Question 1

_____ is a new nontariff barrier that was designed to prevent foreign producers from using predatory pricing.

Accepted Answer

A)  Quota 
B)  Embargo 
C)  Import license 
D)  Antidumping law 
E)  License

Question 2

By the year 1971, the United States was selling more to other countries than it bought from them; that is, the United States had a favorable balance of trade.

Accepted Answer

A) True 
 B)False

Question 3

One of the basic elements of the General Agreement on Tariffs and Trade (GATT) is that:

Accepted Answer

A)  member nations are exempt from import tariffs to other member nations. 
B)  all tariffs shall be abolished among member nations at the time of membership. 
C)  the World Court shall review all claims and make final judgments. 
D)  trade shall be conducted on a nondiscriminatory basis. 
E)  trade in services and investments will be excluded from the purview of the GATT.

Question 4

Blockage is ideally accomplished:

Accepted Answer

A)  when a country refuses to allow an importer to exchange its national currency for the seller's currency. 
B)  when two countries enter into a voluntary agreement to restrict volume of exports. 
C)  when a country applies specific unit or dollar limit to a particular type of good. 
D)  when countries limit the export of certain goods on a case-by-case basis. 
E)  when the government imposes a mandatory tax on goods entering at its borders.

Question 5

A case might be made for temporary protection of markets with excess productive capacity or excess labor when such protection could facilitate an orderly transition.

Accepted Answer

A) True 
 B)False

Question 6

A balance-of-payments statement includes three accounts. Two of those accounts are the current account and the capital account. What is the third account found on the balance-of-payments statement?

Accepted Answer

A)  Investment account 
B)  Receivables account 
C)  Services account 
D)  Credit account 
E)  Reserves account

Question 7

A specific unit or dollar limit applied to a particular type of good is called a(n):

Accepted Answer

A)  trade license. 
B)  quota. 
C)  asterisk bill. 
D)  predatory price. 
E)  exchange rate.

Question 8

What is the significance of balance of payments figures?

Accepted Answer

The answer of What is the significance of balance of...

Question 9

The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II led to:

Accepted Answer

A)  the rise of new global marketing opportunities. 
B)  the uneven distribution of economic power. 
C)  the dissolution of GATT. 
D)  the spread of Communism. 
E)  the sharp reduction of the production capacity in the U.S.

Question 10

Which of the following was designed to primarily deal with trade deficits, protectionism, and the overall fairness of the U.S. trading partners?

Accepted Answer

A)  The Neutrality Pact of 1941. 
B)  The Omnibus Trade and Competitiveness Act of 1988. 
C)  The League of Nations Act of 1920. 
D)  The Hawley-Smoot Tariff Act of 1930. 
E)  The International Monetary Fund Act.

Question 11

_____ is the practice whereby a foreign producer intentionally sells their products in the United States for less than the cost of production to undermine the competition and take control of the market.

Accepted Answer

A)  Basing point pricing 
B)  Offensive pricing 
C)  Defensive pricing 
D)  Counterpoint pricing 
E)  Predatory pricing

Question 12

Quotas strictly permit importing on a case-by-case basis.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a defining characteristic of a balance-of-payments statement?

Accepted Answer

A)  It is a record of the transactions between the government of a country and the private companies. 
B)  It records all financial transactions between the residents of a country and those of the rest of the world. 
C)  It records the trade policies of the member nations of the WTO. 
D)  It is an annual record of the profitable foreign transactions made by a particular country. 
E)  It is a localfirm's financial statement, where the credits and debits must offset each other.

Question 14

The World Bank estimates that five countries whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. _____ is one of the countries included in this list.

Accepted Answer

A)  Canada 
B)  Nigeria 
C)  Netherlands 
D)  Indonesia 
E)  Rhodesia

Question 15

The reserves account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries.

Accepted Answer

A) True 
 B)False

Question 16

Quotas are more flexible than import licenses.

Accepted Answer

A) True 
 B)False

Question 17

Several nations are frustrated with the slow progress of the most recent round of WTO trade negotiations. To vent their frustration, several countries are:

Accepted Answer

A)  negotiating bilateral trade agreements. 
B)  forming a rival organization. 
C)  refusing to honor rules and regulations imposed by the WTO. 
D)  using legal means to sue the WTO. 
E)  opting out of membership in the WTO.

Question 18

Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s?

Accepted Answer

A)  The creation of the Soviet Union and the higher tariffs on imports. 
B)  Growing jingoistic nationalism and a negative population growth rate in major international markets. 
C)  Resistance to direct investment and increasing competition in export markets. 
D)  Increasing Chinese domination in the manufacturing sector and the falling dollar in global markets. 
E)  Political intervention in free trade movement and growing influence of consumer rights advocacy in the home market.

Question 19

It is mandatory for importers who want to buy a foreign good to apply for a business permit in that country.

Accepted Answer

A) True 
 B)False

Question 20

In order to effectively secure foreign exchange, which of the following is most likely to be used by countries experiencing severe shortages of foreign exchange?

Accepted Answer

A)  Import quota 
B)  Government approval 
C)  Tariff 
D)  VERs 
E)  Embargo

Exam 2: The Dynamic Environment of International Trade

_____ is a new nontariff barrier that was designed to prevent foreign producers from using predatory pricing.

By the year 1971, the United States was selling more to other countries than it bought from them; that is, the United States had a favorable balance of trade.

One of the basic elements of the General Agreement on Tariffs and Trade (GATT) is that:

Blockage is ideally accomplished:

A case might be made for temporary protection of markets with excess productive capacity or excess labor when such protection could facilitate an orderly transition.

A balance-of-payments statement includes three accounts. Two of those accounts are the current account and the capital account. What is the third account found on the balance-of-payments statement?

A specific unit or dollar limit applied to a particular type of good is called a(n) :

What is the significance of balance of payments figures?

The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II led to:

Which of the following was designed to primarily deal with trade deficits, protectionism, and the overall fairness of the U.S. trading partners?

_____ is the practice whereby a foreign producer intentionally sells their products in the United States for less than the cost of production to undermine the competition and take control of the market.

Quotas strictly permit importing on a case-by-case basis.

Which of the following is a defining characteristic of a balance-of-payments statement?

The World Bank estimates that five countries whose share of world trade is barely one-third that of the European Union will, by 2020, have a 50 percent higher share than that of the European Union. _____ is one of the countries included in this list.

The reserves account is a record of direct investment, portfolio investment, and short-term capital movements to and from countries.

Quotas are more flexible than import licenses.

Several nations are frustrated with the slow progress of the most recent round of WTO trade negotiations. To vent their frustration, several countries are:

Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s?

It is mandatory for importers who want to buy a foreign good to apply for a business permit in that country.

In order to effectively secure foreign exchange, which of the following is most likely to be used by countries experiencing severe shortages of foreign exchange?