Q&A Hero

Q: What conclusions can be derived from economic analysis of the effect of import tariffs?

Q: The threat of antidumping action : A. helps the firm raise capital in the primary market. B. limits the ability of a firm to raise prices in response to high demand. C. enhances the firm's ability to disperse its productive activities in an efficient manner. D. limits the ability of a firm to use aggressive pricing to gain market share in a country. E. enhances a firm's competitive advantage to indigenous competitors in that country.

Q: Which of the following has been excluded from the agenda for the Doha round of WTO talks that began in 2001? A. Reducing barriers to cross-border investment B. Phasing out subsidies to agricultural producers C. Limiting the use of antidumping laws D. Attempts to tie trade to labor standards in a country E. Cutting tariffs on industrial goods and services

Q: _____ are the highest rate that can be charged, which is often, but not always, the rate that is charged. A. Ceiling rates B. Specific tariff rates C. Bound tariff rates D. Ad valorem tariff rates E. Flat rates

Q: Myra is a firm producing premium hand bags for women. These bags are manufactured and patented in the country of Ceria. Manufactures in the country of Argonia create counterfeit Myra bags and sell them in the local markets of Argonia. These bags are sold at almost similar prices to the original in other countries. According to the given info, which of the following is likely to happen? A. Expansion of world market for Cerian products B. Reduction in the export opportunities for Myra's hand bags in Argonia C. Reduction in import of all Argonian goods D. Increase in the prices of handbags produced by Myra in Argonia E. Reduction in opportunities of export from Argonia to other countries

Q: Which of the following is a loopholes in antidumping laws that is being exploited by many countries to pursue protectionism? A. The slackness of enforcement agencies B. WTO's non-committal approach to antidumping laws C. Bilateral VERs which subvert antidumping laws D. The rather vague definition of what constitutes "dumping" E. Lack of consensus among member nations

Q: Which of the following countries, with minor exceptions, is fully open to inward investment by foreign banks, insurance, and security companies? A. Russia B. Cuba C. Venezuela D. The United States E. Indonesia

Q: The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something the GATT had never done. Two of the first industries targeted for this reform were: A. global telecommunication and financial services industries. B. scientific research and defense sector. C. pharmaceuticals and heavy metal industry. D. pharmaceuticals and biotechnology. E. scientific research and global telecommunication.

Q: Which of the following industries was the first to be targeted for reform under WTO regulations governing foreign direct investment? A. Agricultural industry B. Aviation industry C. Global telecommunication industry D. Defense industry E. Pharmaceutical industry

Q: Which of the following is true regarding the difference between GATT and WTO? A. The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment unlike GATT. B. WTO operates on the basis of consensus unlike GATT. C. GATT gives trading partners the right to compensation or, in the last resort, to impose (commensurate) trade sanctions unlike WTO. D. GATT's verdict is binding unlike that of WTO's. E. WTO allows member-countries to block adoption of arbitration reports unlike GATT.

Q: Which of the following indicates the difference between GATT and WTO? A. WTO has strict time limits unlike GATT. B. WTO operates on the basis of consensus unlike GATT. C. GATT gives trading partners the right to compensation or, in the last resort, to impose (commensurate) trade sanctions unlike WTO. D. GATT's verdict is binding unlike that of WTO's. E. WTO allows member-countries to block adoption of arbitration reports unlike GATT.

Q: The WTO's Agreement on _____ is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules. A. Intellectual Property Rights Enforcement Directive (IPRED) B. Court of Arbitration of Intellectual Property (CAIP) C. Trade-Related Aspects of Intellectual Property Rights (TRIPS) D. Intellectual Property Rights Enforcement and Resolution (IPER) E. International Body on Intellectual Property (IBIP)

Q: Which of the following organizations, established in 1995 under the provisions of the Uruguay Round, has taken over the responsibility to arbitrate trade disputes and monitor the trade policies of member countries? A. World Bank B. World Trade Organization C. International Trade Commission D. International Monetary Fund E. World Economic Forum

Q: The _____ was created to implement the GATT agreement. A. World Bank B. World Trade Organization C. International Trade Commission D. International Monetary Fund E. World Economic Forum

Q: Which of the following is a provision of the Uruguay Round Agreement? A. A wide range of services were to be excluded from GATT fair trade and market access rules. B. Tariffs on industrial goods were to be raised by more than one-third, and tariffs were to be scrapped on more than 50 percent on wide range of services. C. The International Monetary Fund (IMF) was to be created to implement the GATT agreement. D. Barriers on trade in textiles were to be significantly reduced over 10 years. E. Average tariff rates imposed by developed nations on manufactured goods were to be raised by 20 percent of the value, the highest level in modern history.

Q: The main effect of the Uruguay Round Agreement on agriculture sector was: A. the imposition of caps on textile exports. B. the substantial reduction in farm subsidies. C. the increment in tariffs on agricultural produce. D. exemption of a wide range of agricultural services from GATT rules. E. that the GATT rules were extended to processed agricultural goods.

Q: Bilateral voluntary export restraints, or VERs, circumvented GATT agreements, because: A. these nations withdrew their membership to the GATT. B. the member nations had ceased to recognize GATT as a regulatory body for international trade. C. VERs were not a recognized trade barrier under the GATT constitution. D. neither the importing country nor the exporting country complained to the GATT bureaucracy for it to take action. E. member nations erected a wall of tariff barriers.

Q: _____ is one of the ways in which countries can circumvent GATT regulations and is best exemplified by the agreement between Japan and America under which Japanese producers promised to limit their auto imports into the United States. A. Voluntary export restraint B. Export quotas C. Specific tariff D. Quota rent E. Local content requirement

Q: Which of the following best explains the reason for rise in protectionist pressures around the world during the 1980s? A. The strict GATT bureaucracy in Geneva controlling trade regulations B. The opening up of international markets to cheap products from China C. The fall of the Soviet Union D. The persistent trade deficit in the worlds largest economy, the United States E. The economic failure of Japan which hampered the global economy

Q: Which of the following is most likely to be the reason for the rise in protectionist pressures around the world during the 1980s? A. The strict GATT bureaucracy in Geneva controlling trade regulations B. The opening up of International markets to cheap products from China C. The fall of the Soviet Union D. The persistent trade lead taken by the United States E. The economic success of Japan which strained the world trading system

Q: One of the reasons why protectionist pressures arose around the world during the 1980s was: A. that many countries found ways to get around GATT regulations. B. the opening up of national markets to cheap products from China. C. the fall of the Soviet Union. D. the persistent trade lead taken by the United States. E. the Japanese failure in industries such as automobiles and semiconductors that strained the world trading

Q: Which of the following statements is true regarding GATT? A. GATT attempted to liberalize trade restrictions in one go. B. In its early years, GATT was unsuccessful and hence was superseded by the World Bank. C. GATT regulations were mostly enforced by the EU nations rather than by a mutual monitoring mechanism. D. Tariff reductions through negotiations were completed in three rounds. E. The last round for tariff reduction, the Uruguay Round, was launched in 1986 and completed in December 1993.

Q: Which of the following multilateral agreements was established under U.S. leadership in 1947, with the objective to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like? A. General Agreement of Tariffs and Trade (GATT) B. North American Free Trade Agreement (NAFTA) C. Central American Free Trade Agreement (CAFTA) D. Free Trade Areas of the Americas (FTAA) E. North Atlantic Treaty Organization (NATO)

Q: The Smoot-Hawley Act had a damaging effect on _____. A. the balance-of-payment of the United States B. cash flow in the domestic economy of the United States C. prices of natural resources in the United States D. employment abroad E. accrued liabilities of the United States.

Q: A particularly odd aspect of the Smoot-Hawley tariff-raising binge was that the United States was running a balance-of-payment surplus at the time and it was the world's largest _____ nation. A. debtor B. free-trade C. importing D. creditor E. exporting

Q: Enacted in 1930 by the U.S. Congress, Smoot-Hawley Act: A. erected a wall of tariff barriers against imports into the United States. B. specifies that government agencies must give preference to American products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage. C. allowed Americans to sue foreign firms that use Cuban property confiscated from them after the 1959 revolution. D. imposed trade sanctions on Palestine. E. allowed Americans to sue foreign firms that use Libyan and Iranian property.

Q: Which of the following acts, enacted by the U.S. Congress, was aimed at avoiding rising unemployment by protecting domestic industry and diverting consumer demand away from foreign products in the 1930s? A. Smoot-Hawley Act B. D'Amato Act C. Helms-Burton Act D. Buy America Act E. GlassSteagall Act

Q: The economically damaging effects of the Great Depression were worsened in 1929 by the _____. A. First World War B. U.S. stock market collapse C. spread of communism through Europe D. Cold War between the world's superpowers E. harvest failure in Great Britain and famine in Ireland

Q: Which of the following indicates the reason for Great Britain to push the case for trade liberalization for as long as 80 years in the 19th and early 20th century? A. Great Britain was starting to lose the military stranglehold over much of its colonies in early 19th century . B. The emergence of the U.S. threatened Great Britain's position as the most industrialized nation. C. As the world's largest exporting nation, Great Briton had far more to lose from a trade war than did any other country. D. Great Britain had experienced severe famines and droughts in the late 18th and early 19th century. E. Great Britain had lost the authority to impose sanctions on its colonies in 1820s.

Q: Which of the following indicates the reason for the British Parliament repealing the Corn Laws in 1846? A. Opium wars that polarized world opinion against Great Britain B. Harvest failure in Britain and the imminent threat of famine in Ireland C. Imminent threat of rebellions in most of its colonies D. Conservatives taking over the government from the Liberals E. Rise of nationalism in Europe

Q: Which of the following historical events signifies the first official embracing of free trade as a government policy by a country? A. The Union of the Crowns in 1603 B. The repeal of the Corn Laws by the British Parliament in 1846 C. The Treaty of American Independence in 1783 D. The Industrial Revolution of the 18th and 19th centuries E. The Glorious Revolution of 1688

Q: Which of the following is an argument against embracing strategic trade policy? A. It hampers the chances of a country's firms to effectively exploit the first-mover advantages. B. It is certain to be captured by special-interest groups within the economy, which will distort it to their own ends. C. It increases the prices of the products for the domestic consumers. D. It hampers the abilities of the domestic firms to achieve a dominant position in the global industry. E. It leads to a compromise in national sovereignty.

Q: According to Krugman, the ideal way for a country to respond, when the foreign competitors of its companies are already being supported by government subsidies, is probably not to engage in retaliatory action, but to: A. help establish rules that minimize the use of trade-distorting subsidies. B. adopt the strategic trade policy as a way to establish domestic firms in a dominant position in the global industry. C. provide subsidy to a new industry where the foreign competitors have not had the benefit of such strategic trade policies. D. use a combination of home-market protection and export-promoting subsidies. E. provide high level of subsidies to the oldest industry in the country.

Q: According to Krugman, which of the following best indicates the dangers of a strategic trade policy? A. Decrease in subsidies B. Decrease in protectionism C. Occurrence of a trade war D. Huge financial debts for the countries involved E. Occurence of a global recession

Q: According to Paul Krugman, a country that attempts to use strategic trade policy to establish a domestic firm in a dominant position in a global industry, is most likely to: A. dominate the industry. B. move away from protectionism. C. provoke retaliation. D. incur huge financial debts. E. upset the special-interest groups within the economy.

Q: According to the _____ argument, a government should use subsidies to support promising firms that are active in newly emerging industries. A. strategic trade policy B. public policy C. absolute advantage D. product life-cycle E. industrialization

Q: Which of the following is a major reason why many economists remain critical of the infant industry argument? A. It makes the domestic industry inefficient. B. It does not provide guaranteed employment for the citizens. C. It affects the standards of living and per capita income of the people. D. It promotes foreign direct investment. E. It leads to reduced prices in domestic markets.

Q: One of the main reasons why many economists remain critical of the infant industry argument is its reliance on the assumption that: A. protection of manufacturing from foreign competition is harmful. B. absolute advantage cannot sustain productivity of an industry. C. foreign firms too come under the definition of infant industry when they newly enter a foreign market. D. firms are unable to make efficient long-term investments by borrowing money from the domestic or international capital markets. E. foreign competition will eventually cause domestic firms to improve the quality of their products.

Q: _____ has recognized the infant industry argument as a legitimate reason for protectionism. A. GATT B. NATO C. United Nations D. International Monetary Fund E. World Economic Forum

Q: According to _____, many developing countries have a potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete with well-established industries in developed countries. A. economic development argument B. comparative advantage theory C. product life-cycle theory D. infant industry argument E. mixed economy theory

Q: Which of the following is the oldest economic argument for government intervention in international trade? A. Central industry argument B. Infant industry argument C. Labor market argument D. National security argument E. Declining industry argument

Q: Which one of the following is a consequence of Helms-Burton Act? A. With the passage of Helms-Burton Act, agriculture tended to be one of the largest beneficiaries of subsidies in the U.S. B. It led to the formation of American Trading International, Inc. C. The passage of Helms-Burton act elicited protests from Americas trading partners. D. It led to the passage of the Uruguay Round Agreements Act, transforming the GATT into the WTO. E. Global trade in agricultural products rose 50 percent higher.

Q: Which one of the following Acts represents U.S. legislation that is similar to the Helms-Burton Act, but is aimed at Libya and Iran? A. Haley's Act B. D'Amato Act C. Williams Act D. McCain-Feingold Act E. GlassSteagall Act

Q: The act that allows Americans to sue foreign firms that use property in Cuba confiscated from them after the 1959 revolution is known as the: A. Frederick-Peterson Act. B. D'Amato-Perkins Act. C. Perkins-Dole Act. D. Helms-Burton Act. E. Godfrey-Milliken Act.

Q: Cadmia banned imports of Mattel toys with high levels of toxic lead, manufactured in Argonia. The underlying motive for such a move could be: A. protecting domestic businesses from unfair pricing. B. protesting the pricing of toys below their costs of production. C. protecting consumers from unsafe products. D. increasing the trade surplus of the U.S. E. reducing dumping of cheap toys.

Q: Why is retaliation by government intervention a risky strategy? A. It encourages dumping by foreign companies. B. A country that is being pressured may respond to the imposition of punitive tariffs by raising trade barriers of its own. C. It may expose certain industries that are important for national security to foreign competition. D. It allows firms to sell goods in foreign market at below their fair market value. E. It makes it difficult for domestic firms are unable to make any investments by borrowing money from the domestic capital market.

Q: A country Cadmia, which is a leading producer of bauxite, had to impose trade sanctions on Cerian soda cans in order to get the government of Ceria to enforce export restrains. This imposition by Cadmian government was undertaken to protect domestic producers of soda cans. Which of the following government intervention is being used by Cadmia? A. Diversification B. Deregulation C. Retaliation D. Liberalization E. Monopolization

Q: Which of the following industries is most likely to come under the purview of national security? A. Pharmaceutical industry B. Action figures C. Semiconductors D. Gaming consoles E. Electrical appliances

Q: Which of the following is the most common political argument for government intervention in international trade? A. Decreasing the prices of products in the domestic market B. Promoting strategic trade policy C. Protecting jobs and industries from unfair foreign competition D. Improving efficiency of domestic labor E. Protecting human rights

Q: Which of the following indicates the two paths of arguments for government intervention in international trade? A. Political and cultural B. Economic and legal C. Political and economic D. Legal and social E. Political and legal

Q: Antidumping duties are often called _____ duties. A. tariff rent B. counterveiling C. subsidy D. quota rent E. export restraint

Q: Which of the following is considered to be the ultimate objective of antidumping policies? A. Protecting consumers from high prices B. Preventing domestic firms from unloading their excess production in domestic markets C. Protecting domestic producers from unfair foreign competition D. Protecting consumers from substandard and hazardous products E. Preventing foreign products from entering domestic market

Q: The two US agencies that deal with antidumping complaints are: A. the Economic Offences Wing and the Conciliation Council. B. the International Trade Commission and the Industry Council. C. the Commerce Department and the International Trade Commission. D. the Federal Trade Commission and the Economic Council. E. the Industry Council and the Economic Offences Wing.

Q: Which of the following policies protect domestic producers from unfair foreign competition? A. Accounting policies B. Demand side policies C. Arbitration policies D. Antidumping policies E. Supply side policies

Q: _____ are specific duties representing a special tariff which is imposed for punishing foreign firms for engaging in dumping and these tend to be fairly substantial and stay in place for up to five years. A. Excise duties B. Civil duties C. Stamp duties D. Countervailing duties E. Customs duties

Q: Which of the following best indicates the motive for foreign firms to engage in dumping? A. Unloading excess production in foreign markets B. Cutting labor costs to reduce the costs of production C. Providing a wider range of products for consumers in foreign markets D. Meeting the voluntary export requirements imposed on it E. Obtaining subsidies from the importing country

Q: Dumping involves foreign producers: A. attempting hostile takeovers of domestic firms and usurping the available resources for production. B. indiscriminately exploiting the natural resources of a foreign country to create a later demand that can be met only by imports. C. eliminating competition by subsidizing prices in a foreign market with home market profits and eventually raising prices to earn substantial profits. D. capturing the niche market rather than the masses. E. exporting only a small restricted quantity of their products into an importing country.

Q: If Argonia exports vast quantities of cheap toys to Cadmia, selling them at below their costs of production, it would constitute: A. monopolism. B. dumping. C. offshoring. D. nearshoring. E. subsidizing.

Q: In the context of international trade, _____ is defined as selling goods in a foreign market at a price below their costs of production or as selling goods in a foreign market at below their "fair" market price. A. monopolizing B. dumping C. offshoring D. subsidizing E. nearshoring

Q: The Palladian government required that all imported products that came from Lovaskiya be checked by Palladian customs inspectors. The inspection was done at a container freight station that was both remote and poorly staffed. This delayed the Lovaskiyan consignment from reaching the consumers in Palladia. The inspection strategy adopted by the customs officers in Palladia is an example of a(n): A. antidumping policy. B. voluntary export restraint policy. C. administrative trade policy. D. monopolistic competition policy. E. tariff rent policy.

Q: _____ are bureaucratic rules designed to make it difficult for imports to enter a country. A. Voluntary export restraints B. Consumer regulations C. Subsidies D. Administrative trade policies E. Public sector regulations

Q: The _____ in the United States specifies that government agencies must give preference to U.S. products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage. A. Export Administration Act B. Helms-Burton Act C. Hawley-Burton Act D. Buy America Act E. Volcker Rule

Q: Animax Limited got an order to sell 50000 Central Processing Units (CPUs) to Palladia, but the Palladian government stipulated that 15 percent of the component parts of those CPUs must be produced in Palladia. This stipulation by the Palladian government would be example of a(n): A. voluntary export restraint. B. quota rent. C. import quota. D. local content requirement. E. antidumping policy.

Q: Local content regulations provide protection for a domestic producer of parts in much the same way a(n) _____ does, by limiting foreign competition. A. greenfield investment B. international content requirement C. domestic sales requirement D. import quota E. subsidy

Q: A(n) _____ requires that some specific fraction of a good must be produced domestically. A. international allocation requirement B. local content requirement C. specific quota requirement D. ad valorem portion requirement E. Domestic sales requirement

Q: Both import quotas and VERs benefit _____ by limiting import competition, but they result in higher prices, which hurt _____. A. domestic producers; consumers B. the governments; domestic producers C. importers; foreign producers D. foreign producers; the governments E. consumers; foreign investros

Q: The extra profit that producers make when supply is artificially limited by an import quota is referred to as a: A. net profit. B. quota rent. C. trade surplus. D. profit margin. E. quota share.

Q: Which of the following statements is true about voluntary export restraints (VERs)? A. VERs benefit consumers by limiting import competition. B. VER reduces the domestic price of an imported good. C. When imports are limited to a low percentage of the market by a VER, the price is bid up for that limited foreign supply. D. Foreign producers agree to VERs because they fear economic instability in the world economy. E. VERs negatively affect domestic producers by increasing import competition.

Q: A(n) _____ is a quota on trade imposed by the exporting country, typically at the request of the importing country's government. A. tariff rate quota B. quota rent C. voluntary export restraint (VER) D. quota share E. export embargo

Q: The country of Argonia imposes an ad valorem tariff of 10 percent on 1 million tons of rice imports, after which an out-of-quota tariff of 80 percent is applied. According to this information, which of the following trade policy instruments is being used by Argonia? A. Subsidy B. Tariff rate quota C. Voluntary export restraint D. Tariff ceiling E. Local content requirement

Q: Under a(n) _____, a lower tariff rate is applied to imports within the quota than those over the quota. A. tariff rate quota B. voluntary import restraint C. import duty D. quota rent E. import quota

Q: Which of the following statements is true about import quotas? A. Import quotas benefit domestic producers by limiting import competition. B. If a domestic industry lacks the capacity to meet demand, an import quota can raise the prices for domestically produced good but not the imported good. C. Under an import quota, a lower tariff rate is applied to imports within the quota than those over the quota. D. Import quotas benefit consumers by decreasing the domestic price of an imported good. E. An import quota helps a foreign producer in gaining a competitive advantage in the markets of the country which imposes the quota.

Q: Which of the following groups would benefit the most from receiving subsidies? A. Governments B. International organizations such as the WTO C. Domestic producers D. Importers E. Foreign competitors

Q: Which of the following statements with regard to subsidies is true? A. The main gains from subsidies accrue to domestic producers, whose international competitiveness is increased as a result. B. Pharmaceutical industry tends to be one of the largest beneficiaries of subsidies in most countries. C. Subsidies always generate national benefits that exceed their national costs. D. Subsidies comprise only of cash grants and low-interest loans. E. Subsidies never help a firm achieve a first-mover advantage in an emerging industry.

Q: Which of the following industries tends to be one of the largest beneficiaries of subsidies in most countries? A. Banking industry B. Aviation industry C. Agriculture D. Streel industry E. Pharmaceutical industry

Q: By lowering production costs, _____ help domestic producers compete against foreign imports. A. tariffs B. custom duties C. tariff rate quotas D. subsidies E. voluntary export restraints

Q: By lowering production costs, subsidies help domestic producers in: A. gaining export markets. B. meeting import quotas. C. meeting voluntary export restraints. D. meeting the local content requirement. E. competing in the domestic market against local producers.

Q: _____ take many forms including cash grants, low-interest loans, tax breaks, and government equity participation in domestic firms. A. Ad valorem tariffs B. Subsidies C. Quota rents D. Specific tariffs E. Local content requirements

Q: Which of the following terms refers to a government payment to a domestic producer? A. Value-Based Benefit B. Ad valorem tariff C. Subsidy D. Specific tariff E. Quota

Q: Which of the following is most likely to be an objective of export tariffs? A. Abiding by the rules enforced by the WTO B. Curbing the competition offered by foreign firms to domestic firms C. Reducing exports from a sector, often for political reasons D. Maintaining a positive trade deficit E. Increasing the flow of capital in international market