Practice Questions (2) Flashcards
Country A and Country B make an agreement to cooperate more closely and implement tariff reductions. Which of the following best describes this agreement?
bilateral integration
The goal of a ________ is to abolish all tariffs among member countries.
free trade agreement
When the European Union was formed, the size of the market increased for European companies. This is most likely an example of a ________.
dynamic effect
The ________ is the common currency of the European Union.
euro
NAFTA was primarily formed because the member nations have ________.
geographic proximity to each other
________ integration is the political and economic agreements among countries that give preference to member countries to the agreement.
economic
Under NAFTA, rules of origin ensure that ________.
only goods produced mostly within the region are eligible for liberal tariff conditions
The most-favored-nation policy is a WTO privilege that allows member nations to restrict tariff cuts to members.
false
Korman Industries is a foreign multinational that recently established operations in the European Union. What is the most likely advantage for Korman as a result?
market size is larger bc of the elimination
Countries with varied climates and varied natural resources generally ________ than countries with less varied climates and natural resources.
depend less heavily on trade
An example of a U.S. merchandise import is an automobile made in ________ and sold ________.
Japan by a japan company; in the US
According to the theory of comparative advantage, a country gains from foreign trade even though it may have an absolute advantage in the production of all products because ________.
the country will forgo producing its less efficient output in order to produce its more efficient output
Why is the United States both an exporter and importer of such products as vehicles and passenger aircraft?
Companies differentiate products to appeal to different consumers.
The trade theory that says countries should concentrate production on those products using their most abundant production factors is the ________.
factor proportions theory
An example of a Japanese service export is a visit by a ________.
U.S. citizen to Tokyo Disneyland in Japan
The trade theory that says a country should export more than it imports is known as ________.
mercantilism
Assume the following conditions: In the United States it takes 4 units of resources to produce a ton of potatoes and 5 to produce a ton of coal. In Canada it takes 6 units of resources to produce a ton of potatoes and 10 to produce a ton of coal. According to the theory of comparative advantage, ________.
the United States should import potatoes from Canada and export coal to Canada
Neomercantilism describes the approach of countries that try to run a favorable balance of trade to ________.
achieve a social or political objective
Assume a government is considering import restrictions on sugar because sugar imports are hurting the domestic industry. Which of the following groups is LEAST likely to speak out on the subject?
sugar consumers
Protectionism will most likely affect which aspect of a company’s operations?
acquiring foreign supplies
The U.S. catfish industry successfully petitioned the U.S. government to require that catfish varieties imported from Vietnam be labeled as “tra,” “basa,” or “pangasius.” This is an example of which of the following?
a nontariff barrier
Home-country consumers are typically active in preventing their domestic companies from dumping products into foreign markets.
false
