Deck 2: The Dynamic Environment of International Trade

Question 1

A nation's balance-of-payments statement records all financial transactions between its residents and those of the rest of the world during a given period of time--usually one year.

Answer 1

True

Question 2

The creation of the World Trade Organization (WTO)is one of the biggest victories for free trade in decades.

Answer 2

True

Question 3

One of the most severe problems faced by international marketers today is the extremely high level of tariffs the world over.

Answer 3

False

Question 4

If there is a limit on the number of imported television sets from Mexico,this is called a quota.

Question 5

With respect to total trade,the United States trades more with Mexico than any other country.

Question 6

One of the justifications of protectionism is protection of cartels.

Question 7

At no time in modern economic history have countries been more economically interdependent.

Question 8

As the value of the dollar declines to lower levels,American products are more expensive for foreign customers and American exports decrease;moreover,foreign products are less expensive for American customers and foreign imports increase.

Question 9

A government boycott is an absolute restriction against the purchase and importation of certain goods from other countries.

Question 10

Trade barriers are pesky hurdles to peace and prosperity.

Question 11

the U.S.had a trade deficit.Since then,the U.S.has had a trade surplus.

Question 12

,which raised average U.S.tariffs on more than 20,000 imported goods to levels in excess of 60 percent.

Question 13

The French government continues to exclude American beef from the French diet based on disputes about mad cow disease.

Question 14

If Germany agrees voluntarily to limit the number of automobiles exported to the United States,this would be an example of a quota.

Question 15

Following the great economic boom of the late 1990s the number of American largest corporations remained approximately level through 2007 whereas during the same period Japanese largest corporations decreased from 22 to 8 corporations.

Question 16

A tariff is a specific unit or dollar limit applied to a particular type of good.

Question 17

Following the great economic boom of the late 1990s British corporations were no longer among the world's largest corporations.

Question 18

Nations utilize legal barriers,exchange barriers,and psychological barriers to restrain entry of unwanted goods.

Question 19

A balance-of-payments statement includes the following: the current account,the past account,and the overdue account.

Question 20

A government can effectively regulate its international trade position by various forms of boycotts and embargoes.

Question 21

Faced with increased competition for U.S.businesses in the '80s and early '90s,questions were raised as to how to maintain the competitive strength of American business,how to avoid the domination of U.S.markets by foreign multinationals,and how to __________.

A)restructure heavy industries
B)strengthen the dollar
C)initiatite retalitory trade restrictions
D)forestall the buying of America
E)return to the gold standard

Question 22

After 1888,the United States had unparalleled growth and a favorable balance of trade until _________.After this date,the United States has a negative balance of trade.

A)1950
B)1963
C)1968
D)1971
E)1985

Question 23

Since GATT's inception there have been four "rounds" of intergovernmental tariff negotiations.

Question 24

If the United States requires that any imported medicine meant for humans pass FDA standards,the standard requirement would be considered to be a form of nontariff barrier to international trade.

Question 25

The United States has many successful trade relationships.Four of these relationships account for a tremendous volume of trade.All of the following countries are among the top four producers of trade for the U.S.EXCEPT:

A)Canada
B)Mexico
C)Japan
D)France
E)China

Question 26

American beef continues to be excluded in this country's diet based on disputes about mad cow disease.

A)Japan
B)Mexico
C)Canada
D)United Kingdom
E)China

Question 27

International work continues around the world to reduce these trade obstacles to peace and prosperity.

A)Satellite and terrestial communication.
B)Energy and food costs.
C)Medical and drug prices.
D)National debt and high exchange rates.
E)Tariff and nontariff trade barriers.

Question 28

With respect to the nationality of the world's 100 largest industrial corporations,the United States is home to the largest number of the top 100 firms.Which of the following countries is home to the second largest number of these firms?

A)Germany
B)United Kingdom
C)France
D)Netherlands
E)Japan

Question 29

The system of accounts that records a nation's international financial transactions is called its:

A)trade balance.
B)national accounts system.
C)EX-IM (exports-imports)account.
D)balance of payments.
E)exchange rate.

Question 30

In 2007 this country ranked second behind the United States in number of world's largest corporations.

A)Netherlands
B)Japan
C)France
D)Germany
E)South Korea

Question 31

With respect to international trade,MNC stands for:

A)Municipal,National,and County districts
B)Multilateral and National Cartels
C)Multinational Corporations
D)Military and National Control districts
E)Market Nongovernment Channels

Question 32

The overall purpose of the Omnibus Trade and Competitiveness Act of 1988 was to deal with trade deficits,protectionism,and overall fairness of our trading partners.

Question 33

If a foreign producer intentionally sells their products in the United States for less than the cost of production with the purpose of undermining competition and taking control of the market,the foreign producer would be guilty of what is called warrior pricing.

Question 34

GATT stands for Global and Territorial Trade.

Question 35

For every dollar the United States invested in the economic development and rebuilding of other countries after World War II,hundreds of dollars returned in the form of purchases of U.S.goods and services.The primary plan after World War II used to rebuild and reinvigorate war ravaged countries was the:

A)Eisenhower Plan
B)Marshall Plan
C)Bradley Plan
D)Roosevelt Plan
E)Truman Plan

Question 36

The International Monetary Fund (IMF)was created to serve as a watchdog over most international financial transactions between nations.

Question 37

An International Monetary Fund device,special drawing rights (SDR),is in effect "paper gold."

Question 38

The GATT (General Agreement on Tariffs and Trade)was set up as a successor to the WTO (World Trade Organization).

Question 39

The WTO (World Trade Organization)is an institution,not an agreement as was GATT.

Question 40

Those that protest WTO meetings are generally thought to be antiglobalization in their orientation.

Question 41

The practice of ______________ is a particularly ingenious method of controlling imports as it encourages the importation of goods the government deems desirable and discourages importation of goods the government does not want.

A)a differential exchange rate
B)blocked currency
C)boycott
D)embargo
E)import price limit

Question 42

In general,__________ are arbitrary,discriminatory,and require constant administration and supervision.

A)tariffs
B)standards
C)quotas
D)boycotts
E)embargoes

Question 43

Randall Smithe-Jones believes that protectionism is the only way to save the United Kingdom from outside competitors.He has seen small business after small business go bankrupt because cheaper foreign goods have been more popular.The UK has just started a cell-phone manufacturing industry and Smithe-Jones' company is one of the first to try their hand at cell-phone manufacturing.Which of the following would probably be the argument that Smithe-Jones would use to persuade his government representatives that protectionism is still needed in the U.K.?

A)Protection of an infant industry
B)The need to keep money at home
C)Conservation of natural resources
D)National defense
E)The industrialization of a low-wage nation

Question 44

Section 301 of the Omnibus Trade and Competitiveness Act authorizes the U.S.government to _____________ and ___________ against specific foreign trade barriers judged to be unfair.

A)suppress,attack
B)educate,substantiate
C)investigate,retaliate
D)market,dominate
E)litigate,retaliate

Question 45

__________ generally do all of the following: increase inflationary pressures and special interests' privileges;decrease balance-of-payments positions;and,restrict competition.

A)Tariffs
B)Voluntary export restraints
C)Orderly market agreements
D)Monetary barriers
E)Quotas

Question 46

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)investment account
B)receivables account
C)services account
D)credit account
E)reserves account

Question 47

Which of the following types of nontariff barriers would be considered to be "specific limitations on trade" by international marketers?

A)Fees
B)Export subsidies
C)Voluntary export restraints
D)Embargoes
E)Packaging,labeling,or marking standards

Question 48

All of the following would be considered to be nontariff barriers that could be erected to restrict trade EXCEPT:

A)quotas.
B)taxes
C)packaging requirements
D)border taxes.
E)embargoes.

Question 49

A(n)________ is simply a tax imposed by a government on goods entering at its borders.

A)quota
B)trade penalty
C)tariff
D)boycott
E)embargo

Question 50

Exporting countries sometimes agree to voluntary export restraints (VER)as an alternative to the threat of:

A)expulsion.
B)disorderly marketing agreements.
C)stiffer quotas and tariffs.
D)export subsidies
E)standardization disparities

Question 51

All of the following would be considered to be reasons for adopting an attitude of protectionism with respect to world trade EXCEPT:

A)to protect religious beliefs.
B)protection of an infant industry.
C)protection of a home market.
D)the need to keep money at home.
E)to encourage capital accumulation.

Question 52

An agreement between the importing country and the exporting country for a restriction on the volume of exports is called a(n):

A)tariff.
B)standards option.
C)voluntary export option (VER).
D)fee.
E)documentation requirement.

Question 53

When the United States refuses to sell goods to Iran because of the perception that the country harbors radicals and terrorists,the refusal is called a(n):

A)boycott.
B)embargo.
C)tariff.
D)orderly market agreement.
E)blocked currency.

Question 54

A nation's balance-of-payments statement records all financial transactions between:

A)its member states and its primary trading partners.
B)its residents and those of the rest of the world during a given period of time.
C)its suppliers and receivers.
D)profit and nonprofit organizations over a five-year period of time.
E)its top 100 companies and the global top 100 companies.

Question 55

Which of the following would be the balance-of-payments account that is a record of all merchandise exports,imports,and services plus unilateral transfers of funds?

A)current account
B)capital account
C)credit account
D)receivables account
E)reserves account

Question 56

The marketing manager for Healthy Horse Products wants to export to Australia but learns the labeling requirements are quite difficult to comply with limiting imports.This is a type of:

A)blockage.
B)protectionism.
C)trade refusal.
D)stonewalling.
E)boycotting.

Question 57

Which of the following has been effective in reducing tariffs but not in preventing protectionism?

A)GATT
B)the United Nations
C)the International Monetary Fund
D)the World Court
E)None of the above

Question 58

Cybil Chan has been asked by her company to review a series of published nontariff barriers that is used by the Hong Kong Port Authority to control customs and administrative entry procedures.Which of the following nontariff barriers should Ms.Chan look for under the category called customs and administrative entry procedures?

A)Orderly marketing agreements
B)Voluntary export restraints
C)Countervailing duties
D)Export subsidies
E)Documentation requirements

Question 59

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

A)tariff.
B)quota.
C)standard.
D)embargo.
E)boycott.

Question 60

____________ is accomplished by refusing to allow importers to exchange its national currency for the seller's currency.

A)Boycotted money
B)Embargoed capital
C)Blocked currency
D)Anti-banking
E)Cartel dissolution

Question 61

_____________ 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.

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

Question 62

The function of an exchange permit is to:

A)regulate the supply of money.
B)cut-off all exchange.
C)require that importers gain permission to exchange an amount of local currency for foreign currency.
D)protect monopolies.
E)limit pornographic or harmful merchandise from the domestic market.

Question 63

The World Trade Organization was created during which of the following GATT Rounds?

A)Seattle
B)Uruguay
C)Paris
D)Berlin
E)Moscow

Question 64

Shortly after World War II,the United States and 22 other nations signed _________________ to pave the way for the first effective worldwide tariff agreement.

A)the General Agreement on Tariffs and Trade (GATT)
B)the Trade Related Investment Measures (TRIM)
C)the World Trade Organization (WTO)agreement
D)the International Monetary Fund (IMF)agreement
E)the World Bank act

Question 65

__________ has been the forum for successful trade negotiations;recent trade talks continue in Geneva in 2008.

A)ICC (International Chamber of Commerce)
B)EU (European Union)
C)WHO (World Trade Organization)
D)IMF (International Monetary Fund)
E)NAFTA (North American Free Trade Agreement)

Question 66

Unlike GATT,the WTO issues ______________ decisions.

A)illegal
B)counseling
C)no
D)binding
E)intelligent

Question 67

Which of the following trading partners has become the number one "trade problem" for the United States at the beginning of the 21^st century?

A)the United Kingdom
B)Japan
C)Germany
D)Canada
E)China

Question 68

According to the WTO,which of the following is the definition of dumping?

A)Moving questionable goods into a market that does not want them.
B)Flooding a market with so many goods that prices are depressed.
C)Taking excess capacity of one nation and moving that capacity to another.
D)Selling a good at a lower price in the foreign market than in other markets.
E)Exporting goods to take advantage of favorable foreign exchange rates.

Question 69

One of the most popular ways to circumvent WTO guidelines for free trade has been for a country to impose:

A)antidumping duties.
B)tariffs.
C)quotas.
D)fees.
E)licenses.

Question 70

Which of the following acts was designed to deal with trade deficits,protectionism,and the overall fairness of our trading partners?

A)the World Trade Organization Act
B)the Omnibus Trade an 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 71

Protesters have often disagreed with the work of the WTO.Where did the first great protest against globalization and WTO policies and plans occur?

A)Uruguay
B)Chile
C)Paris
D)Seattle
E)Berlin

Question 72

The ratification of the WTO by the United States was challenged in the U.S.Congress for all of the following reasons EXCEPT:

A)possible loss of sovereignty over its trade laws to the WTO.
B)the lack of veto power by the U.S.
C)the ability of a WTO member to challenge trade laws of individual states.
D)the amount of funds that must be supplied to the WTO to run its organization.
E)a majority of WHO members could imposed decisions on the U.S.

Question 73

According to the information provided in the text,a new nontariff barrier that was designed to prevent foreign producers from using predatory pricing is called:

A)quotas.
B)fees.
C)standards.
D)antidumping laws.
E)licenses.

Question 74

As Taki Muri readies his company to pursue lucrative markets in the United States.He is apprehensive about running afoul of U.S.antidumping laws.He has always thought that these laws were constructed just to keep competitors out.However,he also believes (as many other foreign competitors believe)that one way around the U.S.antidumping laws deals with a question of interpretation.Which of the following is the best description of the interpretation loophole that Mr.Muri that believes will work to his benefit?

A)the definition of what a product is
B)the definition of what a price is
C)the interpretation of what "selling below cost" is
D)the interpretation of what a foreign good is
E)the exchange rate variations in the value of the dollar

Question 75

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

A)no nation shall unfairly create tariffs against another.
B)all tariffs shall be abolished among member nations by 2010.
C)the World Court shall review all claims and make final judgments.
D)trade shall be conducted on a nondiscriminatory basis.
E)the United Nations Trade Agency (UNTA)shall serve as watchdog.

Question 76

All of the following activities or organizations are designed to support the growth of international trade EXCEPT:

A)the General Agreement on Tariffs and Trade (GATT).
B)the World Trade Organization (WTO).
C)the International Trade Administration (ITA).
D)the World Bank Group
E)the International Money Fund (IMF).

Question 77

Tall Pine Plywood Company has just received notice that a shipment of plywood (2 metric tons)has been rejected by Japanese customs because the knotholes commonly found on a plywood sheet are too large.This would be an illustration of which of the following nontariff barriers to trade?

A)quota
B)predatory pricing
C)embargo
D)boycott
E)standards

Question 78

_____________ and the World Bank Group are two global institutions created to assist nations in becoming and remaining economically viable.

A)The United Nations
B)The World Court
C)The International Monetary Fund
D)The International Red Cross
E)The League of Nations

Question 79

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

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)doing all of the above to retaliate against the WTO.

Question 80

The Uruguay Round of the WTO achieved many significant breakthroughs in trade.One of the most significant was of particular interest to those in the technology field.Which of the following was considered to be a significant breakthrough of the Uruguay Round?

A)Trade-Related Aspects of Intellectual Property Rights (TRIPs)
B)Trade-Related Investment Measures (TRIMs)
C)Trade-Related Accounting Procedures (TRAPs)
D)Trade-Related Operational Methods (TROMs)
E)Trade-Related Information Technologies (TRITs)