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Exam 7: Government Policy and International Trade

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Question 51

True/False

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In recent decades, a fall in subsidies, quotas, and voluntary export restraints has been accompanied by a rise in tariff barriers.

A) True
B) False

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Question 52

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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.

F) None of the above
G) B) and E)

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Question 53

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Which of the following best explains the reason for the rise in protectionist pressures around the world during the 1980s?

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:

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:

In the Uruguay Round of the WTO, member countries sought to exempt trade in services from GATT rules.

Animax Limited got an order to sell 50,000 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) :

Which of the following requires that some specific fraction of a good must be produced domestically?

Which of the following are bureaucratic rules designed to make it difficult for imports to enter a country?

Subsidies are a trade policy instrument.

Cadmia banned imports of Mattel toys with high levels of toxic lead, manufactured in Argonia. The underlying motive for such a move could be:

The Buy America Act specifies that government agencies must give preference to American products when putting contracts for equipment out for bid unless the foreign products have a significant advantage.

The Common Agricultural Policy (CAP) established by the European Union was designed to reduce prices of domestic produce and protect consumers from unfair premiums.

According to Paul Krugman, a country that adopts a strategic trade policy aimed at establishing domestic firms in a dominant position in a global industry will probably provoke retaliation.

Government intervention in international trade can take the form of reducing restrictions on imports and encouraging foreign direct investment.

What constitutes the revised case for free trade?

How does the increasing integration of the world economy and internationalization of production affect the selection of a trade policy?

Paul Krugman argues that although strategic trade policy looks unappealing in theory, in practice it is most likely to be workable.

During the 1980s and early 1990s, why did the world trade system, erected by GATT, come under strain due to increased pressures for greater protectionism?

Which of the following does NOT reinforce that the best interests of international business are served by a free trade stance?