Deck 9: Formulation of National Trade Policies

Question 1

The "level playing field" argument is primarily used to justify government policies that ________.

A) reduce import tariffs
B) restrict foreign competition
C) establish regional trade blocs
D) manipulate foreign exchange

Answer 1

B

Question 2

Which theory best applies to those industries capable of supporting only a few firms worldwide?

A) national defense argument
B) industrial policy
C) maintenance of existing jobs
D) strategic trade theory

Answer 2

D

Question 3

If two congressional candidates support fair trade, you can assume that they both support ________.

A) providing export subsidies and tax breaks to domestic firms to enhance globalization
B) exerting minimal influence on the importing decisions of private firms
C) allowing international supply and demand to rule the market
D) controlling imports to minimize domestic job losses

Answer 3

D

Question 4

Which country has been particularly successful at nurturing domestic industries through government intervention?

A) China
B) India
C) Germany
D) Japan

Question 5

For five years, Harley-Davidson received tariff protection from Japanese imports to allow the motorcycle firm the opportunity to improve its operations and gain market share. This is an example of the ________.

A) maintenance of existing jobs argument
B) industrial policy argument
C) infant industry argument
D) strategic trade theory

Question 6

For which industry did Alexander Hamilton propose the infant industry argument?

A) manufacturing
B) electronics
C) merchant marine
D) farming

Question 7

The ________ proposes that tariffs be imposed on imported manufactured goods to give U.S. firms temporary protection from foreign competition until they can fully establish themselves.

A) national defense argument
B) infant industry argument
C) industrial policy
D) strategic trade theory

Question 8

Which of the following statements most likely supports the infant industry argument?

A) Total unit costs decrease through economies of scale and scope.
B) Low tariffs to trigger foreign competition increase long-term government revenues.
C) Foreign entrepreneurs need assistance to compete in industries with high entry barriers.
D) Experience of operating over time triggers higher productivity and global competitiveness.

Question 9

________ implies that the national government exerts minimal influence on the exporting and importing decisions of private firms and individuals.

A) Fair trade
B) Free trade
C) Managed trade
D) Equitable trade

Question 10

The ________ holds that a country must be self-sufficient in critical raw materials, machinery, and technology or it will be vulnerable to foreign threats.

A) national defense argument
B) infant industry argument
C) industrial policy
D) strategic trade theory

Question 11

Which of the following is not a common argument for government intervention in international trade?

A) the infant industry argument
B) the national defense argument
C) maintenance of existing jobs
D) competitive trade theory

Question 12

Which of the following groups would not encourage a government to adopt fair trade policies?

A) domestic labor forces
B) communities where factories are located
C) domestic firms fighting foreign competitors
D) foreign competitors trying to establish a presence in the market

Question 13

________ suggests that a national government can make its country better off if it adopts trade policies that improve the competitiveness of its domestic firms in oligopolistic industries.

A) National defense argument
B) Infant industry argument
C) Maintenance of existing jobs
D) Strategic trade theory

Question 14

Strategic trade theory applies best to which industry identified below?

A) air transportation
B) commercial aircraft construction
C) farming
D) automobile manufacturing

Question 15

Which U.S. industry does NOT receive favorable treatment for national defense reasons?

A) farming
B) electronics
C) machine tools
D) merchant marine

Question 16

The government of Country X is encouraging the growth of domestic manufacturing by implementing high barriers to imported goods. Country X is most likely following a strategy of ________.

A) strategic trade
B) export promotion
C) import substitution
D) industrial development

Question 17

Which theory specifically addresses the needs of individual industries?

A) strategic trade theory
B) economic development programs
C) industrial policy
D) public choice analysis

Question 18

Boeing accused Airbus of violating international trade laws because ________.

A) Airbus' fleet gives it a significant advantage in the small and large aircraft market
B) Airbus received low-cost loans from the foreign governments
C) Airbus has a lower cost per seat mile than Boeing
D) Airbus has a monopoly in the jumbo jet market

Question 19

The EU believes that Boeing has benefited from unfair trade practices because ________.

A) Boeing had developed new technologies through U.S. Defense Department contracts
B) the U.S. has forgiven significant government loans to Boeing
C) Boeing controls the small aircraft market because of U.S. defense contracts
D) the WTO has overlooked direct subsidies from the U.S. government

Question 20

Free trade ________.

A) is another term for managed trade
B) implies that the national government exerts minimal influence on the exporting and importing decisions of private firms
C) proposes that national governments should directly help domestic firms by providing export subsidies and tax breaks
D) suggests that the national government should actively intervene to ensure that domestic firms' exports receive an equitable share of foreign markets and that imports are controlled to minimize losses of domestic jobs and market share in specific industries

Question 21

Country X applies a tariff on goods as they leave the country. Country X most likely imposes a(n) ________ tariff.

A) transit tariff
B) ad valorem
C) specific tariff
D) export tariff

Question 22

Products manufactured in Brazil are transported through Mexico on their way to England. Mexico applies a tariff on the goods. What type of tariff is implemented by Mexico?

A) transit tariff
B) ad valorem tariff
C) export tariff
D) compound tariff

Question 23

Which country listed below followed industrial policy to achieve economic success?

A) Japan
B) the U.S.
C) Canada
D) Germany

Question 24

________ suggest(s) that special interest groups will often dominate the general interest on any given issue because these groups are willing to work for the passage of laws.

A) Strategic trade theory
B) Economic development programs
C) Industrial policy
D) Public choice analysis

Question 25

Most tariffs imposed by developed countries are ________.

A) transit tariffs
B) specific tariffs
C) ad valorem tariffs
D) compound tariffs

Question 26

According to the text, Toyota built production facilities in multiple states across the U.S. in order to ________.

A) benefit from various resources
B) minimize labor union regulations
C) gain widespread political support
D) appeal to multiple markets and consumers

Question 27

Famous Footwear imports a variety of athletic shoes, work boots, and casual footwear from around the world. Which of the following would most likely provide Famous Footwear with a detailed classification scheme for its imported shoes?

A) tariff rate quota
B) ad valorem report
C) compound tariff report
D) harmonized tariff schedule

Question 28

Any government regulation, policy, or procedure other than a tariff that has the effect of impeding international trade may be labeled a(n) ________.

A) nontariff barrier
B) ad valorem tariff
C) compound tariff
D) export restraint

Question 29

________ encourages the growth of domestic manufacturing industries by erecting high barriers to imported goods.

A) Strategic trade theory
B) Export promotion strategy
C) Import substitution strategy
D) Import promotion strategy

Question 30

What Japanese organization is entrusted with setting industrial policy?

A) Ministry of International Trade and Industry
B) Industrial Policy Ministry
C) Office of Strategic Trade
D) Ministry of Industry Development

Question 31

Which country did not adopt an import substitution strategy after World War I?

A) Australia
B) Japan
C) India
D) Brazil

Question 32

Which of the following tariffs is not an import tariff?

A) transit tariff
B) ad valorem tariff
C) specific tariff
D) compound tariff

Question 33

Which country did not adopt an export promotion strategy after World War II?

A) Japan
B) Brazil
C) Taiwan
D) China

Question 34

A(n) ________ is a tax placed on a good that is traded internationally.

A) tariff
B) quota
C) par value
D) import substitute

Question 35

What type of tariff is assessed as a specific dollar amount per unit of weight or other standard measure?

A) ad valorem tariff
B) specific tariff
C) export tariff
D) compound tariff

Question 36

What type of tariff is assessed as a percentage of the market value of the imported good?

A) transit tariff
B) ad valorem tariff
C) specific tariff
D) compound tariff

Question 37

What type of tariff includes both ad valorem components and specific components?

A) transit tariff
B) harmonized tariff
C) export tariff
D) compound tariff

Question 38

According to public choice analysis, domestic trade policies that affect international business have a tendency to develop from ________.

A) political goals
B) economic needs
C) foreign competition
D) corporate litigation

Question 39

________ suggests that a country should encourage firms to compete in foreign markets by harnessing some advantage the country possesses.

A) Strategic trade theory
B) Export promotion strategy
C) Import substitution strategy
D) Import promotion strategy

Question 40

The government of Country X actively manages the national economy by providing subsidies to aerospace firms and automobile manufacturers. Country X most likely engages in ________.

A) trade blocs
B) industrial policies
C) export promotion strategies
D) import substitution policies

Question 41

A(n) ________ is a promise by a country to limit its export of a good to another country to a pre-specified amount or percentage of the affected market.

A) tariff rate quota
B) export promise
C) voluntary export restraint
D) embargo

Question 42

Country Q is run by a dictator, and Country X wants to use a nontariff barrier to discipline Country Q. Which of the following would most likely be implemented by Country X?

A) numerical export control
B) voluntary export restraint
C) regulatory control
D) embargo

Question 43

A(n) ________ is an absolute ban on the exporting and importing of goods to a particular destination.

A) voluntary export restraint
B) embargo
C) ad valorem tariff
D) tariff rate quota

Question 44

The U.S. government has decided to impose a tariff rate quota on sugar imports into the United States. Which of the following would benefit the most from this decision?

A) domestic candy producers
B) sugar substitute producers
C) soft drink producers
D) U.S. consumers

Question 45

The federal government policy that international air travel purchased with U.S. government funds must occur on U.S. airlines is an example of which type of nontariff barrier?

A) restricted access to distribution networks
B) numerical export controls
C) public-sector procurement policies
D) local-purchase requirements

Question 46

Country X protects its domestic manufacturers from foreign competition by using a variety of nontariff barriers. Which of the following is NOT one of those nontariff barriers?

A) foreign trade zones
B) product standards
C) regulatory controls
D) local purchase requirements

Question 47

A(n) ________ imposes a low tariff rate on a limited amount of imports of a specified good, but imposes a prohibitively high tariff on the good above that limited amount.

A) tariff rate quota
B) numerical export control
C) voluntary export restraint
D) ad valorem tariff

Question 48

An example of a public-sector procurement policy non tariff barrier is the ________.

A) ATM restrictions in Thailand
B) "Buy American" policy in the U.S.
C) encryption technology rules in Russia
D) foreign exchange requirements in Ethiopia

Question 49

Which of the following is an example of a product and testing standards nontariff barrier?

A) Malaysia's requirement that during prime time at least 40 percent of the songs on the radio be by local artists
B) Turkmenistan's policy that certification of imported electrical equipment be performed by local laboratories
C) China's policy that imported sugar be distributed only by state-owned enterprises
D) Canada's requirement that organic baby food be manufactured locally

Question 50

The U.S. government has decided to impose a tariff rate quota on sugar imports into the United States. Which of the following would NOT benefit from this decision?

A) soft drink producers
B) domestic sugar producers
C) sugar substitute producers
D) corn farmers

Question 51

As a result of trade agreements, many countries have replaced quotas with ________.

A) tariff rate quotas
B) numerical export controls
C) voluntary export restraints
D) regulatory controls

Question 52

Local purchase requirements, investment controls, and product and testing standards are all forms of ________.

A) numerical export controls
B) voluntary export restraints
C) nontariff barriers
D) embargoes

Question 53

Which of the following is an example of a nontariff barrier that restricts access to distribution networks?

A) Malaysia's requirement that during prime time at least 40 percent of the songs on the radio be by local artists
B) Turkmenistan's requirement that all imports of consumer goods be approved by the State Standards Committee
C) China's policy that imported sugar be distributed only by state-owned enterprises
D) Canada's requirement that baby food be packaged in 4.5- and 7.5-ounce containers

Question 54

Which of the following is not an example of regulatory controls as a form of nontariff barrier?

A) Country A conducts safety inspections of all imported exercise equipment.
B) Country B requires foreign firms to obtain licenses before constructing plants.
C) Country C requires producers of cosmetics to obtain government product registration.
D) Country D offers tourists a separate exchange rate than what is offered to importers.

Question 55

Which of the following is an example of a regulatory control nontariff barrier?

A) Malaysia's policy that during prime time at least 40 percent of the songs on the radio be by local artists
B) Turkmenistan's requirement that all imported consumer goods be approved by the State Standards Committee
C) China's policy that imported sugar be distributed only by state-owned enterprises
D) Canada's requirement that baby food be packaged in 4.5- and 7.5-ounce containers

Question 56

During the Clinton administration, which industry did NOT receive federal research and development support?

A) genetics
B) agriculture
C) highway systems
D) computer software

Question 57

Thailand's policy whereby foreign banks can operate only three branches and only one of these can be in the city of Bangkok is an example of which type of nontariff barrier?

A) product and testing standards
B) restricted access to distribution networks
C) numerical export controls
D) public-sector procurement policies

Question 58

France's requirement that during prime time at least 40 percent of the songs played on 1700 AM and FM stations must be written or sung by French or Francophone artists is an example of which type of nontariff barrier?

A) product and testing standards
B) restricted access to distribution networks
C) numerical export controls
D) public-sector procurement policies
E) local-purchase requirements

Question 59

A ________ is a numerical limit on the quantity of a good that may be imported into a country during some time period.

A) quota
B) numerical export control
C) voluntary export restraint
D) regulatory control

Question 60

Public-sector procurement policies are common in Country X. Which of the following is the most likely characteristic of Country X?

A) extensive state ownership of industry
B) highly educated labor force
C) numerous small firms
D) minimal tariffs

Question 61

In most cases, tariffs are imposed for the purpose of ________.

A) increasing national government revenue
B) complying with trade regulations
C) increasing foreign trade activity
D) promoting consumer safety

Question 62

Managed trade is another term for free trade.

Question 63

Free trade implies that government exerts minimal influence on the exporting and importing decisions of private firms and individuals.

Question 64

Country X wants to stimulate exports. Which of the following would most likely help Country X achieve this goal?

A) subsidies
B) currency controls
C) investment controls
D) quotas

Question 65

The strategic trade theory is more applicable than the infant industry argument.

Question 66

A voluntary export control is most likely used to ________.

A) punish political enemies
B) appeal to domestic politicians
C) avoid trade conflicts with friendly trade partners
D) comply with strict product and testing standards

Question 67

Most critics of unfair trade practice laws are concerned that such laws ________.

A) promote globalization
B) encourage mercantilism
C) fail to protect poor consumers
D) serve as protectionist trade barriers

Question 68

Which agency initially investigates complaints about unfair trade practices in the United States?

A) Overseas Private Investment Corporation
B) Federal Trade Commission
C) International Trade Administration
D) World Trade Organization

Question 69

A ________ refers to any factory located in an FTZ in Mexico.

A) maquiladora
B) greenfield operation
C) keiretsu
D) chaebol

Question 70

Which of the following would LEAST likely be used as a subsidy to entice firms to locate or expand facilities in a particular community?

A) quotas
B) free land
C) workforce training
D) reduced utility rates

Question 71

According to the national defense argument, government protection of specific industries may be necessary to ensure a country's self-sufficiency in critical raw materials, machinery, and technology.

Question 72

________ make it more difficult for importers of nonessential goods to acquire foreign exchange.

A) Currency controls
B) Restricted access to distribution networks
C) Numerical export controls
D) Public-sector procurement policies

Question 73

The infant industry argument has been adopted in countries worldwide.

Question 74

________ is/are common in key industries like broadcasting, utilities, air transportation, defense contracting, and financial services.

A) Restricted access to distribution networks
B) Investment controls
C) Public-sector procurement policies
D) Quotas

Question 75

Country X imposes a low tariff rate for the first 5,000 pounds of rice it imports from Japan and a high tariff rate on all imported rice above this threshold. Country X most likely uses a ________.

A) free trade zone
B) tariff rate quota
C) foreign currency control
D) voluntary export restraint

Question 76

Which of the following industries would LEAST likely be subjected to investment controls?

A) broadcasting
B) farming
C) utilities
D) financial services

Question 77

A(n) ________ is calculated to offset the advantage an exporter receives from a subsidy.

A) compound tariff
B) export promotion
C) countervailing duty
D) substitution tariff

Question 78

A foreign trade zone is primarily used by governments to ________.

A) protect currency rates
B) enforce tariffs and duties
C) monitor foreign investments
D) encourage economic development

Question 79

________ can occur when a firm sells its goods in a foreign market at a price below what it charges in its home market.

A) Predatory pricing
B) International price discrimination
C) Foreign trade duties
D) Subsidies

Question 80

A(n) ________ is a geographic area where imported or exported goods receive preferential tariff treatment.

A) free trade zone
B) foreign trade zone
C) fair trade zone
D) economic incentive zone