Question 1

Dumping violates WTO rules because it amounts to unfair competition.

Accepted Answer

Dumping involves selling goods at a lower price than the domestic market or the cost of production in order to gain market share. This can be considered unfairly competitive and is prohibited under the WTO's Anti-Dumping Agreement. Countries can impose anti-dumping duties to counteract the effects of dumping.

Question 2

Explain how quotas work as an instrument of government intervention. What are voluntary export restraints? How can firms use foreign trade zones as a strategy to manage government intervention?

Accepted Answer

The answer of Explain how quotas work as an instrument...

Question 3

Import tariffs are a principle instrument of trade intervention. In a short essay, briefly describe the five main types of import tariffs.

Accepted Answer

The answer of Import tariffs are a principle instrument of...

Question 4

Export-led development refers to government policies that impose high tariffs and quotas on imports from the developed world.

Accepted Answer

Export-led development refers to government policies that promote exports and the growth of domestic industries that specialize in producing goods for export, rather than imposing high tariffs and quotas on imports from the developed world.

Question 5

Currency controls harm companies that export their products from the host country, but favor those that rely heavily on imported parts and components.

Accepted Answer

Currency controls typically harm companies that rely on imported parts and components because they make it more difficult and expensive to obtain foreign currency needed for imports.

Question 6

Which of the following most supports abolishing the cotton quota over maintaining it?
A)The cotton growers have a competitive edge over foreign cotton growers, and they are profitable.
B)The fabric manufacturer, a prime contributor to the nation's annual revenue, can earn better returns by shifting to another country that does not impose cotton quotas.
C)A competing fabric manufacturer is considering opening a production facility in Zanzi.
D)The price of cotton fabric has remain unchanged over the last decade.

Accepted Answer

Maintaining the cotton quota might lead to fabric manufacturers shifting to other countries that do not have such restrictions. This could negatively impact the country's revenue. Therefore, abolishing the cotton quota would be a better choice to support the textile industry. Option A does not necessarily support abolishing the quota as it highlights the competitiveness and profitability of cotton growers. Option C is irrelevant to the given context. Option D does not have any direct relevance to the cotton quota issue.

Question 7

A revenue tariff aims to protect domestic industries from foreign competition.

Accepted Answer

A revenue tariff is primarily designed to generate income for the government, not to protect domestic industries.

Question 8

Which of the following Asian countries had launched an ambitious program of industrialization and export-led development that contributed to its rise from poverty in the 1940s to one of the world's wealthiest countries by the 1980s?
A)Indonesia
B)China
C)Japan
D)India

Accepted Answer

Japan had launched an ambitious program of industrialization and export-led development, which contributed to its rise from poverty in the 1940s to one of the world's wealthiest countries by the 1980s. The program was known as the "Japanese post-war economic miracle" and was based on government-led investment in key industries and strong partnerships between government, industry, and finance. This helped Japan to become a major exporter of high-quality goods and services, especially in the automotive and electronics sectors, and led to the development of some of the world's most well-known brands.

Question 9

In 1938, the United States passed the Smoot-Hawley Tariff Act, which ________.
A)opened foreign markets for U.S. agricultural products
B)led to the consolidation of the U.S. banking system
C)instituted strict regulations to contain intellectual property theft
D)raised U.S. tariffs to near-record highs of more than 50 percent

Accepted Answer

The Smoot-Hawley Tariff Act raised U.S. tariffs to near-record highs of more than 50 percent, making it harder for foreign countries to sell products in the United States and contributing to a reduction in international trade.

Question 10

Increasing trade barriers are a major factor in the growth of developing nations and global commerce.

Accepted Answer

Increasing trade barriers hinder the growth of developing nations and negatively impact global commerce. Import tariffs and other trade restrictions increase the cost of goods and limit the variety of products available, resulting in limited economic growth and increased consumer costs. Free and open trade, on the other hand, promotes competition and innovation, encouraging economic growth and increasing consumer choice.

Question 11

Which of the following was the first major effort to systematically reduce trade barriers worldwide?
A)WIPO
B)GATT
C)NAFTA
D)WTO

Accepted Answer

GATT (General Agreement on Tariffs and Trade) was the first major effort to systematically reduce trade barriers worldwide. It was established in 1947, and later replaced by the World Trade Organization (WTO) in 1995. WIPO (World Intellectual Property Organization) focuses on the protection of intellectual property rights, NAFTA (North American Free Trade Agreement) is a regional free trade agreement between the United States, Canada, and Mexico.

Question 12

Subsidies can help counterbalance harmful consequences that disproportionately affect the poor.

Accepted Answer

Subsidies can provide financial support to those who may not otherwise be able to afford certain goods or services, such as healthcare or public transportation. This can help alleviate the burden of harmful consequences that tend to affect low-income individuals and families more severely than others.

Question 13

In a short essay, explain why agricultural subsidies have been implemented in Europe and the United States. What are the criticisms to these subsidies?

Accepted Answer

The answer of In a short essay, explain why agricultural...

Question 14

Which of the following best supports maintaining the existing cotton quota?
A)Zanzi cotton growers are protected from cheaper cotton imports.
B)Zanzi cotton growers have an advantage when they export cotton fabric to other countries.
C)The local fabric manufacturer pays high prices for cotton.
D)The local fabric manufacturer uses mostly Zanzi-grown cotton.

Accepted Answer

Maintaining the existing cotton quota protects Zanzi cotton growers from potentially cheaper cotton imports, ensuring their market is not undercut by lower-priced foreign cotton. This helps sustain the local cotton growing industry.

Question 15

FDI and ownership restrictions increase the competitive advantage of foreigners while diminishing that of the local firms.

Accepted Answer

FDI and ownership restrictions limit the competitive advantage of foreigners, as they restrict their ability to fully own or control local firms. This can help local firms compete on a more level playing field, but it can also limit their access to foreign investment and resources.

Question 16

Governments support domestic industries by ________.
A)incentivize dumping
B)increase the costs of production of domestic industries
C)alienate domestic industries
D)adopting procurement policies that restrict purchases to home-country suppliers

Accepted Answer

Governments can support domestic industries by adopting procurement policies that restrict purchases to home-country suppliers. This policy ensures that domestic industries get a certain level of demand and can sustain their operations, leading to the growth of the local economy. Incentivizing dumping or increasing the costs of production of domestic industries can lead to unfair competition and may harm the industry in the long run. Alienating domestic industries is also not a desirable outcome as it may lead to the loss of employment and reduced economic growth.

Question 17

Which of the following questions would be most important for government officials to evaluate when considering the controversy over the cotton quota?
A)What would be the short-term effect of additional agricultural quotas?
B)What other nations utilize agricultural quotas and what are the effects?
C)Does the government of Zanzi impose heavy duties on dumping?
D)What will be the long-term effect of the cotton quota on the Zanzi economy?

Accepted Answer

Government officials should consider the long-term effects of the cotton quota on the Zanzi economy. This will ensure that any decision made aligns with the nation's overall economic goals and promotes sustainability. The other options mentioned in the other choices are also important, but they may not provide the complete picture that evaluating the long-term effects of the quota could.

Question 18

A countervailing duty slows the import of products or services and hinders the investment activities of firms.

Accepted Answer

The answer of A countervailing duty slows the import of...

Question 19

What is the primary ethical concern regarding the import of products from poor countries?
A)Higher tariffs hurt poor nations more than developed nations.
B)Nations lacking economic freedom cannot afford to export.
C)Emerging nations use government intervention to protect domestic industries.
D)Lack of subsidies adversely affect poor countries.

Accepted Answer

Higher tariffs imposed by developed nations on imports from poorer countries can disproportionately affect these nations, making it harder for them to compete in the global market and improve their economic conditions.

Question 20

Subsidies may allow a manufacturer to practice dumping-that is, to charge an unusually low price for exported products.

Accepted Answer

Subsidies can provide a financial advantage to manufacturers, allowing them to sell their goods at a lower price than competitors in foreign markets. This is known as dumping, and it can be harmful to domestic industries in the importing countries.

Quiz 7: Government Intervention and Regional Economic Integration

Dumping violates WTO rules because it amounts to unfair competition.

Explain how quotas work as an instrument of government intervention. What are voluntary export restraints? How can firms use foreign trade zones as a strategy to manage government intervention?

Import tariffs are a principle instrument of trade intervention. In a short essay, briefly describe the five main types of import tariffs.

Export-led development refers to government policies that impose high tariffs and quotas on imports from the developed world.

Currency controls harm companies that export their products from the host country, but favor those that rely heavily on imported parts and components.

Which of the following most supports abolishing the cotton quota over maintaining it?

A revenue tariff aims to protect domestic industries from foreign competition.

Which of the following Asian countries had launched an ambitious program of industrialization and export-led development that contributed to its rise from poverty in the 1940s to one of the world's wealthiest countries by the 1980s?

In 1938, the United States passed the Smoot-Hawley Tariff Act, which ________.

Increasing trade barriers are a major factor in the growth of developing nations and global commerce.

Which of the following was the first major effort to systematically reduce trade barriers worldwide?

Subsidies can help counterbalance harmful consequences that disproportionately affect the poor.

In a short essay, explain why agricultural subsidies have been implemented in Europe and the United States. What are the criticisms to these subsidies?

Which of the following best supports maintaining the existing cotton quota?

FDI and ownership restrictions increase the competitive advantage of foreigners while diminishing that of the local firms.

Governments support domestic industries by ________.

Which of the following questions would be most important for government officials to evaluate when considering the controversy over the cotton quota?

A countervailing duty slows the import of products or services and hinders the investment activities of firms.

What is the primary ethical concern regarding the import of products from poor countries?

Subsidies may allow a manufacturer to practice dumping-that is, to charge an unusually low price for exported products.