QUESTION Which of the following does NOT reinforce that the best interests of international business are served by a free trade stance? A. The increasing integration of the world economy B. The internationalization of production C. The trend toward greater protectionism D. The drawbacks of government intervention E. The dispersion of production activities ANSWER […]
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 Cadmia banned imports of Mattel toys with high levels of toxic lead, manufactured in Argonia. The underlying motive for such a move could be: A. protecting domestic businesses from unfair pricing. B. protesting the pricing of toys below their costs of production. C. protecting consumers from unsafe products. D. increasing the trade surplus of […]
QUESTION Which of the following indicates the difference between GATT and WTO? A. WTO has strict time limits unlike GATT. B. WTO operates on the basis of consensus unlike GATT. C. GATT gives trading partners the right to compensation or, in the last resort, to impose (commensurate) trade sanctions unlike WTO. D. GATT’s verdict is […]
