Deck 9: Formulation of National Trade Policies

Question 1

Fair trade is sometimes called ________.

A) managed trade
B) manipulated trade
C) illusory trade
D) right trade

Answer 1

A

Question 2

The government of Country X actively manages the national economy by providing subsidies to aerospace firms and automobile manufacturers. Country X most likely engages in ________.

A) trade blocs
B) industrial policies
C) export promotion strategies
D) import substitution policies

Answer 2

B

Question 3

Which country listed below followed industrial policy to achieve economic success?

A) Japan
B) the United States
C) Canada
D) Germany

Answer 3

A

Question 4

What Japanese organization is entrusted with setting industrial policy?

A) Ministry of International Trade and Industry
B) Industrial Policy Ministry
C) Office of Strategic Trade
D) Ministry of Industry Development

Question 5

For which industry did Alexander Hamilton propose the infant industry argument?

A) manufacturing
B) electronics
C) merchant marine
D) farming

Question 6

Free trade ________.

A) is another term for managed trade
B) implies that the national government exerts minimal influence on the exporting and importing decisions of private firms
C) proposes that national governments should directly help domestic firms by providing export subsidies and tax breaks
D) suggests that the national government should actively intervene to ensure that domestic firms' exports receive an equitable share of foreign markets and that imports are controlled to minimize losses of domestic jobs and market share in specific industries

Question 7

Which theory specifically addresses the needs of individual industries?

A) strategic trade theory
B) economic development programs
C) industrial policy
D) public choice analysis

Question 8

The government of Country X is encouraging the growth of domestic manufacturing by implementing high barriers to imported goods. Country X is most likely following a strategy of ________.

A) strategic trade
B) export promotion
C) import substitution
D) industrial development

Question 9

Free trade implies that government exerts minimal influence on the exporting and importing decisions of private firms and individuals.

Question 10

________ implies that the national government exerts minimal influence on the exporting and importing decisions of private firms and individuals.

A) Fair trade
B) Free trade.
C) Managed trade
D) Equitable trade

Question 11

The "level playing field" argument is primarily used to justify government policies that ________.

A) reduce import tariffs
B) restrict foreign competition
C) establish regional trade blocs
D) manipulate foreign exchange

Question 12

The ________ holds that a country must be self-sufficient in critical raw materials, machinery, and technology or it will be vulnerable to foreign threats.

A) national defense argument
B) infant industry argument
C) industrial policy
D) strategic trade theory

Question 13

Which country has been particularly successful at nurturing domestic industries through government intervention?

A) China
B) India
C) Germany
D) Japan

Question 14

The ________ proposes that tariffs be imposed on imported manufactured goods to give U.S. firms temporary protection from foreign competition until they can fully establish themselves.

A) national defense argument
B) infant industry argument
C) industrial policy
D) strategic trade theory

Question 15

For five years, Harley-Davidson received tariff protection from Japanese imports to allow the motorcycle firm the opportunity to improve its operations and gain market share. This is an example of the ________.

A) maintenance of existing jobs argument
B) industrial policy argument
C) infant industry argument
D) strategic trade theory

Question 16

Which theory best applies to those industries capable of supporting only a few firms worldwide?

A) national defense argument
B) industrial policy
C) maintenance of existing jobs
D) strategic trade theory

Question 17

Managed trade suggests that the national government should actively intervene to ensure that domestic firms' exports receive an equitable share of foreign markets and that imports are controlled to minimize losses of domestic jobs and market share in specific industries

Question 18

________ suggests that a national government can make its country better off if it adopts trade policies that improve the competitiveness of its domestic firms in oligopolistic industries.

A) National defense argument
B) Infant industry argument
C) Maintenance of existing jobs
D) Strategic trade theory

Question 19

Strategic trade theory applies best to which industry identified below?

A) air transportation
B) commercial aircraft construction
C) farming
D) automobile manufacturing

Question 20

________ suggests that a country should encourage firms to compete in foreign markets by harnessing some advantage the country possesses.

A) Strategic trade theory
B) Export promotion strategy
C) Import substitution strategy
D) Import promotion strategy

Question 21

The determination of which industries deserve infant industry protection is often done ________.

A) on a political basis
B) on an economic basis
C) by happenstance
D) on an environmental basis

Question 22

________ suggest(s) that special interest groups will often dominate the general interest on any given issue because these groups are willing to work for the passage of laws.

A) Strategic trade theory
B) Economic development programs
C) Industrial policy
D) Public choice analysis

Question 23

What arguments are used to justify government intervention in foreign trade? What tools are used to restrict trade?

Question 24

What is the infant industry argument? How did Japan use the infant industry argument to rebuild its economic strength following World War II? What tools did it use?

Question 25

Exports generate domestic jobs.

Question 26

A country's adoption of strategic trade policies to cover a broad group of industries can actually reduce the country's overall international competitiveness because favoring certain industries inevitably hurts others.

Question 27

According to the national defense argument, government protection of specific industries may be necessary to ensure a country's self-sufficiency in critical raw materials, machinery, and technology.

Question 28

________, once heavily dependent on cocoa, began an industrialization program to protect itself from fluctuations in cocoa prices.

A) Austria
B) Ghana
C) Brazil
D) The Hershey Company

Question 29

According to strategic trade theory, a national government can make its country better off if it implements trade policies that improve the competitiveness of its firms in oligopolistic industries.

Question 30

What is the primary difference between fair trade and free trade? Which do you think is more appropriate for the United States? Why?

Question 31

What is a primary disadvantage of industrial policy?

Question 32

The infant industry argument has been adopted in countries worldwide.

Question 33

Protection for infant industries can only be given during the first five years of the industry's life.

Question 34

Industrial policy assists a country's firms in capturing large shares of important, growing global markets

Question 35

Classical theories of trade assume that firms operate in perfectly competitive markets.

Question 36

Which type of trade policy did Adam Smith support?

Question 37

What is the national defense argument for protectionism?

Question 38

The United States is an ardent supporter of industrial policy.

Question 39

The South Korean government patterned its economic development strategies after the Japanese model.

Question 40

Discuss the two principal issues surrounding the debate on appropriate trade policy. What role does domestic politics frequently play in such debates?

Question 41

Most tariffs imposed by developed countries are ________.

A) transit tariffs
B) specific tariffs
C) ad valorem tariffs
D) compound tariffs

Question 42

Since the 1960s, the United States has maintained an embargo against ________.

A) Russia
B) China
C) North Korea
D) Cuba

Question 43

What type of tariff is assessed as a specific dollar amount per unit of weight or other standard measure?

A) ad valorem tariff
B) specific tariff
C) export tariff
D) compound tariff

Question 44

A(n) ________ is a tax placed on a good that is traded internationally.

A) tariff
B) quota
C) par value
D) import substitute

Question 45

What type of tariff is assessed as a percentage of the market value of the imported good?

A) transit tariff
B) ad valorem tariff
C) specific tariff
D) compound tariff

Question 46

A(n) ________ imposes a low tariff rate on a limited amount of imports of a specified good, but imposes a prohibitively high tariff on the good above that limited amount.

A) tariff rate quota
B) numerical export control
C) voluntary export restraint
D) ad valorem tariff

Question 47

As a result of trade agreements, many countries have replaced quotas with ________.

A) tariff rate quotas
B) numerical export controls
C) voluntary export restraints
D) regulatory controls

Question 48

A(n) ________ is an absolute ban on the exporting and importing of goods to a particular destination.

A) voluntary export restraint
B) embargo
C) ad valorem tariff
D) tariff rate quota

Question 49

The U.S. government has decided to impose a tariff rate quota on sugar imports into the United States. Which of the following would benefit from this decision?

A) soft drink producers
B) domestic sugar producers
C) steel producers
D) consumers of sugar products

Question 50

Products manufactured in Brazil are transported through Mexico on their way to England. Mexico applies a tariff on the goods. What type of tariff is implemented by Mexico?

A) transit tariff
B) ad valorem tariff
C) export tariff
D) compound tariff

Question 51

Famous Footwear imports a variety of athletic shoes, work boots, and casual footwear from around the world. Which of the following would most likely provide Famous Footwear with a detailed classification scheme for its imported shoes?

A) tariff rate quota
B) ad valorem report
C) compound tariff report
D) harmonized tariff schedule

Question 52

Which of the following is an import tariff?

A) transit tariff
B) ad valorem tariff
C) sua sponte tariff
D) complex tariff

Question 53

A ________ is a numerical limit on the quantity of a good that may be imported into a country during some time period.

A) quota
B) numerical export control
C) voluntary export restraint
D) regulatory control

Question 54

What type of tariff includes both ad valorem components and specific components?

A) transit tariff
B) harmonized tariff
C) export tariff
D) compound tariff

Question 55

Country X protects its domestic manufacturers from foreign competition by using a variety of nontariff barriers. Which of the following is not one of those nontariff barriers?

A) foreign trade zones
B) product standards
C) regulatory controls
D) local purchase requirements

Question 56

Country X applies a tariff on goods as they leave the country. Country X most likely imposes a(n) ________ tariff.

A) transit
B) ad valorem
C) specific
D) export

Question 57

The U.S. government has decided to impose a tariff rate quota on sugar imports into the United States. Which of the following would benefit the most from this decision?

A) domestic candy producers
B) sugar substitute producers
C) soft drink producers
D) U.S. consumers

Question 58

Any government regulation, policy, or procedure other than a tariff that has the effect of impeding international trade may be labeled a(n) ________.

A) nontariff barrier
B) ad valorem tariff
C) compound tariff
D) export restraint

Question 59

A(n) ________ is a promise by a country to limit its export of a good to another country to a pre-specified amount or percentage of the affected market.

A) tariff rate quota
B) export promise
C) voluntary export restraint
D) embargo

Question 60

According to public choice analysis, domestic trade policies that affect international business have a tendency to develop from ________.

A) political goals
B) economic needs
C) foreign competition
D) corporate litigation

Question 61

France's requirement that during prime time at least 40 percent of the songs played on 1700 AM and FM stations must be written or sung by French or Francophone artists is an example of which type of nontariff barrier?

A) product and testing standards
B) restricted access to distribution networks
C) numerical export controls
D) public-sector procurement policies
E) local-purchase requirements

Question 62

________ is/are common in key industries like broadcasting, utilities, air transportation, defense contracting, and financial services.

A) Restricted access to distribution networks
B) Investment controls
C) Public-sector procurement policies
D) Quotas

Question 63

A voluntary export control is most likely used to ________.

A) punish political enemies
B) appeal to domestic politicians
C) avoid trade conflicts with friendly trade partners
D) comply with strict product and testing standards

Question 64

Which of the following is an example of a nontariff barrier that restricts access to distribution networks?

A) Malaysia's requirement that during prime time at least 40 percent of the songs on the radio be by local artists
B) Turkmenistan's requirement that all imports of consumer goods be approved by the State Standards Committee
C) China's policy that imported sugar be distributed only by state-owned enterprises
D) Canada's requirement that baby food be packaged in 4.5- and 7.5-ounce containers

Question 65

The federal government policy that international air travel purchased with U.S. government funds must occur on U.S. airlines is an example of which type of nontariff barrier?

A) restricted access to distribution networks
B) numerical export controls
C) public-sector procurement policies
D) local-purchase requirements

Question 66

________ make it more difficult for importers of nonessential goods to acquire foreign exchange.

A) Currency controls
B) Restricted access to distribution networks
C) Numerical export controls
D) Public-sector procurement policies

Question 67

Most tariffs imposed by developed countries are ad valorem.

Question 68

A transit tariff is a tax placed on a good that is traded internationally, and are levied on goods as they leave the country or as they pass through one country bound for another.

Question 69

Which of the following is an example of a regulatory control nontariff barrier?

A) Malaysia's policy that during prime time at least 40 percent of the songs on the radio be by local artists
B) Egypt's 15 percent bidding preference on public contracts
C) China's policy that imported sugar be distributed only by state-owned enterprises
D) Canada's requirement that baby food be packaged in 4.5- and 7.5-ounce containers

Question 70

________ is a term used to denote 17 different minerals that are critical for the production of high-tech products.

A) Tech gems
B) Dirty tech
C) Rare earths
D) Neo-elements

Question 71

Which of the following is not an example of regulatory controls as a form of nontariff barrier?

A) Country A conducts inspections of all imported luggage and baggage.
B) Country B requires foreign firms to obtain licenses before constructing plants.
C) Country C requires domestic producers of cosmetics to obtain government product registration.
D) Country D offers tourists a separate exchange rate than what is offered to importers.

Question 72

Public-sector procurement policies are common in Country X. Which of the following is the most likely characteristic of Country X?

A) extensive state ownership of industry
B) highly educated labor force
C) numerous small firms
D) minimal tariffs

Question 73

An example of a public-sector procurement policy non tariff barrier is the ________.

A) ATM restrictions in Thailand
B) "Buy American" policy in the United States
C) encryption technology rules in Russia
D) foreign exchange requirements in Ethiopia

Question 74

According to public choice analysis, the general public is more willing to work towards defeating unfavorable consumer laws than special-interest groups are willing to work towards the passage of trade laws.

Question 75

Country X imposes a low tariff rate for the first 5,000 pounds of rice it imports from Japan and a high tariff rate on all imported rice above this threshold. Country X most likely uses a ________.

A) free trade zone
B) tariff rate quota
C) foreign currency control
D) voluntary export restraint

Question 76

In many cases, tariffs are imposed for the purpose of ________.

A) increasing national government revenue
B) complying with trade regulations
C) increasing foreign trade activity
D) promoting consumer safety

Question 77

Country X charges a tariff of 6 cents per kilogram for imported citrus fruit, so Country X is using a specific tariff.

Question 78

Tariffs and quotas are more difficult to eliminate than non-tariff barriers.

Question 79

Local purchase requirements, investment controls, and product and testing standards are all forms of ________.

A) numerical export controls
B) voluntary export restraints
C) nontariff barriers
D) embargoes

Question 80

Which of the following is an example of a product and testing standards nontariff barrier?

A) Malaysia's requirement that during prime time at least 40 percent of the songs on the radio be by local artists
B) Brazil's requirement that new pharmaceutical products undergo clinical testing in Brazil
C) China's policy that imported sugar be distributed only by state-owned enterprises
D) Canada's requirement that organic baby food be manufactured locally