Quizzes

Question 1

Bureaucratic rules that are designed to make it difficult for imports to enter a country are referred to as:

A. public service intransigence
B. supplemental trade policies
C. Ad valorem trade policies
D. Administrative policies
E. Situational trade policies

Answer 1

D. Administrative trade policies.

Question 2

According to the strategic trade policy argument, a government should use subsidies to do what?

A. Support large employers
B. Support the import of goods that a country cannot produce domestically
C. Support the export of agricultural products
D. Support promising firms in emerging industries
E. Support established firms in key industries

Answer 2

Support promising firms in emerging industries

Question 3

By lowering production costs, ________ help domestic producers compete against foreign imports.

A. Ad valorem
B. Tariffs
C. Duties
D. Subsidies
E. Quotas

Answer 3

Subsidies

Question 4

_________ tends to be one of the largest beneficiaries of subsidies in most countries.

A. Agriculture
B. Commodities
C. Domestic product
D. Technology
E. Consumers

Answer 4

Agriculture

Question 5

Which of the following is not an example of one of the main instruments in trade policy used by governments around the world?

A. Political mandate
B. Local content requirement
C. Tariffs
D. Subsidies
E. Import quotas

Answer 5

Political Mandate

Question 6

What is the ultimate objective of anti-dumping policies?

A. Protect domestic producers from unfair foreign competition
B. Protect consumers from predatory pricing
C. Protect host governments from the loss of legitimate tax revenue
D. Promote fair trade
E. Protect foreign producers from unfair local competition

Answer 6

Protect domestic producers from unfair foreign competition

Question 7

Perhaps the most common political argument for government intervention into the free flow of trade is that

A. It is necessary for protecting jobs and industries from foreign competition.
B. it is important for national security.
C. it protects national pride.
D. is necessary to maintain domestic economic stability.

Answer 7

It is necessary for protecting jobs and industries from foreign competition.

Question 8

While ________ tariffs are levied as a fixed charge for each unit of a good imported, ________ tariffs are levied as a proportion of the value of the imported good.

A. Ad valorem; special
B. Predatory; percentage
C. General; special
D. Specific; ad valorem
E. Global; special

Answer 8

Specfic; ad valorem

Question 9

One of the most famous examples of a(n) ________ is the limitation on auto exports to the United States enforced by Japanese automobile producers in 1981.

A. Involuntary import restraint
B. Limited market access
C. Trade reconciliation
D. Referred export restraint
E. Voluntary export restraint

Answer 9

Voluntary export restraint

Question 10

If Westvaco decided to produce paper in Spain, and the Spanish government stipulated that 50% of the component parts that went into Westvaco’s paper must be produced locally, that requirement would be an example of a(n):

A. Ad valorem content requirement
B. Barter consent
C. Local content requirement
D. International content requirement
E. Specific content requirement

Answer 10

Local content requirement

Question 11

______ are three main benefits of inward FDI for a host country.

Answer 11

• Resource-transfer effect
• Employment effect
• Balance-of-payments effect

Question 12

When two or more enterprises encounter each other in different regional markets, national markets, or industries, ________ arises.

A. Multipoint competition
B. A cartel
C. International competition
D. A monopoly
E. An oligopoly

Answer 12

Multipoint competition

Question 13

Vernon’s theory says that firms invest in a foreign country when:

A. Demand in that country will support local production
B. Demand in that country will support foreign economic conditions
C. Market demand is growing
D. Demand is high and supply is low
E. Demand is high and raw materials in that country can meet production needs

Answer 13

demand in that country will support local production

Question 14

are knowledge spillovers that occur when companies in the same industry locate in the same area

A. Externalities
B. Inward overflows
C. Cognitive overflows
D. Concentric overflows
E. Synergy

Answer 14

Externalities

Question 15

FDI is often undertaken as a response to:

A. High GDP levels
B. Exporting
C. Threatened import tariffs
D. FDI inflows
E. FDI outflows

Answer 15

threatened import tariffs

Question 16

One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by ________, this theory has been developed with regard to oligopolistic industries.

Answer 16

F.T. Knickerbocker

Question 17

High transportation costs and/or tariffs imposed on imports help explain why many firms prefer ________ over ________.

Answer 17

foreign direct investment or licensing; exporting

Question 18

Host governments use a range of controls to restrict FDI. The two most common are:

A. Foreign corporate tax levies and ownership restraints
B. Monetary restraints and performance requirements
C. Technology transfer restraints and employment restraints
D. Employment restraints and repatriation limitations
E. Ownership restraints and performance requirements

Answer 18

ownership restraints and performance requirements.

Question 19

The ________ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year). The ________ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.

Answer 19

flow; stock

Question 20

The eclectic paradigm has been championed by the British economist ________.

Answer 20

John Dunning