Deck 6: Political Economy of Trade

Question 1

When a company exports a product at a price that is lower than the price normally charged in its domestic market or lower than the cost of production,it is said to be ________.

A)dumping
B)ringfencing
C)hoarding
D)cost-shifting

Answer 1

A

Question 2

Which of the following statements is true of local content requirements?

A)It is a strategy mainly used by developed nations.
B)This strategy enforces companies to locate their manufacturing facilities in their home countries.
C)Local content requirements hurt domestic producers through their effect on prices.
D)It forces companies from other countries to employ local resources in their production processes.

Answer 2

D

Question 3

The protection of infant industries by a nation's government can cause domestic companies to become complacent toward innovation.

Answer 3

True

Question 4

Which of the following do products designated as dual use require before exports can take place?

A)currency controls
B)countervailing duties
C)special government approval
D)local content requirements

Question 5

Which of the following industries is typically protected for national security reasons?

A)agriculture
B)textile
C)automobile
D)housing

Question 6

Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy.The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Which of the following motives illustrates Freeland's efforts to protect local jobs?

A)political motive
B)economic motive
C)cultural motive
D)social motive

Question 7

Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy.The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Freeland's efforts to provide opportunities to its emerging industries is an example of its ________.

A)political motive
B)economic motive
C)cultural motive
D)social motive

Question 8

Which of the following statements is true about cultural influences?

A)Culture and trade are independent of each other.
B)Unwanted cultural influence in a nation can cause governments to block imports that it believes are harmful.
C)The cultures of countries are independent of the effects of exposure to the people and products of other cultures.
D)The culture of the United States is readily adapted into the local culture of countries all over the world.

Question 9

Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy.The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Which of the following motives is least likely attributed to Freeland's restriction on free trade?

A)political motives
B)economic motives
C)social motives
D)cultural motives

Question 10

The most common economic reason for nations attempts to influence international trade is preserving national security.

Question 11

Which of the following is true of government interventions in a country's trade practices?

A)A major economic motive behind government intervention in trade is the protection of jobs.
B)A major political motive behind government intervention in trade is the protection of infant industries.
C)Government interventions help companies take advantage of economies of scale and be the first movers in their industries.
D)Governments intervene to protect only imports,as the protection of exports is handled by private agencies.

Question 12

An additional tariff placed on an imported product that a nation believes is receiving an unfair subsidy is called a(n)________.

A)countervailing duty
B)ad valorem tariff
C)antidumping duty
D)compound tariff

Question 13

________ refers to the unwanted cultural influence in a nation that can cause great distress and lead governments to block imports it believes to be harmful.

A)Cultural imperialism
B)Cultural protectionism
C)Dumping
D)Capitalism

Question 14

Which of the following is a political motive behind a government's intervention in trade?

A)promoting a strategic trade policy
B)gaining influence over other nations
C)protecting a country from unwanted cultural influence
D)protecting young industries from competition

Question 15

The purpose of ________ is to force companies from other nations to use local resources in their production processes,particularly labor.

A)administrative delays
B)currency controls
C)local content requirements
D)voluntary export restraints

Question 16

Scenario: Not-So-Free Freeland
Freeland is a semi-closed economy whose government believes in protecting national identity and building a self-sustained economy.The government's priority is to protect local jobs and provide opportunities to Freeland's emerging industries to flourish without the threat of external competition.
Freeland's protection of its national identity is an example of a(n)________.

A)political motive
B)economic motive
C)cultural motive
D)social motive

Question 17

Which of the following is an example of a dual use product?

A)a blowdryer
B)a GPS navigation device
C)a food processor
D)a vacuum cleaner

Question 18

Which of the following countries is seen as a threat to national cultures around the world?

A)United States
B)India
C)Russia
D)France

Question 19

Industries considered essential to national security often receive government-sponsored protection.

Question 20

Which of the following is the main cultural motive behind government intervention in trade?

A)promotion of strategic trade policies
B)protection of jobs
C)protection of national identity
D)protection of young industries from competition

Question 21

A common purpose of many companies' facilities in foreign trade zones is ________.

A)final product assembly
B)acquisition of raw materials
C)product design
D)product manufacturing

Question 22

What is meant by dumping? Describe the various roles of the World Trade Organization,including when a country is accused of dumping.

Question 23

Describe each instrument that governments use to promote trade.

Question 24

The major purpose of foreign trade zones is to implement barriers to trade and commerce.

Question 25

Which of the following statements is true of export financing?

A)Small businesses that have just started to export are financially stable and seldom require financing from government agencies.
B)The Ex-Im Bank finances the export activities of companies all over the world.
C)Governments usually offer loans to exporters with above-market interest rates.
D)Governments may promote exports by offering loan guarantees.

Question 26

Unwanted cultural influence in a nation can cause governments to block imports that it believes are harmful.

Question 27

The main cultural motive behind government intervention in trade includes protection of domestic jobs.

Question 28

A designated geographic region in which merchandise is allowed to pass with lower customs duties and/or fewer custom procedures is called a(n)________.

A)foreign trade zone
B)free trade area
C)single market
D)open border

Question 29

Explain why job protection is a political motive for governments to restrict free trade.Why might a government interested in job protection insist on local content requirements for international firms doing business in that country?

Question 30

Which of the following is a method of restricting trade?

A)export financing
B)local content requirements
C)subsidy
D)foreign trade zones

Question 31

Describe the main political motives behind government intervention in trade.

Question 32

Financial assistance given to domestic producers in the form of cash payments is an example of a(n)________.

A)ad valorem tariff
B)quota
C)subsidy
D)export tariff

Question 33

Transit tariffs have been almost entirely eliminated worldwide through international trade agreements.

Question 34

Which of the following financial companies in the United States is involved in activities of selling of goods abroad,and offers insurance on foreign accounts receivable?

A)National Cooperative Bank
B)Overseas Private Investment Corporation
C)Export-Import Bank
D)Inter-American Development Bank

Question 35

Describe the role of special government agencies in promoting exports and imports.

Question 36

Receiving financing from government agencies is often crucial to the success of small businesses just beginning to export.

Question 37

Which of the following statements is true of foreign trade zone?

A)It is an area through which merchandise is allowed to pass with fewer procedures but higher taxes.
B)These areas provide very limited employment opportunities.
C)Goods imported into these zones require import licenses and are subject to import duties.
D)International companies can store goods in these zones without incurring taxes,before shipping them to other countries.

Question 38

Government trade promotion agencies ________.

A)enable imports at discounts
B)set up foreign trade zones across the country
C)advertise in other countries to promote the nation's exports
D)place voluntary export restraints on companies that fail to export adequately

Question 39

Which of the following is an instrument that governments use to promote trade?

A)embargoes
B)tariffs
C)export financing
D)administrative delays

Question 40

The protection of infant industries by a nation's government can cause more economic harm than good.

Question 41

Which of the following will add to the cost of an imported product by levying an additional tax upon it?

A)tariffs
B)quotas
C)local content requirements
D)embargoes

Question 42

A(n)________ tariff is levied as a particular fee for each unit of an imported product.

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

Question 43

Using tariffs to generate government revenue is most common among ________.

A)developed countries
B)developing countries
C)western nations
D)First World nations

Question 44

Restrictions on the convertibility of a currency into other currencies are referred to as ________.

A)administrative delays
B)currency crisis
C)local content requirements
D)currency controls

Question 45

A lower tariff rate for a certain quantity of imports and a higher rate for quantities that exceed the quota is called a(n)________.

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

Question 46

Which of the following statements is true of tariffs?

A)Tariffs increase an imported product's appeal to buyers.
B)Transit tariffs are the most widely-levied tariffs.
C)Ad valorem tariffs are levied as a specific fee for each unit of an imported product.
D)Export tariffs are used by countries when they believe an export's price is lower than it should be.

Question 47

A restriction on the amount of a good that can enter or leave a country during a certain period of time is called a(n)________.

A)administrative delay
B)local content requirement
C)quota
D)tariff

Question 48

A(n)________ is the most restrictive nontariff trade barrier and is typically applied to accomplish political goals.

A)tariff-quota
B)subsidy
C)embargo
D)voluntary export restraint

Question 49

Which of the following is true of quotas?

A)They are the most common type of trade barrier.
B)They help domestic producers maintain their market shares and prices.
C)Their licenses are granted by governments to other nation companies on a five-year basis.
D)They lead to a decrease in the prices of intermediate goods.

Question 50

Tariff-quotas are used extensively in the trade of ________.

A)manufactured goods
B)services
C)textiles
D)agricultural products

Question 51

Which of the following statements is true of tariffs?

A)They are the major source of government revenue in developed nations.
B)They increase products' appeal to buyers.
C)They lower the effective prices of imports.
D)They protect domestic producers.

Question 52

A(n)________ tariff is levied as a percentage of the stated price of an imported product.

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

Question 53

A country imposes a tariff on goods that it sells abroad at the request of another nation.This is an example of a(n)________.

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

Question 54

Purposely understaffing customs offices to cause time delays,requiring special licenses that take a long time to obtain,and requiring air carriers to land at inconvenient airports are all examples of ________.

A)local content requirements
B)import quotas
C)administrative delays
D)voluntary export restraints

Question 55

Regulatory controls or bureaucratic rules designed to impair the rapid flow of imports into a country are called ________.

A)local content requirements
B)administrative delays
C)voluntary export restraints
D)import quotas

Question 56

A tariff levied by the government of a country that is selling goods abroad is called a(n)________.

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

Question 57

A(n)________ tariff is levied on an imported product and calculated partly as a percentage of its stated price and partly as a specific fee for each unit.

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

Question 58

The most common tariffs used today are the ________ tariffs.

A)import
B)transit
C)inverted
D)export

Question 59

Countries might impose a(n)________ in response to the threat of an import quota or total ban on a product by an importing nation.

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

Question 60

A tariff levied by the government of a country that a product is passing through on its way to a final destination is called a ________ tariff.

A)transit
B)compound
C)export
D)specific

Question 61

A disadvantage of protection from import competition is the added cost of continuing to produce a good domestically that could be supplied more efficiently by an international supplier.

Question 62

An embargo is the most restrictive nontariff trade barrier available.

Question 63

Tariffs tend to exact a cost on countries as a whole because they lessen citizens' gains from trade.

Question 64

Tariffs are a source of government revenue mostly among developing nations.

Question 65

A compound tariff on an imported product is calculated partly as a percentage of its stated price and partly as a specific fee for each unit.

Question 66

Scenario: Excelsior's Limited
Excelsior's Limited,a manufacturer of health and beauty aids,is expanding its presence in several countries around the world.Excelsior's president is surprised at some of the responses the company is receiving from other countries.
When Excelsior's Limited tried to convert its earnings from one country,the government stipulated that the company had to exchange its currency at a very unfavorable rate.This is an example of a(n)________.

A)administrative delay
B)currency control
C)subsidy
D)tariff

Question 67

A country that believes an imported product is being sold in its market for a price lower than the cost of production for the product may impose a(n)________ in retaliation.

A)countervailing duty
B)ad valorem tariff
C)antidumping duty
D)compound tariff

Question 68

The automobile industry is typically protected for national security reasons.

Question 69

Scenario: Konesia Joins the World
Konesia,a former totalitarian economy and pariah state,is taking steps toward a free market economy.The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
Which of the following would be Konesia's least appropriate method to restrict unwanted trade?

A)introduce an administrative delay
B)impose a quota
C)reduce tariffs
D)impose a currency control

Question 70

Customs duties decrease the total amount of a good's production cost.

Question 71

Scenario: Konesia Joins the World
Konesia,a former totalitarian economy and pariah state,is taking steps toward a free market economy.The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
Which of the following is the most likely reason for Konesia's government to impose an import quota?

A)to maintain adequate supplies of a product in the home market
B)to maintain market shares and prices of domestic producers
C)to restrict the supply of a product to world markets
D)to maintain the exports of a product at target levels

Question 72

Products that are of use in both industrial and military applications are designated as dual-use products.

Question 73

Scenario: Excelsior's Limited
Excelsior's Limited,a manufacturer of health and beauty aids,is expanding its presence in several countries around the world.Excelsior's president is surprised at some of the responses the company is receiving from other countries.
Excelsior's Limited tried to sell its product in Canada,but was told that at least forty percent of the product must be manufactured in Canada.This is an example of a(n)________.

A)administrative delay
B)local content requirement
C)tariff
D)embargo

Question 74

Consumers are benefitted when a government imposes import quotas on products.

Question 75

When a company exports a product at a price higher than the price normally charged in its domestic market,it is said to be dumping.

Question 76

A voluntary export restraint refers to a quota that a nation imposes on its exports,usually at the request of another nation.

Question 77

An import tariff is levied by the government of a country that a product is passing through on its way to its final destination.

Question 78

Scenario: Konesia Joins the World
Konesia,a former totalitarian economy and pariah state,is taking steps toward a free market economy.The government wants to encourage trade but also wants to find a balance so that local businesses and industries are not harmed.
If Konesia chooses to levy tariffs as a percentage of the stated price of an imported product,this would be an example of a(n)________.

A)compound tariff
B)specific tariff
C)ad valorem tariff
D)tariff-quota

Question 79

Restrictions on the convertibility of one currency into others is called administrative delays.

Question 80

Scenario: Excelsior's Limited
Excelsior's Limited,a manufacturer of health and beauty aids,is expanding its presence in several countries around the world.Excelsior's president is surprised at some of the responses the company is receiving from other countries.
France gave Excelsior's Limited permission to export its product as long as the company obtained a special license first.Excelsior has been waiting six months for the license and is wondering if it will ever arrive.Excelsior's Limited is experiencing a(n)________.

A)administrative delay
B)local content requirement
C)embargo
D)currency control