Deck 3: Trade Distortions and Marketing Barriers

Question 1

Protectionism is ineffective in reducing unemployment.

Answer 1

True

Question 2

Without trade, cost/price equalization is very unlikely.

Answer 2

True

Question 3

A nation can never be completely self-sufficient.

Answer 3

True

Question 4

Protectionist policies rarely achieve their objectives.

Question 5

The mere existence of a government can distort international trade even without tariffs or other trade restrictions.

Question 6

A cartel is legal in the United States.

Question 7

It is debatable whether the United States is the most liberal nation in promoting free trade.

Question 8

Countervailing duties are imposed on imported products that are subsidized by foreign governments.

Question 9

Duties "according to value" of the imported goods are specific duties.

Question 10

A value-added tax is a multi-stage, noncumulative tax on consumption.

Question 11

A value-added tax cannot be rebated on exports.

Question 12

The use of VAT affects only about a quarter of the world's population.

Question 13

Only a small number of countries use VAT.

Question 14

Tariffs are more nontransparent than nontariff barriers.

Question 15

A trade barrier should be made transparent.

Question 16

The "national treatment" provision of the Government Procurement Code allows the signatory nations to give preferential treatment to their own citizens/suppliers.

Question 17

GATT's Subsidies Code prohibits the use of export subsidies on primary products (e.g., farm products) but not on nonprimary products (i.e., manufactures)

Question 18

Manufactured products are not allowed by GATT to be subsidized.

Question 19

Affluent countries have been heavily subsidizing their agricultural businesses.

Question 20

Unlike developing countries, affluent countries do not significantly subsidize their agricultural businesses.

Question 21

Because all parties and suppliers must adhere to the same product specifications, detailed product specifications are necessary to treat all bidders fairly.

Question 22

From a policy standpoint, a quota is more desirable than a tariff.

Question 23

VER and OMA are used to circumvent GATT's market safeguard of the most-favored-nation principle.

Question 24

When a foreign subsidiary is not allowed to freely remit the profit to its parent, the parent firm should bill its subsidiary for royalties, management fees, and engineering fees.

Question 25

Compared to nontariff barriers, private barriers are pretty much transparent.

Question 26

GATT's MFN (most favored nation) principle moves countries away from multilateral bargaining to bilateral bargaining.

Question 27

The most-favored-nation principle allows a country to give preferential treatment to the other member nations of the same free trade area or customs union.

Question 28

The most-favored-nation principle allows a country to give preferential treatment to domestic companies while discriminating against foreign companies.

Question 29

The MFN (Most Favored Nation) principle and the NTR (Normal Trade Relations) status are the same thing.

Question 30

Based on GATT's recent rounds of negotiation, the most favored nation principle is weakened because countries are allowed to retaliate against a certain country on an individual basis.

Question 31

The Doha Round of multilateral trade negotiations was concluded successfully as originally scheduled due to countries' recognition of the importance of free trade.

Question 32

GATT has been replaced by the World Trade Organization.

Question 33

Unlike GATT, the WTO is more permanent and legally secure.

Question 34

Unlike its predecessor (GATT), the WTO has less authority to settle trade disputes.

Question 35

The World Trade Organization allows a nation to veto a decision of the WTO's panel.

Question 36

WTO (GATT) does not allow developed countries to use the Generalized System of Preferences because it deviates from the traditional nondiscrimination principle.

Question 37

GSP is the system which gives less developed countries' exports a preferential treatment.

Question 38

GSP is the tariff preference system employed by less developed countries to give preferential treatment to other less developed countries.

Question 39

The GSP program is product-specific because the preferential treatment does not apply to all products of less developed countries.

Question 40

There is no evidence that outward-oriented trade policy produces greater economic success than inward-oriented policy.

Question 41

According to the "positive externalities" assumption, government intervention is appropriate because the development of a certain industry has a positive impact on a broader segment of the economy.

Question 42

Positive externalities are usually presumed than documented.

Question 43

Countries tend to be protectionist because they are able to shift the costs of protection to the others (i.e., selling nations)

Question 44

Trade openness and financial openness are complementary.

Question 45

There is a strong relationship between a country's openness and the important determinants of high per capita income.

Question 46

Greater bureaucracy brings bad economic outcomes.