

In _____ Britain withdrew from the European Union following _____.

Multiple choice question.

2018, TWO

2016, Brexit

2018, TPP

2016, NAFTA

2016, Brexit

When considering the three basic decisions a firm must make when it decides to enter a foreign market, it must determine the market to enter, the timing of entrance, and

Multiple choice question.

facility location.

finance options.

the scale.

the partner.

the scale.

Lyttleton Enterprises, based in the United States, is considering opening an operation in London, England. The costs and risks associated with doing business in London would be considered _______________
_ because the country is economically advanced and politically stable. (select low or high)

low

What is the term used for when one company enters markets before its competitors?

Multiple choice question.

Concurrent entry

Late entry

Complacent entry

Early entry

A firm enters a market on a(n) ______ scale when it commits significant resources to this effort.

Multiple choice question.

small

narrow

even

large

Which is an example of a major strategic commitment by a company?

Multiple choice question.

Choosing a local manager

Assessing the potential tax consequences of a price change

Changing the local board of advisers from 5 to 7 members

Entering a foreign market on a significant scale

Select all that apply

What three basic decisions must firms evaluate when considering foreign expansion?

Multiple select question.

When to enter markets

What accounting procedures to use

The availability of personnel

On what scale to enter markets

Which markets to enter

When to enter markets

On what scale to enter markets

Which markets to enter

Foreign market entry decisions are based on the varying levels of risk and reward.

True false question.
True
False

True

Companies that want to have the least amount of risk when pursuing business in a foreign country should consider countries that are _____.

Multiple choice question.

politically stable

struggling economically

less developed

financially unstable

politically stable

Quick Auto Parts does not want to establish a manufacturing facility in Mexico but does want to get component parts to the 75 dealers it has in that country. Which form of entry should it use?

Multiple choice question.

Licensing

Acquisition

Turnkey project

Exporting

Conrad’s U.S. based company entered the European market long after its competitors had established themselves. This is known as ________ entry.

Multiple choice question.

delayed

noncompetitive

late

cautious

late

Lisette works for Southwest Petroleum Corp. Her company is responsible for every aspect of setting up a refinery location for its clients. Southwest Petroleum builds the site, trains personnel, and notifies the client when the refinery is ready for operation. What foreign entry mode does this represent?

Multiple choice question.

Greenfield investment

Acquisition

Exporting

Turnkey project

Select all that apply

What are two reasons a firm would choose NOT to enter a new market on a large scale?

Multiple select question.

May not have the resources available to commit to a large scale

Already has brand recognition in neighboring countries

Does not need the competitive advantage

Prefer to enter slowly so that it can become more familiar with the market

May not have the resources available to commit to a large scale

Prefer to enter slowly so that it can become more familiar with the market

What are two types of intangible property that can be associated with a licensing agreement?

Multiple select question.

Accounting

Trademark

Patent

Marketing

Trademark

Patent

A commitment that is strategic has a short-term impact and is easy to reverse.

True false question.
True
False

False

______ involves one firm selling intangible property to another firm and insisting that the receiver of the intangible property abides by strict rules on how it does business.

Multiple choice question.

Franchising

An acquisition

Licensing

Exporting

Franchising

Multiple Select Question
Select all that apply

What are two advantages of exporting?

Multiple select question.

Not having to establish manufacturing operations in host country

Having complete control over the distribution channels

Selling directly to the final consumer

Helps a firm achieve experience curve and location economies

Not having to establish manufacturing operations in host country

Helps a firm achieve experience curve and location economies

What are two ways a company can set up a wholly owned subsidiary in a foreign country?

Multiple select question.

A greenfield venture

Franchising agreement

Acquire an established firm

Master licensing arrangement

A greenfield venture

Acquire an established firm

A type of entry mode that is common in the chemical, pharmaceutical, and petroleum-refining industries in which a contractor agrees to handle every detail of a project for a foreign client is called ______.

Multiple choice question.

franchising

exporting

a turnkey project

an acquisition

a turnkey project

If a firm is highly concerned about choosing a politically acceptable entry mode, the firm should choose

Multiple choice question.

exporting.

licensing.

a wholly owned subsidiary.

a joint venture.

In a licensing deal, the licensor receives payment in the form of ____ from the licensee.

Multiple choice question.

royalties

stock

dividends

imports

royalties

If a firm is determining which foreign entry strategy to use but is concerned with maintaining control over its proprietary technology, which two entry modes should it AVOID?

Multiple select question.

Licensing

Joint ventures

Franchising

Exporting

Licensing

Joint ventures

Which three statements are TRUE about franchising?

Multiple select question.

It is similar to a license but with a longer time commitment.

The franchiser does not sell intangible property as part of the franchise.

The franchiser typically receives a royalty payment.

Once the franchisee has a commitment, it is able to make all decisions about how to run the business.

The franchisee commits to abiding by strict rules on how it does business.

It is similar to a license but with a longer time commitment.

The franchiser typically receives a royalty payment.

The franchisee commits to abiding by strict rules on how it does business.

As the pressure to reduce costs increases, a firm will focus on location and experience curve economies. These firms would MOST LIKELY consider franchising and joint ventures entry modes.

True false question.
True
False

False

The most typical joint venture involves a ____ stake in ownership between two companies.

Multiple choice question.

50–50

33 1/3–66 2/3

80–20

40–60

50–50

A(n) ______ is a form of foreign direct investment where a parent company builds its operations in a foreign country from the ground up. In addition to the construction of new production facilities, these projects can also include the building of new distribution hubs, offices, and living quarters.

Multiple choice question.

joint venture

wholly owned subsidiary

merger

greenfield strategy

In which entry mode, does a firm own 100 percent of the stock?

Multiple choice question.

Wholly-owned subsidiary

Joint venture

Exporting

Licensing or franchising

Wholly-owned subsidiary

Select all that apply

What are three advantages of acquisitions?

Multiple select question.

Preempt the competition

Guaranteed first-mover advantage

Less risky than greenfield ventures

Lower cost than exporting

Quick to execute

Preempt the competition

Less risky than greenfield ventures

Quick to execute

At Jackson Electric, the company’s core competence is based in the proprietary technology it has developed for kitchen appliances. Which foreign entry mode should Jackson Electric avoid in order to protect this technology?

Multiple choice question.

Wholly owned subsidiary

Exporting

Franchising

Joint venture

Which entry mode’s major advantage is that a firm has more control over the kind of subsidiary it wants in a foreign market?

Multiple choice question.

Joint venture

Greenfield venture

Franchise

Exporting

Greenfield venture

If a firm’s core competency is based on technological know-how, a firm generally should NOT use which two entry modes?

Multiple select question.

Wholly owned subsidiary

Greenfield investment

Licensing

Joint venture

Licensing

Joint venture

Bob’s Bicycle Company is planning to enter into foreign markets where there are already well-established incumbent enterprises and in which global competitors are also interested in establishing a presence. Based on these circumstances, Bob’s Bicycle Company should enter the foreign markets via ______.

Multiple choice question.

acquisition

greenfield venture

acquisition

Which of the following are the two most appropriate foreign market entry modes as pressures for cost reductions increase?

Multiple select question.

Franchising

Exporting

Wholly owned subsidiary

Joint ventures

Exporting

Wholly owned subsidiary

A company that gains entry into a foreign market through ______ has total control over the products or services manufactured or sold.

Multiple choice question.

direct exports

franchising

a greenfield venture

joint venture

a greenfield venture

Developing countries with a comparative advantage in manufacturing should temporarily support new industries until they have grown strong enough to meet international competition.