51) Which of the following falls on the plus side of the U.S. balance of payments?
A) payments to the United States for insurance
B) the costs of goods imported
C) spending by American tourists overseas
D) new overseas investments
E) the cost of foreign military
52) Which of the following falls on the minus side of the U.S. balance of payments?
A) payments to the United States for insurance
B) payments of dividends and interest on investments abroad
C) return on capital invested abroad
D) new foreign investments in the United States
E) spending by American tourists overseas
53) What occurs in the balance of payments account when international payments are greater
than receipts?
A) a tariff
B) inflation
C) recession
D) a credit
E) a deficit
54) The ________ account of the balance-of-payments statement is used to record all
merchandise exports, imports, and services plus unilateral transfers of funds.
A) current
B) capital
C) credit
D) receivables
E) reserves
55) Which account in the balance-of-payments statement is a record of direct investment,
portfolio investment, and short-term movement of cash and technology to and from countries?
A) current account
B) capital account
C) credit account
D) receivables account
E) reserves account
56) The ________ of the balance-of-payments statement is used to record increases or decreases
in foreign exchange and increases or decreases in liabilities to foreign central banks.
A) current account
B) capital account
C) credit account
D) receivables account
E) reserves account
57) What argument regarding the need for protectionism is recognized by economists as valid?
A) need to keep money at home
B) encouragement of capital accumulation
C) industrialization of a low-wage nation
D) conservation of natural resources
E) maintenance of employment and reduction of unemployment
58) Rishi, a protectionist, has seen several small businesses go bankrupt because they were
unable to compete with the cheaper prices of goods provided by foreign companies. The cell-
phone manufacturing industry has just started in the United Kingdom, and Rishi’s company is
one of the first to try its hand at cell-phone manufacturing. What argument is most likely to be
used by Rishi to persuade his government to restrict the import of foreign cell phones from
foreign companies?
A) protection of an infant industry
B) the need to keep money at home
C) conservation of natural resources
D) national defense
E) maintenance of standard of living
59) What is a tariff?
A) It is a tax levied by a government on goods being exported out of the country.
B) It is a tax paid by individual states to the federal government for goods transferred across state
lines.
C) It is a tax imposed by a government on goods that are imported into the country.
D) It is a limit on the amount of goods that can be imported into the country.
E) It is a limit on the amount of goods that can be exported out of the country.
60) In general, tariffs weaken
A) inflationary pressures.
B) special interests’ privileges.
C) balance-of-payments positions.
D) government control in economic matters.
E) the number of reciprocal tariffs by other countries.
61) Which statement is true of tariffs?
A) They strengthen balance-of-payments positions.
B) They strengthen supply-and-demand patterns.
C) They increase special interests’ privileges.
D) They strengthen international relations.
E) They promote competition.
62) The tariff on certain goods is based on the percentage of the determined value of the item
being imported. What type of tariff is this?
A) compound duty
B) quota duty
C) specific duty
D) reciprocal duty
E) ad valorem duty
63) A specific unit or dollar limit applied to a particular type of good is called a(n)
A) trade license.
B) quota.
C) ad valorem duty.
D) predatory price.
E) exchange rate.
64) A boycott on importing produce from Mexico would be an example of a
A) compound duty.
B) revenue tariff.
C) nontariff barrier.
D) specific duty.
E) quota embargo.
65) If a country refuses to sell some products to another country, it is utilizing which barrier to
trade?
A) import credit discriminations
B) export subsidies
C) voluntary export restraints
D) embargoes
E) packaging, labeling, or marking standards
66) If a country decided to refuse to allow an importer to exchange its national currency for the
sellers’ currency, it would be an example of a(n) ________ currency.
A) blocked
B) spot
C) embargo
D) taxed
E) quota
67) Exporting countries primarily agree to voluntary export restraints (VERs) to
A) minimize exposure in the importing country.
B) reduce market competitiveness.
C) avoid stiffer quotas being set by the importing country.
D) take over local industries of the importing country.
E) avoid criminal prosecution.
68) A voluntary export restraint is an agreement signed willingly between the importing country
and the exporting country for a restriction on the
A) overall tax.
B) number of businesses eligible for imports.
C) volume of exports.
D) government’s portion of the paid tariff.
E) balance-of-payments statements.
69) Voluntary export restraints are commonly used in what industry?
A) finance
B) furniture
C) agriculture
D) media
E) education
70) The marketing manager for Glorious Products wants to export the company’s line of fashion
boots to an EU country. However, she discovers that there is a complete restriction on the import
of any form of leather into that country. This is an example of
A) an orderly market agreement.
B) a quota.
C) a monetary barrier.
D) a voluntary export restraint.
E) a boycott.
71) One country refuses to sell goods to its neighboring country based on the belief that the
neighboring country harbors radicals and terrorists. In this case, the refusal is referred to as a(n)
A) antidumping penalty.
B) embargo.
C) monetary barrier.
D) orderly market agreement.
E) voluntary export restraint.
72) In the context of monetary barriers, blockage is ideally accomplished when
A) a country refuses to allow an importer to exchange its national currency for the country’s
currency.
B) two countries enter into a voluntary agreement to determine the value of their currencies.
C) a country applies a specific unit or dollar limit to a particular type of good.
D) money dealers limit the rate at which foreign currencies are exchanged.
E) the government of a country imposes a mandatory tax on goods entering at its borders.
73) In order to effectively secure foreign exchange, what is most likely to be used by countries
experiencing severe shortages of foreign exchange?
A) privatization
B) government approval
C) spot pricing
D) voluntary export restriction
E) monopoly
74) What trade policy tool makes it mandatory for its importers who want to buy a foreign good
to apply for an exchange permit?
A) tariff
B) import quota
C) blocked currency
D) government approval
E) export levy
75) An exchange permit can stipulate the
A) quantity of goods that can be exchanged for a particular sum of foreign currency.
B) number of parties that can be involved in an exchange transaction.
C) amount to be exchanged that must be deposited in a local bank for a set period.
D) quality standards of the goods involved in an exchange.
E) number of times one party can avail exchange permits.
76) Active Bicycle Company has just received notice that a shipment of 300 bicycles has been
rejected by the customs administration of the recipient country because the bikes did not include
a metal plate surrounding the chain. What category of nontariff barriers primarily uses such
quality issues as a trade barrier?
A) quotas
B) licenses
C) embargoes
D) boycotts
E) standards
77) The United States and other countries require some products (automobiles in particular) to
contain a percentage of “local content” to gain admission to their markets. This is an example of
the stringent usage of ________ to restrict trade.
A) exchange permits
B) embargoes
C) blocked currencies
D) standards
E) antidumping penalties
78) ________ pricing is the practice whereby a foreign producer intentionally sells its products
in the United States for less than the cost of production to undermine the competition and take
control of the market.
A) Basing point
B) Spot
C) Defensive
D) Counterpoint
E) Predatory
79) ________ is/are a nontariff barrier that was specifically designed to prevent foreign
producers from using predatory pricing to take control of U.S. markets.
A) Quotas
B) Embargoes
C) Blocked currency
D) Antidumping laws
E) Exchange permits
80) Which trading partner of the United States became its number one “trade problem” at the
beginning of the 21st century?
A) United Kingdom
B) Japan
C) Germany
D) Canada
E) China