Exam 7: Government Intervention and Regional Economic Integration

Minimizing Trade Barriers (Scenario) National Appliance Corporation (NAC) needs to build a new manufacturing facility to meet the increasing demand for professional-grade appliances. NAC managers are considering building the facility in Mexico but are hesitant because of the high tariffs involved. Another possible location for the facility is India; however, the country also imposes high tariffs. Wherever NAC builds a plant, parts will need to be imported from other nations. -Given the high trade barriers in Mexico, the management of NAC is most likely to consider ________ to be an inappropriate entry strategy.

Which of the following statements is TRUE about protection of an infant industry?

Minimizing Trade Barriers (Scenario) National Appliance Corporation (NAC) needs to build a new manufacturing facility to meet the increasing demand for professional-grade appliances. NAC managers are considering building the facility in Mexico but are hesitant because of the high tariffs involved. Another possible location for the facility is India; however, the country also imposes high tariffs. Wherever NAC builds a plant, parts will need to be imported from other nations. -Which of the following must NAC ensure in order to reduce exposure to trade barriers?

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

Currency controls can help conserve especially valuable currency or reduce the risk of capital flight.

Governments sometimes retaliate against subsidies by imposing ________, tariffs on products imported into a country to offset subsidies given to producers or exporters in the exporting country.

Firms use foreign trade zones to ________.

Governments impose offensive barriers to ________.

________ refers to a tax imposed on imported products, effectively increasing the cost of acquisition for the customer.

What is a foreign trade zone (FTZ)? In a short essay, explain how FTZs are utilized by firms.

Which of the following is an example of nontariff trade barrier?

Which of the following entry strategies do most firms use in the absence of high tariffs?

Briefly describe the five levels of economic integration.

Tariffs are taxes that will increase the price to consumers.

If high tariffs are present, managers may consider other strategies, such as FDI, licensing, and joint ventures that allow the firm to operate directly in the target market, avoiding import barriers.

Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc.

A nontariff trade barrier is a government policy, regulation, or procedure that impedes trade through means other than explicit tariffs.

Maquiladoras refer to export-assembly plants in northern Mexico along the U.S. border that produce components and typically finished products destined for the United States on a tariff-free basis.

NAFTA is a treaty entered into by Canada, Mexico, and the United States.

A ________ is an area within a country that receives imported goods for assembly or other processing and subsequent re-export.