Question 1

Which of the following is a reason for the pressure for greater protectionism that occurred during the 1980s and early 1990s?

Accepted Answer

The world trading system was strained by the persistent trade deficit in the world's largest economy, the United States. From a political perspective, the matter was worsened in 1992 by the $45 billion U.S. trade deficit with Japan, a country perceived as not playing by the rules.

Question 2

In 1997,two South Korean manufacturers of semiconductors,LG Semicon and Hyundai Electronics,were accused of selling dynamic random access memory chips (DRAMs)in the U.S.market at below their costs of production.It was alleged that the firms were trying to unload their excess production in the United States.This is an example of:

Accepted Answer

In the context of international trade, dumping is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Question 3

Economic problems during the Great Depression were compounded in 1930 when the U.S.Congress passed the _____,aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.

Accepted Answer

Economic problems were compounded in 1930 when the U.S. Congress passed the Smoot-Hawley tariff. 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.

Question 4

Until 1995,GATT rules applied to all of the following EXCEPT:

Accepted Answer

Until 1995, GATT rules applied only to industrial goods (i.e., manufactured goods and commodities). Until the Uruguay Round, GATT rules had applied only to trade in manufactured goods and commodities. In the Uruguay Round, member countries sought to extend GATT rules to cover trade in services.

Question 5

The U.S.government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws.This is an example of government intervention based on:

Accepted Answer

Some argue that governments should use the threat to intervene in trade policy as a bargaining tool to help open foreign markets and force trading partners to "play by the rules of the game." The U.S. government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws.

Question 6

The TRIPS regulations established at the 1995 Uruguay Round:

Accepted Answer

The 1995 Uruguay agreement that established the WTO also contained an agreement to protect intellectual property (the Trade-Related Aspects of Intellectual Property Rights, or TRIPS, agreement). The TRIPS regulations oblige WTO members to grant and enforce patents lasting at least 20 years and copyrights lasting 50 years.

Question 7

According to the 1986 Uruguay Round,the _____ was to be created to implement the GATT agreement.

Accepted Answer

The Uruguay Round contained the following provision: The World Trade Organization was to be created to implement the GATT agreement.

Question 8

The Smoot-Hawley Act aimed at:

Accepted Answer

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 industry was rewarded with its "made-to-order" tariff.

Question 9

TRIPS regulations oblige WTO members to all of the following EXCEPT:

Accepted Answer

The 1995 Uruguay agreement that established the WTO also contained an agreement to protect intellectual property (the Trade-Related Aspects of Intellectual Property Rights, or TRIPS, agreement). The TRIPS regulations oblige WTO members to grant and enforce patents lasting at least 20 years and copyrights lasting 50 years. The very poorest countries had 10 years to comply with the rules.

Question 10

The infant industry argument is criticized because it relies on an assumption that:

Accepted Answer

The infant industry argument relies on an assumption that firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital market. Consequently, governments have been required to subsidize long-term investments.

Question 11

_____ are the highest rate that can be charged,which is often,but not always,the rate that is charged.

Accepted Answer

Bound tariff rates are the highest rate that can be charged, which is often, but not always, the rate that is charged. Australia and South Korea, both OECD countries, still have bound tariff rates of 15.1 percent and 24.6 percent, respectively, on imports of transportation equipment.

Question 12

After the Uruguay Round of GATT extended global trading rules to cover trade in services,the first two industries targeted for reform by the WTO were:

Accepted Answer

The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for reform were the global telecommunication and financial services industries.

Question 13

According to the strategic trade policy argument:

Accepted Answer

According to the strategic trade policy argument, a government can help raise national income if it can somehow ensure that the firm or firms that gain first-mover advantages in an industry are domestic rather than foreign enterprises. The second component of the strategic trade policy argument is that it might pay a government to intervene in an industry by helping domestic firms overcome the barriers to entry created by foreign firms that have already reaped first-mover advantages.

Question 14

Identify the INCORRECT statement about trade barriers.

Accepted Answer

Tariff barriers raise the costs of exporting products to a country (or of exporting partly finished products between countries). This may put the firm at a competitive disadvantage to indigenous competitors in that country.

Question 15

The "millennium round" ended in 1999 with:

Accepted Answer

At the end of November 1999, representatives from the WTO's member states met in Seattle, Washington. The goal of the meeting was to launch a new round of talks-dubbed "the millennium round"-aimed at further reducing barriers to cross-border trade and investment. The talks ended December 3, 1999, without reaching any agreement.

Question 16

The WTO argues that removing tariff barriers and subsidies in the agricultural sector could:

Accepted Answer

The WTO argues that removing tariff barriers and subsidies could significantly boost the overall level of trade, lower prices to consumers, and raise global economic growth by freeing consumption and investment resources for more productive uses.

Question 17

_____ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Accepted Answer

In the context of international trade, dumping is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Question 18

Which of the following acts allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution?

Accepted Answer

In 1996 the U.S. Congress passed the Helms-Burton Act. This act allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution. Later in 1996, Congress passed a similar law, the D'Amato Act, aimed at Libya and Iran.

Question 19

According to the _____ argument,governments should temporarily support new industries until they have grown strong enough to meet international competition.

Accepted Answer

The infant industry argument is by far the oldest economic argument for government intervention. According to this argument, many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with established industries in developed countries.

Question 20

The Netherlands exported tulip bulbs to almost every country in the world except Japan.This was because in Japan,customs inspectors insisted on checking every tulip bulb by cutting it vertically down the middle.This is an example of which of the following trade barriers?

Accepted Answer

Administrative trade policies are bureaucratic rules designed to make it difficult for imports to enter a country. It has been argued that the Japanese are the masters of this trade barrier.

Quiz 7: Government Policy and International Trade

Which of the following is a reason for the pressure for greater protectionism that occurred during the 1980s and early 1990s?

Economic problems during the Great Depression were compounded in 1930 when the U.S.Congress passed the _____,aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.

Until 1995,GATT rules applied to all of the following EXCEPT:

The U.S.government has used the threat of punitive trade sanctions to try to get the Chinese government to enforce its intellectual property laws.This is an example of government intervention based on:

The TRIPS regulations established at the 1995 Uruguay Round:

According to the 1986 Uruguay Round,the _____ was to be created to implement the GATT agreement.

The Smoot-Hawley Act aimed at:

TRIPS regulations oblige WTO members to all of the following EXCEPT:

The infant industry argument is criticized because it relies on an assumption that:

_____ are the highest rate that can be charged,which is often,but not always,the rate that is charged.

After the Uruguay Round of GATT extended global trading rules to cover trade in services,the first two industries targeted for reform by the WTO were:

According to the strategic trade policy argument:

Identify the INCORRECT statement about trade barriers.

The "millennium round" ended in 1999 with:

The WTO argues that removing tariff barriers and subsidies in the agricultural sector could:

_____ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Which of the following acts allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution?

According to the _____ argument,governments should temporarily support new industries until they have grown strong enough to meet international competition.

The Netherlands exported tulip bulbs to almost every country in the world except Japan.This was because in Japan,customs inspectors insisted on checking every tulip bulb by cutting it vertically down the middle.This is an example of which of the following trade barriers?