Deck 6: Political and Trade Forces

Question 1

The length of the investment in a foreign country has no impact on the risk assessment for that investment.What matters is the economic and political situations in the country.

Answer 1

False

Question 2

The national defense argument for trade restrictions is based on the development-level of the country.

Answer 2

False

Question 3

New types of dumping include concession dumping.

Answer 3

False

Question 4

Sanctions are a trade restriction that is effective in forcing change.

Question 5

A comparison based on hourly wages is a reasonable guide to a need to protect domestic jobs.

Question 6

When the U.S.military contracts out security details in war zones,it is engaged in privatization.

Question 7

Only in communist countries do governments own the factors of production.

Question 8

To protect an infant industry,trade restrictions might be effective.

Question 9

Retaliatory trade restrictions are not made for dumping because price competition is protected by the WTO.

Question 10

Country risks are increasingly political in nature.

Question 11

The practice of country risk assessment is an exercise in xenophobic and ethnocentric thinking.

Question 12

U.S.ocean shipping companies are benefiting from U.S.government subsidies.

Question 13

Zimbabwe's government offers an example of government instability.

Question 14

The only reason firms are nationalized is to spread a socialist-communist ideology.

Question 15

Fair competition is a strong rationale for trade barriers.

Question 16

When people are kidnapped for ransom,the right response is to pay the ransom,get the hostages released,and then retaliate.

Question 17

Kidnap,ransom and extortion are techniques often used by terrorists against which no insurance is available.

Question 18

Tariff barriers may be used to protect domestic industry from foreign,lower-cost producers.

Question 19

Businesses favor unstable governments because they present more profit opportunities.

Question 20

Subsidies that confer a benefit may well evoke countervailing duties.

Question 21

Unlike the topography,the political climate of a country has relatively little influence on its exports.

Question 22

One historic function of government has been the protection of the economic activities within its borders.

Question 23

Nuisance tariffs require importers to go through the administrative paperwork connected to paying tariffs,even though the payment itself might be quite small.

Question 24

Terrorists avoid kidnapping because the repercussions can be harmful to their movement.

Question 25

Paying ransom makes sense because a life is saved and the payments can be traced.

Question 26

Trade restrictions violate the spirit of the WTO.

Question 27

The British PM Tony Blair led the privatization movement.

Question 28

The Multi-Fiber Arrangement (MFA)was an orderly marketing arrangement to regulate textiles and clothing exports.

Question 29

Voluntary export restraints are imposed by the importing nation to avoid violating WTO rules.

Question 30

To hedge the terrorism risk,there is insurance,antiterrorist schools,and even companies to handle negotiations.

Question 31

Sanctions against nations are not a form of trade restriction because the motivation is political.

Question 32

Nontariff barriers that are not quantitative can be divided into two groups,those established by the government participation in trade and those that are administrative.

Question 33

A variable levy confers benefit on the domestic producer,such as with the EU variable levy on grain.

Question 34

Duties may be used to encourage local input.

Question 35

Trade barriers create costs that are paid by the government erecting the barrier.

Question 36

Country risk assessment is a measure of the threat of nationalization.

Question 37

One example of nationalization of private companies is with the nationalization of French-owned firms in Europe after WWII.

Question 38

When government-owned companies compete with private companies,the private companies have the advantage.

Question 39

The national defense argument for trade restrictions suggests that some industries,even if they are not competitive,need protection from imports.

Question 40

Policy continuity and government stability are more important to a business than the type of political system.

Question 41

The oldest orderly marketing arrangement,which was disbanded through the WTO,is the

A)multi-fiber arrangement (MFA).
B)Jamaica Agreement.
C)Textile Co-operation Treaty (CTC).
D)Japanese truck export quota.

Question 42

Transshipping is used to

A)reduce shipping costs,like consolidation.
B)avoid import administration.
C)evade allocated quotas.
D)all of the above.

Question 43

Import duties can be set to encourage

A)increased imports based on sales volumes.
B)local input.
C)price-fixing.
D)imports from other suppliers.

Question 44

Subsidies are problematic because they

A)are administered as a form of political patronage.
B)aid export businesses or protect domestic businesses from imports.
C)encourage nationalization.
D)violate UN agreements.

Question 45

Social dumping occurs when an exporting country

A)imposes an export tax on domestic businesses that export,to compensate for the opportunity cost to the domestic market.
B)creates unfair competition based on lower costs because they provide little social support system to the worker.
C)target markets to specific vulnerable groups in the importing country.
D)exports good that are not sellable in the domestic environment due to hazards and safety issues.

Question 46

The primary motivation of tariffs is to:

A)raise government revenue at the cost of importers.
B)raise the price of imports,to protect domestic goods.
C)punish countries over political issues.
D)encourage foreign consumption.

Question 47

Zimbabwe is an example of

A)a richly endowed country that has suffered because of government instability.
B)a government that expropriated private property,that is,nationalized it,and then redistributed it.
C)a country whose leadership stole their 2008 election.
D)all of the above.

Question 48

A nontariff barrier is illustrated by

A)The French requirement in 1982 that all Japanese VCRs be inspected in Poitieres,far from the port and lacking speedy highway connection to the port.
B)The widespread Japanese belief that American rice can cause cancer.
C)The European attitude towards genetically modified crops.
D)All of the above.

Question 49

Arguments for trade restrictions include:

A)national defense,infant industry,and job protection.
B)punishment of offending nations.
C)fair competition and retaliation.
D)all of the above.

Question 50

When governments nationalize a firm,they seek to

A)extract more money from the firm.
B)increase the firm's profitability.
C)preserve jobs.
D)all of above.

Question 51

Nuisance tariffs

A)annoy the importers with red tape and administrative paperwork.
B)are a historical anomaly.
C)are fond in developed nations more than in developing nations.
D)have no point other than to indicate that tariffs regulations change quickly.

Question 52

An example of environmental dumping can be found in the

A)maquiladora plants of Mexico,located near the U.S.border and operating at lower environmental standards than would be required in the U.S.
B)nuclear waste shipments to developing nations.
C)garbage shipments from New Jersey to developing nations.
D)All of the above.

Question 53

Nationalization and privatization are

A)similar trends.
B)opposing trends.
C)both risks faced by privately held firms.
D)both risks not encountered in capitalist democracies.

Question 54

Government protection of economic activities is

A)a historical function of government.
B)a recent responsibility of government.
C)a socialist characteristic.
D)stronger in democracies.

Question 55

Cote d'Ivoire uses child labor,often imported and kidnapped,in the cultivation and harvesting of

A)marijuana.
B)palm oil.
C)cocoa bean.
D)poppy.

Question 56

Unlike quotas,voluntary export restraints (VERs)are imposed by the

A)importing country's government.
B)exporting country's government.
C)either the importing or exporting country's government; what matters is that they are voluntary.
D)the importing company.

Question 57

Quotas are a quantitative barrier that sets

A)limits,established by the importer.
B)goals,established by the exporter.
C)precise quantities of imports or exports,based on price.
D)expectations on domestic and foreign sales.

Question 58

What is the role of the home country in risk assessment?

A)It has no role.
B)It is a significant consideration.
C)It is used initially,but then more micro issues become the focus of CRA.
D)None of the above.

Question 59

Nonquantitative nontariff barriers

A)are seen by many to be the most significant nontariff barrier.
B)often involve government participation in trade,especially in customs and other administrative procedures.
C)often involve standards.
D)all of the above.

Question 60

The U.S.became one of the first countries to prohibit dumping into its own market,in

A)2006.
B)1856.
C)1916.
D)1776.

Question 61

What is dumping and why is it found to be problematic?

Question 62

"In nearly every economic crisis,the root cause is political,not economic," observed

A)Abraham Lincoln
B)Lee Kuan Yew
C)Adam Smith
D)Ben Bernake

Question 63

Discuss barriers to trade,using examples to illustrate your points.

Question 64

An argument against using trade restrictions to punish an offending nation is that

A)sanctions seldom achieve their goal of forcing change in the offending country.
B)sanctions are relatively harmful to the citizens of the offending country.
C)sanctions are not condoned by the UN.
D)sanctions decrease the cost of doing business.

Question 65

The national defense argument for trade restrictions has been used in the U.S.to argue for restriction on imports in

A)munitions.
B)uniforms.
C)shoes.
D)all of the above.

Question 66

The owners of private companies sometimes complain government owned companies have unfair advantages.Discuss some of these complaints.

Question 67

Define and discuss country risk assessment,using examples to illustrate your points.

Question 68

The most common form of direct government participation in trade is

A)the subsidy.
B)shipping on national vessels.
C)import duties.
D)a combination of the above.

Question 69

International business can be a power political force,in part because

A)a recent supreme court ruling in the U.S.allows corporate contributions to political races.
B)many top management team members are willing to accept roles with national security agencies.
C)about half the world's 100 largest economic units are firms.
D)business is all about achieving political goals.

Question 70

Barriers to trade

A)are a political issue but don't affect the cost of imports except marginally.
B)cost consumers billions of dollars per year.
C)save jobs in unprotected industries at $231,289 per job per year.
D)none of these

Question 71

Discuss the terrorist threat of kidnapping and how it impacts international business.