Question 1

For many years, there have been limits set on the amount of sugar that foreign producers can sell in the U.S. market. This is mandated by a

Accepted Answer

The tariff rate quota system is a trade policy tool that allows a set amount of a product to be imported at a lower tariff rate, with higher tariffs applied to quantities that exceed the quota. This system is used to limit the amount of sugar foreign producers can sell in the U.S. market.

Question 2

According to the ________, U.S. government agencies must give preference to U.S. products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.

Accepted Answer

The Buy America Act requires U.S. government agencies to prefer U.S.-made products in their procurement processes unless foreign products are significantly cheaper.

Question 3

If Indonesia exports vast quantities of cheap textiles to Italy, selling them at below their costs of production, it would be an example of

Accepted Answer

Dumping occurs when a country exports a product at a price lower than the cost of production, often to gain market share or eliminate competition in the importing country.

Question 4

Many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries. This demonstrates the

Accepted Answer

The infant industry argument suggests that new industries in developing countries need protection from international competition until they become established and can compete on their own.

Question 5

ComTek Limited has an order to sell 50,000 central processing units (CPUs) to Brazil, but the Brazilian government stipulated that 35 percent of the component parts of those CPUs must be produced in Brazil. This stipulation is an example of a(n)

Accepted Answer

A local content requirement is a regulation that requires a certain percentage of a product to be made from local components or materials, as stipulated by the Brazilian government in this case.

Question 6

In 1975, OPEC did not allow the export of U.S. crude oil in order to drive up the price of oil. This action is an example of a(n)

Accepted Answer

An export ban is a government-imposed restriction on the export of certain goods, in this case, U.S. crude oil, to influence market conditions such as prices.

Question 7

The principal function of the trade sanctions the United States has in place against Cuba is to

Accepted Answer

The trade sanctions are intended to economically isolate Cuba in hopes of pressuring the government to move away from communism.

Question 8

If the U.S. Department of Education put out a contract for 150,000 laptop computers and the contract stated that preference would be given to bids that declared at least 51 percent of the materials by value in the computers were produced in the United States, which legislative act is this stipulation based on?

Accepted Answer

The stipulation is based on the Buy America Act, which requires that government contracts give preference to American-made products, specifically that a certain percentage of the materials used in the products be sourced from the United States.

Question 9

Arguments for international trade typically focus on political and ________ reasons.

Accepted Answer

International trade is often advocated for economic reasons, as it can lead to increased efficiency, growth, and access to a wider variety of goods and services.

Question 10

Firms engage in dumping in order to

Accepted Answer

Firms engage in dumping to sell excess production in foreign markets at lower prices than in their home market, often to maintain production levels and market share.

Question 11

Dumping takes place when foreign producers

Accepted Answer

Dumping occurs when foreign producers sell goods in a foreign market at prices lower than in their home market, often below cost, to eliminate competition and later raise prices to earn profits.

Question 12

Why is retaliation by government intervention a risky strategy?

Accepted Answer

Retaliation by government intervention can lead to increased tariff barriers by the country being pressured, escalating trade tensions and potentially harming both economies involved.

Question 13

________ are put in place to make it difficult for imports to enter a country.

Accepted Answer

Administrative trade policies are designed to restrict imports and make it difficult for foreign goods to enter a country.

Question 14

Paint products containing lead are banned from entering the United States. This ban is in place to

Accepted Answer

The ban on lead paint is primarily to protect consumers from the health hazards associated with lead exposure, which can be particularly harmful to children.

Question 15

Ultimately, antidumping policies are put in place to

Accepted Answer

Antidumping policies are designed to protect domestic industries from foreign companies selling products at unfairly low prices, which can harm domestic producers.

Question 16

For years, the world used a small nation in Central America as a place to assemble goods and benefit from cheap labor. To shift its manufacturing base from simple assembly to full-fledged manufacture of components and finished goods, the nation introduced a policy that stated 35 percent of the value of a product must be produced locally. This is an example of a(n)

Accepted Answer

This is an example of a local content requirement, which mandates that a certain percentage of a product's value must be produced within the country.

Question 17

Some governments "threaten" trade sanctions or other measures as a way to get another government to enforce safety standards or enforce intellectual property laws. This method of intervention is known as

Accepted Answer

Retaliation involves using threats of trade sanctions or other measures to compel another government to change its policies or practices, such as enforcing safety standards or intellectual property laws.

Question 18

During the 1980s and 1990s, trade sanctions were put in place by Western governments against South Africa in response to the apartheid policies in place there. These trade sanctions were a response to

Accepted Answer

The trade sanctions were imposed in response to South Africa's apartheid policies, which were considered severe human rights violations.

Question 19

If France decides it wants to make it difficult for other countries to export wine to French businesses and creates bottling standards that don't exist anywhere else in the world, it would be implementing ________ policies as a way to restrict these imports.

Accepted Answer

Administrative trade policies involve bureaucratic rules and regulations that make it difficult for imports to enter a country, such as unique bottling standards.

Question 20

One way to ensure that there is sufficient supply of a good within a country is to enact a(n) ________, which discriminates against producers from exporting goods.

Accepted Answer

An export tariff is a tax placed on goods leaving a country, which can discourage producers from exporting goods and help ensure sufficient domestic supply.

Quiz 7: Government Policy and International Trade