QUESTION Trade barriers encourage firms to disperse their productive activities—design, production, and assembly—to foreign nations. Indicate whether the statement is true or false. ANSWER FALSE It may make sense for a firm to design and engineer its product in one country, to manufacture components in another, to perform final assembly operations in yet another […]
QUESTION Which of the following is the most common political argument for government intervention in international trade? A. Decreasing the prices of products in the domestic market B. Promoting strategic trade policy C. Protecting jobs and industries from unfair foreign competition D. Improving efficiency of domestic labor E. Protecting human rights ANSWER C
QUESTION Antidumping actions seem to be concentrated in certain sectors of the economy such as basic metal industries (e.g., aluminum and steel), chemicals, plastics, and machinery and electrical equipment. Indicate whether the statement is true or false. ANSWER TRUE Antidumping actions seem to be concentrated in certain sectors of the economy such as basic […]
QUESTION Dumping involves foreign producers: A. attempting hostile takeovers of domestic firms and usurping the available resources for production. B. indiscriminately exploiting the natural resources of a foreign country to create a later demand that can be met only by imports. C. eliminating competition by subsidizing prices in a foreign market with home market profits […]
QUESTION Which of the following groups benefits the most from the imposition of tariffs? A. Domestic producers B. Consumers C. Exporters and importers D. Foreign producers E. International bodies such as WTO ANSWER A
QUESTION Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors. Indicate whether the statement is true or false. ANSWER TRUE Government intervention can be self-defeating because it tends to protect the inefficient rather than help firms become efficient global competitors. Intervention is dangerous; […]
QUESTION A firm may set up production activities in a foreign country, where trade barriers do not currently exist, to reduce the threat of trade barriers being imposed later. Indicate whether the statement is true or false. ANSWER TRUE Even when trade barriers do not exist, the firm may still want to locate some […]
QUESTION The threat of antidumping action enhances the ability of a firm to use aggressive pricing to gain market share in a country. Indicate whether the statement is true or false. ANSWER FALSE The threat of antidumping action limits the ability of a firm to use aggressive pricing to gain market share in a […]
QUESTION Which of the following is a trade policy instrument that the GATT and WTO have been most successful in limiting? A. Local content requirements B. Tariffs C. Subsidies D. Voluntary export restraints E. Import quotas ANSWER B
QUESTION Which of the following refers to a quota on trade imposed by the exporting country, typically at the request of the importing country’s government? A. Tariff rate quota B. Quota rent C. Voluntary export restraint (VER) D. Quota share E. Export embargo ANSWER C
