QUESTION Which of the following is a loophole in antidumping laws that is being exploited by many countries to pursue protectionism? A. The slackness of enforcement agencies B. WTO’s noncommittal approach to antidumping laws C. Bilateral VERs which subvert antidumping laws D. The rather vague definition of what constitutes “dumping” E. Lack of consensus among […]
QUESTION Which of the following has been excluded from the agenda for the Doha round of WTO talks that began in 2001? A. Reducing barriers to cross-border investment B. Phasing out subsidies to agricultural producers C. Limiting the use of antidumping laws D. Attempts to tie trade to labor standards in a country E. Cutting […]
QUESTION The threat of antidumping action: A. helps the firm raise capital in the primary market. B. limits the ability of a firm to raise prices in response to high demand. C. enhances the firm’s ability to disperse its productive activities in an efficient manner. D. limits the ability of a firm to use aggressive […]
QUESTION When a firm exports its products to a foreign country, foreign direct investment occurs. Indicate whether the statement is true or false. ANSWER FALSE Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or market a product in a foreign country. According to the U.S. Department of Commerce, […]
QUESTION The attractiveness of exporting increases in comparison to FDI or licensing when products have a low value-to-weight ratio. Indicate whether the statement is true or false. ANSWER FALSE The viability of an exporting strategy is often constrained by transportation costs and trade barriers. When transportation costs are added to production costs, it becomes […]
QUESTION By placing tariffs on imported goods, governments can increase the cost of exporting relative to foreign direct investment and licensing. Indicate whether the statement is true or false. ANSWER TRUE Transportation costs aside, some firms undertake foreign direct investment as a response to actual or threatened trade barriers such as import tariffs or […]
QUESTION By limiting imports through quotas, governments reduce the attractiveness of FDI and licensing. Indicate whether the statement is true or false. ANSWER FALSE By limiting imports through quotas, governments increase the attractiveness of FDI and licensing. For example, the wave of FDI by Japanese auto companies in the United States during the 1980s […]
QUESTION According to the free market view, countries should specialize in the production of those goods and services that they can produce most efficiently. Indicate whether the statement is true or false. ANSWER TRUE The free market view argues that international production should be distributed among countries according to the theory of comparative advantage. […]
QUESTION According to the pragmatic nationalist view, no country should ever permit foreign corporations to undertake FDI. Indicate whether the statement is true or false. ANSWER FALSE According to the radical view, no country should ever permit foreign corporations to undertake FDI, since they can never be instruments of economic development, only of economic […]
QUESTION The United States accused Libya and Iran of supporting terrorist action and building weapons of mass destruction. The U.S. government, therefore, imposed trade sanctions against the two countries. Which of the following political arguments does this exemplify? A. Retaliation and trade war B. Furthering foreign policy objectives C. Strategic trade policy D. Corporate security […]
