QUESTION Free trade as a government policy was first officially embraced by Germany in 1846, when the Bundestag repealed the Corn Laws. Indicate whether the statement is true or false. ANSWER FALSE Free trade as a government policy was first officially embraced by Great Britain in 1846, when the British Parliament repealed the Corn […]
QUESTION Specific tariffs are levied as a proportion of the value of the imported good. Indicate whether the statement is true or false. ANSWER FALSE Specific tariffs are levied as a fixed charge for each unit of a good imported (e.g., $3 per barrel of oil). Ad valorem tariffs are levied as a proportion […]
QUESTION The Smoot-Hawley Act aimed to liberalize trade by eliminating tariffs, subsidies, and import quotas. Indicate whether the statement is true or false. ANSWER FALSE Aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products, the Smoot-Hawley Act erected an enormous wall of tariff barriers. Almost every […]
QUESTION Government intervention in international trade can take the form of reducing restrictions on imports and encouraging foreign direct investment. Indicate whether the statement is true or false. ANSWER TRUE When governments intervene in international trade, they often do so by restricting imports of goods and services into their nation, while adopting policies that […]
QUESTION One of the reasons for the trend toward greater protectionism was that many countries found ways to get around GATT regulations. Indicate whether the statement is true or false. ANSWER TRUE During the 1980s and early 1990s, the world trading system erected by the GATT came under strain as pressures for greater protectionism […]
QUESTION Political arguments for government intervention are usually concerned with protecting consumer interests within the country. Indicate whether the statement is true or false. ANSWER FALSE Political arguments for intervention are concerned with protecting the interests of certain groups within a nation (normally producers), often at the expense of other groups (normally consumers), or […]
QUESTION Governments can protect consumers from unsafe products by issuing a limit or a ban on such products. Indicate whether the statement is true or false. ANSWER TRUE Many governments have long had regulations to protect consumers from unsafe products. The indirect effect of such regulations often is to limit or ban the importation […]
QUESTION Some countries argue that government intervention to protect certain domestic industries can compromise national security. Indicate whether the statement is true or false. ANSWER FALSE Countries sometimes argue that it is necessary to protect certain industries because they are important for national security.
QUESTION Which of the following is true of factor endowments according to Porter? A. Basic factors, unlike advanced factors, are the most significant for competitive advantage. B. Basic factors can be upgraded by nations, while advanced factors are endowed by nature. C. The initial advantage provided by advanced factors is extended by investment in basic […]
QUESTION Which of the following factor endowments would be classified as a basic factor by Michael Porter? A. Communication infrastructure B. Research facilities C. Natural resources D. Skilled labor E. Technological know-how ANSWER C
