Question 1

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

Accepted Answer

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

Question 2

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?

Accepted Answer

A balance-of-payments statement includes three accounts: the current account, the capital account, and the official reserves account.

Question 3

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

Accepted Answer

There are 11 arguments favoring protectionism out of which "protection of political stability" is not one of them.

Question 4

In general, tariffs weaken:

Accepted Answer

In general, tariffs weaken balance-of-payments positions, supply-and-demand patterns, and international relations (they can start trade wars).

Question 5

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

Accepted Answer

Taxes are generally not considered nontariff barriers; they are a form of tariff or fiscal policy. Nontariff barriers typically include quotas, packaging requirements, and embargoes, which restrict trade without imposing a direct tax on imports or exports.

Question 6

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

Accepted Answer

Similar to quotas are the voluntary export restraints (VERs) or orderly market agreements (OMAs).

Question 7

Which of the following arguments regarding protections is recognized by economists as valid?

Accepted Answer

Economists in general recognize as valid only the arguments regarding infant industry, national defense, and industrialization of underdeveloped countries.

Question 8

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

Accepted Answer

Each of the nation's financial transactions with other countries is reflected in its balance of payments.

Question 9

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:

Accepted Answer

Protectionism involves tariffs, quotas, and nontariff barriers designed to protect a country's markets from intrusion by foreign companies. Nations utilize legal barriers, exchange barriers, and psychological barriers to restrain the entry of unwanted goods.

Question 10

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?

Accepted Answer

The current account is a record of all merchandise exports, imports, and services plus unilateral transfers of funds.

Question 11

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

Accepted Answer

Similar to quotas are the voluntary export restraints (VERs) or orderly market agreements (OMAs).

Question 12

Which of the following is true regarding balance-of-payments records?

Accepted Answer

The fact that assets and liabilities balance does not mean a nation is in particularly good or poor financial condition. A balance of payments is a record of condition, not a determinant of condition. Each of the nation's financial transactions with other countries is reflected in its balance of payments.

Question 13

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.

Accepted Answer

Refer Crossing Borders 2.1

Question 14

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.?

Accepted Answer

The case tells us that cell-phone manufacturing is a nascent industry in the United Kingdom. Protecting this infant industry would be the most probable reason for seeking protection from foreign competition.

Question 15

In general, tariffs restrict:

Accepted Answer

In general, tariffs restrict manufacturers' supply sources, choices available to consumers, and competition.

Question 16

Which of the following ensures that balance-of-payments records are always in balance?

Accepted Answer

Because the balance-of-payments record is maintained on a double-entry bookkeeping system, it must always be in balance.

Question 17

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?

Accepted Answer

Customs and administrative entry procedures refer to the regulations and documentation requirements that importers and exporters must comply with when crossing borders. Therefore, Ms. Chan should look for nontariff barriers such as import and export licenses, customs clearance procedures, documentation requirements, and inspection procedures. Of the options given, E (documentation requirements) is the most relevant to this category. Orderly marketing agreements, voluntary export restraints, countervailing duties, and export subsidies are all measures related to trade policy but do not fall under the category of customs and administrative entry procedures.

Question 18

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

Accepted Answer

A tariff is a tax imposed by a government on goods entering at its borders. Tariffs may be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons.

Question 19

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

Accepted Answer

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.

Question 20

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

Accepted Answer

The answer of Which of the following types of nontariff...

Quiz 2: The Dynamic Environment of International Trade

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