Exam 8: Government Intervention in International Business

International Trade History (Scenario) The history of international trade is the subject of a report presented by Patrick Hinojosa to his international business class. Patrick addressed how the GATT impacted world trade, and how trade barriers have gradually disappeared. He described the protectionist policies implemented by Latin America during the 1950s. Patrick wrapped up his report by citing the rapid economic growth of Singapore, Hong Kong, and Taiwan during the 1970s and the post-World War II Japanese miracle. -Which of the following entry strategies do most firms use in the absence of high tariffs?

Tariffs and most nontariff trade barriers apply to FDI, whereas investment barriers apply to exporting.

________ are checkpoints at the ports of entry in each country where government officials inspect imported products and levy 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.

Restrictions on the outflow of hard currency from a country or on the inflow of foreign currencies is called ________.

Which of the following refers to an often-used form of nontariff trade barrier?

Import substitution failed during the 1950s in Latin America because ________.

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

In a short essay, describe two methods of government intervention and explain the four main motives for government intervention in international trade and investment activities.

The GATT created a forum for resolving trade disputes.

In a short essay, explain the consequences of the 1938 Smoot-Hawley Tariff Act and the succeeding evolution of government intervention, up until the birth of the WTO. How has the recent global financial crisis led to a gradual increase of government intervention?

________ represent a major driver of market globalization.

Cotton Quota (Scenario) Cotton growers in the nation of Zanzi export nearly 700,000 bales of cotton every year. Zanzi is the home country for a fabric manufacturing facility that exports high-quality cotton fabric around the world. The government imposed a quota of 1 million bales of cotton that can be imported into Zanzi every year. The local fabric manufacturer is lobbying the government to remove the quota on cotton. -Which of the following best supports maintaining the existing cotton quota?

Investment barriers is an example of commercial risk in the context of international business.

International Trade History (Scenario) The history of international trade is the subject of a report presented by Patrick Hinojosa to his international business class. Patrick addressed how the GATT impacted world trade, and how trade barriers have gradually disappeared. He described the protectionist policies implemented by Latin America during the 1950s. Patrick wrapped up his report by citing the rapid economic growth of Singapore, Hong Kong, and Taiwan during the 1970s and the post-World War II Japanese miracle. -Patrick's research is most likely to indicate the ________ as the reason for the rapid economic growth achieved by Singapore, Hong Kong, and Taiwan from the 1970s onward.

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

How can government intervention in the form of subsidies be utilized to help low-income groups? Explain with suitable example.

________ refers to a government measure intended to manage or prevent the export of certain products or trade with certain countries.

Which of the following situations is an example of country risk?

In the 1950s, ________ adopted protectionist policies aimed at industrialization and economic development.