Question 1

Local content laws state that

Accepted Answer

Local content laws require that products sold in a country must be at least partially made in that country. This is meant to promote local industries and create job opportunities for locals.

Question 2

Dumping involves selling products at

Accepted Answer

Dumping involves selling products at a lower price than what is considered fair value, which can harm domestic producers and distort trade competition.

Question 3

Arguments for and against protectionism include all of the following except

Accepted Answer

The other four choices are arguments for or against protectionism, while choice C simply states a potential consequence of protectionist policies.

Question 4

Why do foreign companies sometimes have problems complying with stringent and often changing regulations and bureaucratic obstacles?

Accepted Answer

Many countries have business practice laws that differ from those in other countries. Companies must learn to navigate these laws to comply with regulations and avoid bureaucratic obstacles. This often requires significant time, effort, and resources.

Question 5

When Walmart was forced to stop refunding price differences on items sold for less by other stores because the practice is illegal in Germany, Walmart discovered the effect of

Accepted Answer

Walmart was forced to stop refunding price differences on items sold for less by other stores because it violated German business practice laws. This suggests that Walmart learned about the impact of local laws and regulations on their business practices.

Question 6

Selling a product abroad for less than the cost of production is referred to as

Accepted Answer

Selling a product abroad for less than the cost of production is referred to as dumping. This can harm domestic industries by creating unfair competition and is often addressed through anti-dumping measures imposed by importing countries.

Question 7

Many governments require that products sold in their particular country be at least partly made there. This policy involves ________ laws.

Accepted Answer

The policy described involving requiring products to be partly made in a particular country is a local content law.

Question 8

The Transparency International "Corruption Perceptions Index" showed that the least corrupt countries are ________, and the most corrupt countries are ________.

Accepted Answer

The Transparency International "Corruption Perceptions Index" often ranks Denmark, Finland, and New Zealand among the least corrupt countries, while North Korea, Afghanistan, and Somalia are frequently found at the bottom of the list, indicating higher levels of perceived corruption.

Question 9

The purpose of GATT was to

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) was created in order to reduce or eliminate trade barriers such as quotas and tariffs, with the overall goal of promoting international trade. While it may indirectly lead to improved trade balances in developing countries, it is not its main purpose. It also does not aim to encourage governments to increase protection for their domestic industries, but rather to promote free trade. The issue of dumping is addressed in GATT, but it is not the main purpose of the agreement. Therefore, B is the best choice.

Question 10

If the Mexican government puts a limit on the ounces of tequila being imported into Mexico, what has occurred?

Accepted Answer

The Mexican government has installed a protection plan for its own tequila producers by setting a limit on the ounces of tequila being imported into Mexico, and it has also installed a quota to regulate the amount of imported tequila. Therefore, choice B is the correct answer.

Question 11

What is the purpose of tariffs on imports?

Accepted Answer

Tariffs on imports are mainly imposed to protect domestic businesses from foreign competitors. By adding tariffs to imported goods, domestic goods become more affordable and attractive to domestic consumers, therefore maintaining their competitiveness. It also helps to prevent the dumping of goods by foreign companies that may sell their goods at a lower price than their manufacturing cost, driving domestic business out of the market.

Question 12

A few years ago, before the various accounting groups merged, the Certified General Accountants challenged the rule that in Quebec only Chartered Accountants could have auditing rights. This was an example of a dispute about

Accepted Answer

The dispute between the Certified General Accountants and Chartered Accountants about auditing rights in Quebec relates to the Agreement on Internal Trade, which governs trade between provinces and territories in Canada. The dispute involved a challenge to interprovincial trade barriers and restrictions on labour mobility, which are addressed by the Agreement.

Question 13

In some countries, it may be legal to bribe businesses and government officials, but this practice is illegal in Canada. This barrier to international trade is known as

Accepted Answer

The barrier to international trade described in the question relates to laws and regulations governing bribery and corruption in Canada. This falls under the category of business practice laws. Imposing tariffs, quotas, and local content laws are different types of trade barriers that affect the movement of goods across borders. Cartelling refers to the collusion among businesses to control prices or output, and is unrelated to the issue of bribery and corruption.

Question 14

The Canadian government imposed a 34.6 percent tariff on barbecues made in China because complaints were received that Chinese companies were unfairly subsidizing the production of barbecues. This was an example of

Accepted Answer

The imposition of a tariff to protect domestic industries from foreign competition is an example of a protectionist tariff. In this case, the Canadian government was protecting its domestic barbecue industry from unfairly subsidized Chinese imports.

Question 15

Which of the following is not true about protectionism?

Accepted Answer

Protectionism does not generate revenue for provincial governments in Canada. Tariffs and quotas may generate revenue for the federal government through customs duties, but this revenue does not go directly to provincial governments.

Question 16

Tariffs that are imposed strictly to raise money for the government are referred to as ________ tariffs.

Accepted Answer

Revenue tariffs are imposed to earn revenue for the government. They are not intended to restrict the imports and provide protection to domestic industries (protectionist) or to limit the quantity of imports (quota). Union and subsidy are not relevant to the concept of tariffs.

Question 17

Which of the following is true about dumping?

Accepted Answer

Dumping refers to the practice of selling a product in a foreign market at a price lower than its normal value, often below the cost of production or the price in the domestic market.

Question 18

Sometimes foreign companies have many problems in complying with stringent and often changing regulations and bureaucratic obstacles known as

Accepted Answer

The answer of Sometimes foreign companies have many problems in...

Question 19

Associations of producers that control supply and prices are called

Accepted Answer

Associations of producers that control supply and prices are commonly known as cartels. They collude to restrict output and raise prices, thereby obtaining increased profits.

Question 20

The successor to GATT is

Accepted Answer

GATT was replaced by the World Trade Organization (WTO) in 1995 as the international organization responsible for regulating international trade. The other options listed are regional trade organizations or unrelated global organizations.

Quiz 5: The Global Context of Business