Question 1

Nontariff trade barriers have increased in popularity partly because they ________.
A) generate profits for foreign firms
B) are easier to conceal from the WTO
C) restrict trade by imposing direct tax
D) have been fairly successful in eliminating smuggling along international borders

Accepted Answer

Nontariff trade barriers, such as quotas, import licenses, and standards, have become more popular because they can be more easily concealed or justified under non-trade policies compared to direct tariffs, making them less likely to attract immediate scrutiny or retaliation from the World Trade Organization (WTO) or trading partners.

Question 2

________ are used when governments impose limits, under which firms agree to limit exports of certain products.
A) Voluntary export restraints
B) Antidumping duties
C) Countervailing duties
D) Quotas

Accepted Answer

Voluntary export restraints are agreements between the exporting country and the importing country where the exporting country agrees to limit the quantity of goods exported to the importing country. This is often done to avoid more severe trade restrictions or tariffs that the importing country might impose.

Question 3

Governments sometimes retaliate against subsidies by imposing ________, tariffs on products imported into a country to offset subsidies given to producers or exporters in the exporting country.
A) local content requirements
B) investment incentives
C) countervailing duties
D) antidumping duties

Accepted Answer

Countervailing duties are tariffs imposed by a country to offset subsidies given to producers or exporters in the exporting country, aiming to level the playing field for domestic industries.

Question 4

Countries with many high-tech or high value-adding industries, such as information technology, pharmaceuticals, car manufacturing, or financial services, create better jobs and higher tax revenue.

Accepted Answer

Countries with high-tech or high-value-adding industries tend to have better job opportunities with higher wages and generate more tax revenue due to the higher profitability and value creation of these sectors.

Question 5

In a short essay, describe the negative effects to the economy when a government intervenes in international trade.

Accepted Answer

The answer of In a short essay, describe the negative...

Question 6

Restrictions on the outflow of hard currency from a country or on the inflow of foreign currencies is called ________.
A) antidumping duty
B) currency appreciation
C) currency control
D) currency depreciation

Accepted Answer

Currency control refers to the measures taken by a government to regulate the flow of foreign currencies and the outflow of its own currency to stabilize the national economy and currency value.

Question 7

Governments impose defensive barriers to pursue strategic or public policy objectives, such as increasing employment or generating tax revenues.

Accepted Answer

The answer of Governments impose defensive barriers to pursue strategic...

Question 8

Which of the following may allow a manufacturer to practice dumping?
A) countervailing duties
B) subsidies
C) currency control
D) import license

Accepted Answer

Subsidies allow a manufacturer to sell products at a lower price than the cost of production, which is a form of dumping.

Question 9

Products are classified under about 8,000 different unique codes in the ________ schedule, a standardized system used worldwide.
A) harmonized (code) tariff
B) protective tariff
C) revenue tariff
D) specific tariff

Accepted Answer

The Harmonized Tariff Schedule is a standardized system used worldwide to classify traded products. It consists of about 8,000 unique codes that identify goods for customs purposes.

Question 10

A(n) ________ is a tax that is assessed as a percentage of the value of the imported product.
A) specific tariff
B) export tariff
C) subsidy
D) ad valorem tariff

Accepted Answer

An ad valorem tariff is a tax imposed on imported goods based on a percentage of their value.

Question 11

In a short essay, describe two methods of government intervention and explain the four major defensive motives for government intervention.

Accepted Answer

The answer of In a short essay, describe two methods...

Question 12

In Cadmia, foreign-owned automobile manufacturing companies must be managed by a Cadmian national and most board members must be Cadmian citizens. This exemplifies ________.
A) FDI and ownership restrictions
B) administrative and bureaucratic procedures
C) regulations and technical standards
D) antidumping duty

Accepted Answer

This is an example of Foreign Direct Investment (FDI) and ownership restrictions, where a country imposes specific conditions on foreign companies, such as management and board composition requirements, to operate within its borders.

Question 13

________ represent a major driver of market globalization.
A) Continued reductions in trade restrictions
B) Export controls
C) Import controls
D) Prohibitive tariffs

Accepted Answer

Continued reductions in trade restrictions facilitate the flow of goods and services between countries, thereby driving market globalization by making it easier for countries to trade with one another.

Question 14

The United Nations estimated that trade barriers alone cost developing countries ________ in lost trading opportunities with developed countries every year.
A) $100 billion
B) $200 billion
C) less than $100 billion
D) more than $500 billion

Accepted Answer

The answer of The United Nations estimated that trade barriers...

Question 15

A flat fee or fixed amount per unit imposed by a government on an imported product is called a(n) ________.
A) ad valorem tariff
B) specific tariff
C) protective tariff
D) export tariff

Accepted Answer

A specific tariff is a fixed fee imposed by a government on each unit of an imported product, unlike an ad valorem tariff which is based on the value of the goods.

Question 16

________ refers to the requirement that firms include a minimum percentage of locally sourced inputs in the production of given products or services.
A) Quotas
B) Regulations and technical standards
C) Local content requirements
D) Administrative and bureaucratic procedures

Accepted Answer

Local content requirements mandate that a certain percentage of goods or services used in the production process must be sourced from local suppliers, aiming to support domestic industries and reduce foreign dependency.

Question 17

An import license refers to a ________.
A) tax charged on an imported product whose price is below usual prices in the local market
B) list of complex procedures imposed on importers that hinder trade and investment
C) complicated system of establishing quotas
D) formal permission to import

Accepted Answer

An import license is a formal permission granted by a government or regulatory authority that allows a business or individual to import goods into a country.

Question 18

Typically, administrative and bureaucratic procedures ________.
A) speed up the investment activities of firms
B) hinder the activities of importers
C) boost investment activities
D) harm late importers

Accepted Answer

Administrative and bureaucratic procedures often create delays and obstacles, which can hinder the activities of importers by making the process more time-consuming and complex.

Question 19

Governments often impose trade barriers to restrict imports of products to protect infant industries,

Accepted Answer

Governments impose trade barriers such as tariffs, quotas, and import bans to protect nascent or infant industries from international competition, allowing these industries to develop and become competitive.

Question 20

Under the ________, Canada, Mexico, and the United States have eliminated nearly all tariffs on product imports from each other.
A) APEC
B) FTAAP
C) GATT
D) NAFTA

Accepted Answer

NAFTA, the North American Free Trade Agreement, is the correct answer because it is the agreement between Canada, Mexico, and the United States that eliminated nearly all tariffs on product imports from each other.

Quiz 7: Government Intervention and Regional Economic Integration

Nontariff trade barriers have increased in popularity partly because they ________.

________ are used when governments impose limits, under which firms agree to limit exports of certain products.

Governments sometimes retaliate against subsidies by imposing ________, tariffs on products imported into a country to offset subsidies given to producers or exporters in the exporting country.

Countries with many high-tech or high value-adding industries, such as information technology, pharmaceuticals, car manufacturing, or financial services, create better jobs and higher tax revenue.

In a short essay, describe the negative effects to the economy when a government intervenes in international trade.

Restrictions on the outflow of hard currency from a country or on the inflow of foreign currencies is called ________.

Governments impose defensive barriers to pursue strategic or public policy objectives, such as increasing employment or generating tax revenues.

Which of the following may allow a manufacturer to practice dumping?

Products are classified under about 8,000 different unique codes in the ________ schedule, a standardized system used worldwide.

A(n) ________ is a tax that is assessed as a percentage of the value of the imported product.

In a short essay, describe two methods of government intervention and explain the four major defensive motives for government intervention.

In Cadmia, foreign-owned automobile manufacturing companies must be managed by a Cadmian national and most board members must be Cadmian citizens. This exemplifies ________.

________ represent a major driver of market globalization.

The United Nations estimated that trade barriers alone cost developing countries ________ in lost trading opportunities with developed countries every year.

A flat fee or fixed amount per unit imposed by a government on an imported product is called a(n) ________.

________ refers to the requirement that firms include a minimum percentage of locally sourced inputs in the production of given products or services.

An import license refers to a ________.

Typically, administrative and bureaucratic procedures ________.

Governments often impose trade barriers to restrict imports of products to protect infant industries,

Under the ________, Canada, Mexico, and the United States have eliminated nearly all tariffs on product imports from each other.