Question 1

Which of the following indicates the difference between GATT and WTO?

Accepted Answer

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.F) All of the above
G) B) and D)

Question 2

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

Accepted Answer

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 United States.
E)  reducing dumping of cheap toys.F) A) and C)
G) C) and D)

Question 3

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?

Accepted Answer

During the 1980s and early 1990s,the tra...

Question 4

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?

Accepted Answer

A)  General Agreement on Tariffs and Trade (GATT) 
B)  North American Free Trade Agreement (NAFT
A)  
C)  Central American Free Trade Agreement (CAFT
A)  
D)  Free Trade Areas of the Americas (FTA
A)  
E)  North Atlantic Treaty Organization (NATO) F) A) and E)
G) B) and C)

Question 5

Maroji,a developing country,has a potential comparative advantage in manufacturing electronic goods but is unable to compete with China,at least for the near future.Maroji's predicament is best explained by the

Accepted Answer

A)  economic development argument.
B)  comparative advantage theory.
C)  national security argument.
D)  infant industry argument.
E)  mixed economy theory.F) A) and B)
G) A) and C)

Question 6

The main gains from subsidies accrue to importers,whose international competitiveness is increased as a result of these subsidies.

Accepted Answer

A) True 
 B)False  False

Question 7

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

Accepted Answer

A)  increasing integration of the world economy
B)  internationalization of production
C)  trend toward greater protectionism
D)  drawbacks of government intervention
E)  dispersion of production activitiesF) A) and D)
G) None of the above

Question 8

The United States accused Libya and Iran of supporting terrorist action and building weapons of mass destruction.The U.S.government,therefore,imposed trade sanctions against the two countries.Which of the following political arguments does this exemplify?

Accepted Answer

A)  retaliation and trade war
B)  furthering foreign policy objectives
C)  strategic trade policy
D)  corporate security
E)  protecting infant industriesF) A) and D)
G) A) and C)

Question 9

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

Accepted Answer

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.F) C) and D)
G) B) and C)

Question 10

Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997?

Accepted Answer

A)  It enhanced protection of patents,copyrights,and trademarks (intellectual property) .
B)  It helped resolve deadlock situations arising out of the unwillingness to lower trade barriers between neighboring countries.
C)  It offered a greater ability for companies to offer a global,seamless service for all their corporate needs.
D)  It liberalized trade policies by eliminating tariffs,subsidies,import quotas,antidumping duties,and local content requirements.
E)  It reduced the export of pirated imitations of patented innovations pioneered in a different country.F) A) and B)
G) C) and E)

Question 11

The threat of antidumping action enhances the ability of a firm to use aggressive pricing to gain market share in a country.

Accepted Answer

A) True 
 B)False

Question 12

What are the issues that are at the forefront of the current agenda of the WTO?

Accepted Answer

Four issues at the forefront of the curr...

Question 13

Explain with an example the administrative trade policies used by governments in addition to the formal instruments of trade policy.

Accepted Answer

In addition to the formal instruments of...

Question 14

Which of the following is a major reason why many economists remain critical of the infant industry argument?

Accepted Answer

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.F) A) and B)
G) B) and E)

Question 15

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

Accepted Answer

A)  voluntary export restraints
B)  consumer regulations
C)  subsidies
D)  administrative trade policies
E)  public sector regulationsF) A) and B)
G) B) and C)

Question 16

By lowering production costs,subsidies help foreign competitors gain export markets.

Accepted Answer

A) True 
 B)False  False

Question 17

Since strong economic arguments support unrestricted free trade,governments of developed nations are setting an example by unilaterally lowering their trade barriers.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

In general,two conclusions can be derive...

Question 19

Which of the following is the term for when a lower tariff rate is applied to imports within the quota than those over the quota?

Accepted Answer

A)  tariff rate quota
B)  voluntary import restraint
C)  import duty
D)  quota rent
E)  import quotaF) A) and B)
G) C) and E)

Question 20

Which of the following groups would benefit the most from receiving subsidies?

Accepted Answer

A)  governments
B)  international organizations such as the WTO
C)  domestic producers
D)  importers
E)  foreign competitorsF) B) and D)
G) B) and E) C

Exam 7: Government Policy and International Trade

Which of the following indicates the difference between GATT and WTO?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedDuring the 1980s and early 1990s,the tra...View AnswerShow Answer

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?

Correct AnswerverifiedShow Answer

Maroji,a developing country,has a potential comparative advantage in manufacturing electronic goods but is unable to compete with China,at least for the near future.Maroji's predicament is best explained by the

Correct AnswerverifiedShow Answer

The main gains from subsidies accrue to importers,whose international competitiveness is increased as a result of these subsidies.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

The United States accused Libya and Iran of supporting terrorist action and building weapons of mass destruction.The U.S.government,therefore,imposed trade sanctions against the two countries.Which of the following political arguments does this exemplify?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Why did telecommunications companies welcome the telecommunication deal brokered by WTO in 1997?

Correct AnswerverifiedShow Answer

The threat of antidumping action enhances the ability of a firm to use aggressive pricing to gain market share in a country.

Correct AnswerverifiedShow Answer

What are the issues that are at the forefront of the current agenda of the WTO?

Correct AnswerverifiedFour issues at the forefront of the curr...View AnswerShow Answer

Explain with an example the administrative trade policies used by governments in addition to the formal instruments of trade policy.

Correct AnswerverifiedIn addition to the formal instruments of...View AnswerShow Answer

Which of the following is a major reason why many economists remain critical of the infant industry argument?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

By lowering production costs,subsidies help foreign competitors gain export markets.

Correct AnswerverifiedFalse

Since strong economic arguments support unrestricted free trade,governments of developed nations are setting an example by unilaterally lowering their trade barriers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedIn general,two conclusions can be derive...View AnswerShow Answer

Which of the following is the term for when a lower tariff rate is applied to imports within the quota than those over the quota?

Correct AnswerverifiedShow Answer

Which of the following groups would benefit the most from receiving subsidies?

Correct AnswerverifiedC

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During the 1980s and early 1990s,the tra...
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False

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Four issues at the forefront of the curr...
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In addition to the formal instruments of...
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False

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In general,two conclusions can be derive...
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C