Question 1

The WTO was created in 1947 to reduce tariffs through continuous negotiations among member nations.

Accepted Answer

A) True 
 B)False

Question 2

A government policy that impedes trade through means other than explicit tariffs is known as a(n) ________.

Accepted Answer

A)  investment incentive 
B)  subsidy 
C)  maquiladora 
D)  nontariff trade barrier 
A)  investment incentive 
B)  subsidy 
C)  maquiladora 
D)  nontariff trade barrier

Question 3

Which of the following is a method used by some manufacturers to avoid paying high tariffs?

Accepted Answer

A)  assemble products in the target market 
B)  produce a large number of less expensive items in the target market 
C)  employ highly skilled workers in the export location regardless of the cost 
D)  ship products to fewer international locations 
A)  assemble products in the target market 
B)  produce a large number of less expensive items in the target market 
C)  employ highly skilled workers in the export location regardless of the cost 
D)  ship products to fewer international locations

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

Quotas restrict the physical volume or v

Question 6

Which of the following criteria is used to evaluate a country's Index of Economic Freedom?

Accepted Answer

A)  environmental wellness 
B)  military capability 
C)  level of trade barriers 
D)  income of non-residents located in that country 
A)  environmental wellness 
B)  military capability 
C)  level of trade barriers 
D)  income of non-residents located in that country

Question 7

Which of the following exemplifies local content requirements?

Accepted Answer

A)  Titania charges a 27 percent tariff on imported dairy products. 
B)  At least 40 percent of the value of all computers assembled in Titania must be from parts or other inputs produced in Titania. 
C)  Titania bans imports of firearms. 
D)  Titania imposes extensive inspections and bureaucratic procedures on the import of alcoholic beverages. 
A)  Titania charges a 27 percent tariff on imported dairy products. 
B)  At least 40 percent of the value of all computers assembled in Titania must be from parts or other inputs produced in Titania. 
C)  Titania bans imports of firearms. 
D)  Titania imposes extensive inspections and bureaucratic procedures on the import of alcoholic beverages.

Question 8

Typically, administrative and bureaucratic procedures ________.

Accepted Answer

A)  speed up the investment activities of firms 
B)  slow the import of products or services 
C)  boost investment activities 
D)  harm late importers 
A)  speed up the investment activities of firms 
B)  slow the import of products or services 
C)  boost investment activities 
D)  harm late importers

Question 9

Obtaining economic development incentives from host- or home-country governments increases the cost of trade and investment barriers.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  WIPO 
B)  GATT 
C)  NAFTA 
D)  WTO 
A)  WIPO 
B)  GATT 
C)  NAFTA 
D)  WTO

Question 11

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

Accepted Answer

A)  Gayle Inc. is a U.S.-based retailer that imports cosmetic products manufactured in Thailand. These products pass through U.S. customs and are subject to a 5 percent import duty. 
B)  The U.S. imports chocolates manufactured in Belgium that cost $65 a box with taxes. 
C)  The U.S. Department of Commerce announced that white sugar imports will be limited to 7,500 million tons. 
D)  Spices imported from India to the U.S. for sale in the domestic market are subject to a 10 percent import duty. 
A)  Gayle Inc. is a U.S.-based retailer that imports cosmetic products manufactured in Thailand. These products pass through U.S. customs and are subject to a 5 percent import duty. 
B)  The U.S. imports chocolates manufactured in Belgium that cost $65 a box with taxes. 
C)  The U.S. Department of Commerce announced that white sugar imports will be limited to 7,500 million tons. 
D)  Spices imported from India to the U.S. for sale in the domestic market are subject to a 10 percent import duty.

Question 12

Advocates of government intervention in international trade argue that blocking imports will ________.

Accepted Answer

A)  reduce the availability of products sold in the home market 
B)  protect home-country employment opportunities 
C)  encourage manufacturers to outsource jobs 
D)  limit intellectual property theft 
A)  reduce the availability of products sold in the home market 
B)  protect home-country employment opportunities 
C)  encourage manufacturers to outsource jobs 
D)  limit intellectual property theft

Question 13

Which of the following is NOT a country risk in international business?

Accepted Answer

A)  government policies that favor domestic firms 
B)  investment barriers 
C)  government protectionism 
D)  currency exchange rate 
A)  government policies that favor domestic firms 
B)  investment barriers 
C)  government protectionism 
D)  currency exchange rate

Question 14

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 would be most important for NAC managers to consider while taking a decision in favor of building a facility in Mexico or India?

Accepted Answer

A)  Has NAC engaged in dumping in the past? 
B)  How would appliance parts and finished products be categorized when passing through customs? 
C)  Is employee empowerment culturally favored in Mexico and India? 
D)  What entry strategies are available in both countries which would allow NAC to minimize import barriers? 
A)  Has NAC engaged in dumping in the past? 
B)  How would appliance parts and finished products be categorized when passing through customs? 
C)  Is employee empowerment culturally favored in Mexico and India? 
D)  What entry strategies are available in both countries which would allow NAC to minimize import barriers?

Question 15

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

Accepted Answer

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? 
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?

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 most supports abolishing the cotton quota over maintaining it?

Accepted Answer

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. 
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.

Question 18

In Cadmia, foreign-owned automobile manufacturing companies must be managed by a Cadmian national and most board members must be Cadmian citizens. This exemplify ________.

Accepted Answer

A)  FDI and ownership restrictions 
B)  administrative and bureaucratic procedures 
C)  Regulations and technical standards 
D)  Anti-dumping duty 
A)  FDI and ownership restrictions 
B)  administrative and bureaucratic procedures 
C)  Regulations and technical standards 
D)  Anti-dumping duty

Question 19

Dumping violates WTO rules because it amounts to unfair competition.

Accepted Answer

A) True 
 B)False

Question 20

Import substitution refers to substituting exports for imports.

Accepted Answer

A) True 
 B)False

The WTO was created in 1947 to reduce tariffs through continuous negotiations among member nations.

A government policy that impedes trade through means other than explicit tariffs is known as a(n) ________.

Which of the following is a method used by some manufacturers to avoid paying high tariffs?

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

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

Which of the following criteria is used to evaluate a country's Index of Economic Freedom?

Which of the following exemplifies local content requirements?

Typically, administrative and bureaucratic procedures ________.

Obtaining economic development incentives from host- or home-country governments increases the cost of trade and investment barriers.

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

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

Advocates of government intervention in international trade argue that blocking imports will ________.

Which of the following is NOT a country risk in international business?

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

In Cadmia, foreign-owned automobile manufacturing companies must be managed by a Cadmian national and most board members must be Cadmian citizens. This exemplify ________.

Dumping violates WTO rules because it amounts to unfair competition.

Import substitution refers to substituting exports for imports.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

Organizational Participants That Make International Business Happen

The Cultural Environment of International Business

Ethics and International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Countertrade

Foreign Direct Investment and Collaborative Ventures

Licensing, Franchising, and Other Contractual Strategies

Global Sourcing

Marketing in the Global Firm

Human Resource Management in the Global Firm

Financial Management and Accounting in the Global Firm

Filters

Exam 8: Government Intervention in International Business

The WTO was created in 1947 to reduce tariffs through continuous negotiations among member nations.

A government policy that impedes trade through means other than explicit tariffs is known as a(n) ________.

Which of the following is a method used by some manufacturers to avoid paying high tariffs?

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

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

Which of the following criteria is used to evaluate a country's Index of Economic Freedom?

Which of the following exemplifies local content requirements?

Typically, administrative and bureaucratic procedures ________.

Obtaining economic development incentives from host- or home-country governments increases the cost of trade and investment barriers.

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

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

Advocates of government intervention in international trade argue that blocking imports will ________.

Which of the following is NOT a country risk in international business?

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

In Cadmia, foreign-owned automobile manufacturing companies must be managed by a Cadmian national and most board members must be Cadmian citizens. This exemplify ________.

Dumping violates WTO rules because it amounts to unfair competition.

Import substitution refers to substituting exports for imports.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

Organizational Participants That Make International Business Happen

The Cultural Environment of International Business

Ethics and International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Countertrade

Foreign Direct Investment and Collaborative Ventures

Licensing, Franchising, and Other Contractual Strategies

Global Sourcing

Marketing in the Global Firm

Human Resource Management in the Global Firm

Financial Management and Accounting in the Global Firm

Filters