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International Business, 12e (Hill)
1) Tariffs are generally pro-consumer and anti-producer.
2) Export tariffs are far less common than import tariffs.
3) Under a tariff rate quota, a higher tariff rate is applied to imports within the quota than those
over the quota.
4) Unlike other trade policies, local content regulations tend to benefit consumers and not
producers.
5) Local content regulations provide protection for a domestic producer of parts by limiting
foreign competition.
6) Antidumping policies are designed to punish foreign firms that are engaged in dumping.
7) Antidumping policies vary drastically from country to country.
8) Protecting industries deemed important for national security and retaliating against unfair
foreign competition are economic arguments for government intervention.
9) The infant industry argument is the latest argument for government intervention in trade.
10) GATT has not recognized the infant industry argument as a legitimate reason for
protectionism.
11) Governments do not always act in the national interest when they intervene in the economy;
politically important interest groups often influence them.
12) Trade wars benefit countries with interventionist governments.
13) During the 1980s and early 1990s, the world trading system erected by the GATT gained
momentum as protectionist demands generally decreased across the world.
14) The World Trade Organization was created as part of the Uruguay Round.
15) The WTO does not have the power to impose trade sanctions.
16) Antidumping actions are concentrated in certain sectors of the economy such as basic metal
industries, chemicals, plastics, and machinery and electrical equipment.
17) The TRIPS regulations oblige WTO members to grant and enforce patents lasting at least 20
18) One of the successful outcomes of the Doha Round negotiations has been that many nations
have proceeded with bilateral free trade agreements.
19) Tariffs on industrial goods remain higher than tariffs on services.
20) Tariff barriers lower the costs of exporting products to a country.
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written consent of McGraw-Hill Education.
21) To conform to local content regulations, a firm may have to locate more production activities
in a given market than it would otherwise.
22) ________ are levied as a proportion of the value of the imported good.
A) Specific tariffs
B) Import quotas
C) Ad valorem tariffs
D) Tariff rate quotas
23) A ________ helps domestic producers to compete against foreign imports.
A) An ad valorem tariff
B) A specific tariff
C) An import quota
D) A subsidy
24) The extra profit that producers make when supply is artificially limited by an import quota is
referred to as a
A) quota rent.
B) specific tariff.
C) tariff rate quota.
D) subsidy.
25) The ________ specifies that government agencies must give preference to American products
when putting contracts for equipment out to bid unless the foreign products have a significant price
advantage.
A) General Agreement on Tariffs and Trade
B) Buy America Act
C) American Reinvestment Act
D) Smoot-Hawley Act
26) What term refers to a situation in which a government does not attempt to restrict what its
citizens can buy or sell to another country?
A) tariffs
B) import quotas
C) free trade
D) subsidies
