Question 1

Discuss the establishment of GATT. What was GATT's objective?

Accepted Answer

The GATT was a multilateral agreement whose objective was to liberalize trade by eliminating tariffs, subsidies, import quotas, and other trade barriers. GATT was established in 1947 with 19 members. Membership increased to more than 120 nations by the time it was superseded by the WTO. Under GATT, tariff reduction was spread over eight rounds. The last round, the Uruguay Round, resulted in the establishment of the WTO, which, among other things, took over the role of GATT in the global economy.

Question 2

________ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Accepted Answer

A)   Export restraint
B)   Dumping
C)   Local content requirement
D)   Ad valorem

Question 3

Economist Paul Krugman has suggested that trade policy designed to retaliate against another country's trade policy would

Accepted Answer

A)   benefit the multinational firms of both countries.
B)   benefit the citizens of both countries.
C)   hurt the multinational firms of both countries.
D)   hurt the citizens of both countries.

Question 4

The extra profit that producers make when supply is artificially limited by an import quota is referred to as a

Accepted Answer

A)   quota rent.
B)   specific tariff.
C)   tariff rate quota.
D)   subsidy.

Question 5

According to the ________ argument, governments should temporarily support new industries until they have grown strong enough to meet international competition.

Accepted Answer

A)   retaliatory action
B)   human rights
C)   infant industry
D)   antidumping

Question 6

Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them.

Accepted Answer

A) True 
 B)False

Question 7

GATT has not recognized the infant industry argument as a legitimate reason for protectionism.

Accepted Answer

A) True 
 B)False

Question 8

According to ________, some specific fraction of a good must be produced domestically.

Accepted Answer

A)   import quotas
B)   voluntary export restraints
C)   local content requirements
D)   antidumping duties

Question 9

Antidumping policies are designed to punish foreign firms that are engaged in dumping.

Accepted Answer

A) True 
 B)False  True

Question 10

Tariff barriers lower the costs of exporting products to a country.

Accepted Answer

A) True 
 B)False

Question 11

One of the successful outcomes of the Doha Round negotiations has been that many nations have proceeded with bilateral free trade agreements.

Accepted Answer

A) True 
 B)False

Question 12

An ____ is a direct restriction on the quantity of some good that may be imported into a country.

Accepted Answer

A)   import tariff
B)   import quota
C)   import subsidy
D)   ad valorem tariff

Question 13

Which of the following is a consequence of subsidies?

Accepted Answer

A)   Subsidies make domestic producers vulnerable to foreign competition.
B)   Subsidies lead to lowered production.
C)   Subsidies protect inefficient domestic producers.
D)   Subsidies produce revenue for the government.

Question 14

Governments use ________ to boost exports and restrict imports.

Accepted Answer

A)   subsidies
B)   local content requirements
C)   administrative trade policies
D)   formal instruments of trade policy

Question 15

Administrative trade policies are

Accepted Answer

A)   requirements that some specific fraction of a good be produced domestically.
B)   quotas on trade imposed by the exporting country.
C)   bureaucratic rules designed to make it difficult for imports to enter a country.
D)   designed to punish foreign firms that engage in dumping. C

Question 16

Identify the true statement about trade barriers.

Accepted Answer

A)   They lower the costs of exporting products to a country.
B)   They may put a firm at a competitive advantage to indigenous competitors.
C)   They may help a firm to serve a country from locations outside of that country.
D)   To conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise.

Question 17

________ are levied as a proportion of the value of the imported good.

Accepted Answer

A)   Specific tariffs
B)   Import quotas
C)   Ad valorem tariffs
D)   Tariff rate quotas

Question 18

What is the TRIPS agreement? Why was it established?

Accepted Answer

The 1995 Uruguay agreement that establis...

Question 19

The TRIPS regulations established at the 1995 Uruguay Round

Accepted Answer

A)   established regulations on patents and copyrights.
B)   set a new level of agriculture subsidies.
C)   organized OECD countries to eliminate tariffs on textiles.
D)   established new tariff levels on technology.

Question 20

Economic problems during the Great Depression were compounded in 1930 when the U.S. Congress passed the ________, aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.

Accepted Answer

A)   Smoot-Hawley Act
B)   Antidumping Act
C)   Helms-Burton Act
D)   D'Amato Act

Exam 7: Government Policy and International Trade

Discuss the establishment of GATT. What was GATT's objective?

________ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Correct Answer
verified

Economist Paul Krugman has suggested that trade policy designed to retaliate against another country's trade policy would

Correct Answer
verified

The extra profit that producers make when supply is artificially limited by an import quota is referred to as a

Correct Answer
verified

According to the ________ argument, governments should temporarily support new industries until they have grown strong enough to meet international competition.

Correct Answer
verified

Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them.

Correct Answer
verified

GATT has not recognized the infant industry argument as a legitimate reason for protectionism.

Correct Answer
verified

According to ________, some specific fraction of a good must be produced domestically.

Correct Answer
verified

Antidumping policies are designed to punish foreign firms that are engaged in dumping.

Correct Answer
verified
True

Tariff barriers lower the costs of exporting products to a country.

Correct Answer
verified

One of the successful outcomes of the Doha Round negotiations has been that many nations have proceeded with bilateral free trade agreements.

Correct Answer
verified

An ____ is a direct restriction on the quantity of some good that may be imported into a country.

Correct Answer
verified

Which of the following is a consequence of subsidies?

Correct Answer
verified

Governments use ________ to boost exports and restrict imports.

Correct Answer
verified

Administrative trade policies are

Correct Answer
verified
C

Identify the true statement about trade barriers.

Correct Answer
verified

________ are levied as a proportion of the value of the imported good.

Correct Answer
verified

What is the TRIPS agreement? Why was it established?

Correct Answer
verified
The 1995 Uruguay agreement that establis...
View Answer

The TRIPS regulations established at the 1995 Uruguay Round

Correct Answer
verified

Economic problems during the Great Depression were compounded in 1930 when the U.S. Congress passed the ________, aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.

Correct Answer
verified

Exam 7: Government Policy and International Trade

Discuss the establishment of GATT. What was GATT's objective?

________ is variously defined as selling goods in a foreign market at below their costs of production or as selling goods in a foreign market at below their "fair" market value.

Correct AnswerverifiedShow Answer

Economist Paul Krugman has suggested that trade policy designed to retaliate against another country's trade policy would

Correct AnswerverifiedShow Answer

The extra profit that producers make when supply is artificially limited by an import quota is referred to as a

Correct AnswerverifiedShow Answer

According to the ________ argument, governments should temporarily support new industries until they have grown strong enough to meet international competition.

Correct AnswerverifiedShow Answer

Governments do not always act in the national interest when they intervene in the economy; politically important interest groups often influence them.

Correct AnswerverifiedShow Answer

GATT has not recognized the infant industry argument as a legitimate reason for protectionism.

Correct AnswerverifiedShow Answer

According to ________, some specific fraction of a good must be produced domestically.

Correct AnswerverifiedShow Answer

Antidumping policies are designed to punish foreign firms that are engaged in dumping.

Correct AnswerverifiedTrue

Tariff barriers lower the costs of exporting products to a country.

Correct AnswerverifiedShow Answer

One of the successful outcomes of the Doha Round negotiations has been that many nations have proceeded with bilateral free trade agreements.

Correct AnswerverifiedShow Answer

An ____ is a direct restriction on the quantity of some good that may be imported into a country.

Correct AnswerverifiedShow Answer

Which of the following is a consequence of subsidies?

Correct AnswerverifiedShow Answer

Governments use ________ to boost exports and restrict imports.

Correct AnswerverifiedShow Answer

Administrative trade policies are

Correct AnswerverifiedC

Identify the true statement about trade barriers.

Correct AnswerverifiedShow Answer

________ are levied as a proportion of the value of the imported good.

Correct AnswerverifiedShow Answer

What is the TRIPS agreement? Why was it established?

Correct AnswerverifiedThe 1995 Uruguay agreement that establis...View AnswerShow Answer

The TRIPS regulations established at the 1995 Uruguay Round

Correct AnswerverifiedShow Answer

Economic problems during the Great Depression were compounded in 1930 when the U.S. Congress passed the ________, aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.

Correct AnswerverifiedShow Answer

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True

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C

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The 1995 Uruguay agreement that establis...
View Answer

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