Deck 13: Global Business

Question 1

Measures to restrict imports into a country are known as _____________. Is it "restrictionism"? "protectionism"? "recidivism"?

Answer 1

Protectionism

Question 2

A limit on the number of imports into a country is known as a _____.

Answer 2

Quota

Question 3

Complete the sentence. In a customs union…

A) There is freedom of movement of goods and services but not finance.
B) There is free trade between members and each country determines its trade policy with non-members.
C) There is free trade between members and a common trade policy with non-members.
D) Member states determine their own policy towards each other.

Answer 3

c

Question 4

Which of the following statements about a tariff is true?

A) It limits the quantity of products imported into an economy.
B) It increases the sales of products from abroad in a country.
C) It is a tax on foreign products.
D) It occurs in a free trade area.

Question 5

What does it mean if a country has a comparative advantage in the production of a product?

A) It has a lower opportunity cost than rivals.
B) It can produce more than rivals.
C) It is charging more than rivals.
D) It is subsidized by the government.

Question 6

The opportunity cost of 1X in country A is 2Y; in country B it is 3Y; which of the following are possible terms of trade?

A) 1X=2.5Y
B) 1X=5Y
C) 1X = 0.5 Y
D) 1x= 1.2Y

Question 7

An increase in the exchange rate increases the prices of _________ in foreign currency all other things being equal

Question 8

Reasons for protectionism do NOT include

A) Protecting infant industries
B) Retaliating against other government's actions
C) To protect strategic industries
D) To help local businesses be more efficient with competitive pressure

Question 9

The principle of comparative advantage is based on ___________ cost

Question 10

Comparative advantage is based on the principle of:

A) Opportunity cost
B) Diseconomies of scale
C) Allocative inefficiency
D) Normative economics

Question 11

If a country can produce 300 units of X or 200 units of Y. The opportunity cost of 1X is:

A) 200Y
B) 1.5Y
C) 0.67Y
D) 1.6Y

Question 12

The worldwide organisation aimed at reducing protectionism has the initials:

A) WTO
B) CC
C) BERR
D) EU

Question 13

If a government imposes a tariff, its revenue will increase most if the price elasticity of demand is:

A) -0.1
B) -0.01
C) -1
D) -5

Question 14

The opportunity cost of 1X in country A is 2Y; in country B it is 5Y. According to the theory of comparative advantage country A will export Ys to B

Question 15

If countries specialise in the production of products where they have comparative advantage unit costs may fall even further due to __________________. Is it "economies of scale"? "diseconomies of scale"? ""over capacity"?

Question 16

In the European Union each member country can set its own tariff against non members.

Question 17

A subsidy to exporters shifts the demand curve for these products to the right.

Question 18

Free trade occurs when there are no transport costs.

Question 19

A tariff usually leads to higher prices and a lower equilibrium quantity.