Deck 11: International Trade in the Global Marketplace

Question 1

Adherents to commercial liberalism agree that everyone benefits from unfettered free trade.

Answer 1

True

Question 2

According to the most-favored-nation (MFN) principle,

A) states cannot rely on comparative advantage in their trade policies.
B) goods produced at home are treated the same for import and export agreements.
C) tariff preferences granted to one state must be granted to all others exporting the same product.
D) import quotas can be used to regulate trade, but export quotas cannot be used.
E) certain important trading partners should be given favors status.

Answer 2

C

Question 3

The GATT principle of nondiscrimination that called for all foreign goods to be treated equally with domestic goods, and that countries are not able to enact policies, such as taxes, to give their products an advantage over foreign products is called _______.

A) national treatment
B) most-favored nation status
C) transparency
D) liberalization
E) reciprocity

Answer 3

A

Question 4

Economic sanctions have the greatest impact on autocratic regimes.

Question 5

In The Wealth of Nations, Adam Smith argues for the idea of a nation's comparative advantage.

Question 6

GATT stands for General Agreement on Tariffs and Trade.

Question 7

An open international economy is a collective good.

Question 8

The GATT principle that called for mutual lowering of trade barriers between trading partners was known as __________ .

A) reciprocity
B) convertibility
C) nondiscrimination
D) outsourcing
E) transparency

Question 9

Hegemons are initially intolerant of nations called free riders, because they immediately take advantage of free trade before they eventually begin to repay the hegemon.

Question 10

The production of goods is usually dispersed throughout several different countries.

Question 11

Which of the following statements is false regarding the globalization of labor?

A) The use of child or slave labor can be used to gain an unfair advantage over companies that pay a fair wage.
B) Mobility of businesses and labor as an integral component of the international economy.
C) Corporations will always benefit by moving to a country where labor is less expensive.
D) Studies show that multinational corporations need for skilled labor can encourage countries to increase spending on education and health care.
E) Increased supply of labor through increased mobility of labor and business raises concerns over the ability of labor to bargain collectively and protect the interests of workers.

Question 12

The primary goal of the GATT was to open or liberalize world trade using the principles of reciprocity, nondiscrimination, and transparency.

Question 13

The United States ended its steel tariffs in response to a WTO ruling because it feared retaliatory tariffs from the EU.

Question 14

Intra-firm trade is cross-national trade of international goods and services within the same firm.

Question 15

The transnationalization of the productive process in which finished goods rely on inputs from multiple countries outside their final market is known as __________ .

A) intra-firm trade
B) globalization of production
C) trade integration
D) globalization of finance
E) global trade

Question 16

There is a direct correlation between economic freedom and prosperity; the more economically free a country the more prosperous it tends to be and vice versa.

Question 17

As trade integration grows, so does globalization because states' interdependence increases when exports account for an increasing percentage of their gross domestic product.

Question 18

The large increase in trade integration comes from Global North countries.

Question 19

Liberals emphasize the mutual gains (absolute gains) of global trade whereas mercantilists are more concerned with relative gains.

Question 20

Voluntary export restrictions are agreements in which exporting countries agree to restrict shipments of a particular product to a country to deter it from imposing an even more onerous import quota.

Question 21

An infant industry is one that

A) is not yet strong enough to compete effectively in the global market place.
B) is new to the practice of voluntary export restraints.
C) is accused of "dumping" products below the cost of production.
D) recently began selling exports.
E) utilizes child labor.

Question 22

What is the difference between absolute advantage and comparative advantage?

Question 23

____________________ is a principle for trade that proclaims that goods produced at home and abroad are to be treated the same for import and export agreements.

Question 24

List three tools of protectionism utilized by states.

Question 25

The principle of comparative advantage maintains that

A) instituting trade restrictions, such as nontariff barriers, is an effective way to gain a comparative advantage in certain trade sectors, such as manufactured goods.
B) a state should specialize in producing those goods it can produce comparatively cheaply and trade them for goods in which others enjoy a comparative advantage.
C) it is comparatively cheaper to protect new domestic industries than to allow them to be destroyed by competition from more established industries in other states.
D) because security issues or other "high politics" issues have more public interest, they have a comparative advantage over "low politics" issues when competing for attention from policy makers.
E) states should encourage trade with nations that have a similar government structure because they would have a comparative advantage in global trade negotiations.

Question 26

What must a hegemon do to maintain the international political economy?

A) Remain open and liberal
B) Tolerate free riders
C) Provide a stable international currency
D) Assume leadership
E) All of the above are true.

Question 27

World trade fell by 9 percent in 2008 precipitated by which of the following conditions?

A) Decline of consumer demand
B) Global supply chains meant that trade reductions were felt in multiple countries.
C) The collapse in credit markets dried up available financing.
D) Both A and C above are true.
E) All of the above are true.

Question 28

Economic sanctions have been used with increasing frequency since World War II. Research has shown sanctions

A) are seldom effective in impairing the military potential of its targets.
B) actually slow down the threat of military actions between two countries.
C) are deliberate actions against a target country to deprive it of the benefits of continuing economic relations.
D) are successful against autocratic leaders, such as Fidel Castro of Cuba.
E) Both A and C are true.

Question 29

Mercantilists differ from liberalists in that

A) mercantilists do not see wealth and economic growth as ends in themselves.
B) liberalists treat all specializations as equal in value; mercantilists do not.
C) mercantilists view the state as having an active and vital role in their economies; liberalists do not.
D) mercantilists believe relative gains are more important than absolute gains for both parties.
E) all of the above are true.

Question 30

The provision of public goods is problematic due to two basic problems, accountability and rationality. This is called_________________________.

Question 31

What are the responsibilities of a hegemon in a liberal international economic system?

Question 32

The political economic perspective that views international trade in zero-sum terms and calls for active state intervention into domestic economies is called _________________________________.

Question 33

Punitive economic actions, such as the cessation of trade or financial ties, by one state in retaliation for objectionable behavior are called ____________________.

Question 34

When taxes are placed on another exporting state's alleged selling of a product at a price below the cost to produce it, this is called ____________.

A) strategic trade policy
B) voluntary export restrictions
C) orderly market arrangements
D) antidumping duties
E) All of the above are true.

Question 35

As the WTO has been largely successful in reducing tariffs, it has begun to confront all but which of the following issues?

A) Agriculture policy
B) Intellectual property rights
C) Security issues
D) Environmental protection measures
E) Labor standards

Question 36

What was the name of the meeting that changed the GATT to WTO?

A) The Brazil Round
B) The Uruguay Round
C) Paris Talks
D) The Vienna Conference
E) The Tokyo Accords

Question 37

The process by which finished goods rely on inputs from multiple countries other than their final market is known as _______________________________.

Question 38

America's trade competitors have long noted and complained that the United States has increasingly engaged in _____________.

Question 39

Which of the following is not a type of quota?

A) Voluntary export restraint
B) Orderly market arrangement
C) Countervailing duty
D) Nontariff barriers
E) All of the above are quotas.

Question 40

A good that everyone benefits from and from which no one can be excluded is a(n) _________

A) exported good
B) free rider
C) collective or public good
D) commercial good
E) benefit

Question 41

List three key differences between liberalism and mercantilism.

Question 42

Give examples of protectionism during the current world financial crisis.

Question 43

What are the barriers to free trade agreed to by two trading states to protect their domestic producers called?

Question 44

Globalization of labor is a very controversial issue. Why do so many people fear it? What do the studies indicate? MNCs are an integral component of this issue? What are the pros and cons of MNCs? Make sure you discuss issues such as child labor, immigration, slave labor, and unions.

Question 45

List ways in which the United States simultaneously pursues liberal trade while engaging in certain protective trade policies.

Question 46

Countervailing duties and antidumping duties are examples of what type of protectionist policy?

Question 47

List at least two regional trade agreements.

Question 48

During a meeting of the World Trade Organization, anti-WTO activists descended upon the trade talks in Seattle, WA. Why were the protestors there? What were their complaints? Were they justified? Write an in which you decide whether the World Trade Organization is a friend or foe.

Question 49

_________________________ are a protectionist measure in which exporting countries agree to restrict shipments of a particular product to a country to deter it from imposing an even more onerous import quota.

Question 50

Rules governing international commerce often evolve according to the wishes of the powerful. How useful is hegemonic stability theory in accounting for the creation and stability of the postwar international economic regime? Describe the problems that arise when the hegemon is no longer able to effectively carry out its role.

Question 51

Non-tariff barriers to trade that may be hidden in government policies not directly related to trade such as environmental initiatives and government spending are known as __________________________.