87. The United States wants to limit the amount of dollars that another country can obtain. The best way to accomplish
this is to
a. impose an import duty.
b. establish a foreign-exchange control.
c. declare an embargo.
d. set an import quota.
e. impose an export duty.
88. A currency devaluation increases the cost of foreign goods and the cost of domestic goods to foreign firms.
a. devalues
b. increases
c. balances
d. decreases
e. restricts
89. A reduction of the value of a nation‘s currency relative to the currencies of other countries is called
a. a currency devaluation.
b. a reduced exchange rate.
c. a deficit money market.
d. a compressed economy.
e. none of the above.
90. When a country’s currency is devalued, this
foreign firms.
a. increases; decreases
b. reduces; reduces
c. decreases; increases
d. neutralizes; raises
e. neutralizes; decreases
the cost of foreign goods and the cost of domestic goods to
91. Suppose a set of English bone china costing £1,000 costs $3,000 in the United States. After devaluation, the set of
china costs $1,000. This change
a. shows that to foreigner purchasers, the price of the china is the same before and after the devaluation.
b. makes the china less attractive to foreigner purchasers.
c. makes the china more attractive to foreign purchasers.
d. is irrelevant to foreign purchasers.
e. proves that foreign purchasers would prefer devaluation of the English pound so that it would be worth $2.
That way, they could get even more for their dollars.
92. A newly formed country in the Caribbean has no high tariffs, yet other countries find it difficult to trade with the
new country because of its requirements for labeling, product testing, and certifications. These restrictions can best
be classified as
a. embargos.
b. currency devaluations.
c. import quotas.
d. quality import restrictions.
e. bureaucratic red tape.
93. Because it has not been around long enough to establish itself, the Russian automobile industry could be classified
as a(n)
a. hopeless industry.
b. soft industry.
c. infant industry.
d. protected industry.
e. toddler industry.
94. During a stormy meeting of computer software firms, several company presidents said that without tariff cushions,
many of them would go broke. They represent a new industry that needs protection until their firms grow to a size
that will allow them to be competitive. Their comments are based on the
a. infant-industry argument.
b. goal of equalizing the nation‘s balance of payments.
c. national self-sufficiency argument.
d. goal of protecting the health of citizens.
e. goals of retaliating for another nation’s trade restrictions.
95. Arguments for imposing trade restrictions include
a. the misallocation of international resources.
b. equalizing a nation’s balance of payments.
c. higher prices for consumers.
d. restriction of consumers’ choices.
e. none of the above.
96. In addition to political considerations, all of the following are reasons for trade restrictions except
a. equalizing a nation’s balance of payments.
b. protecting new and weak industries.
c. protecting the health of citizens.
d. protecting national security.
e. all of the above are reasons for trade restrictions.
97. Arguments for the government imposing restrictions on foreign trade include
a. the loss of jobs in foreign countries.
b. advancing technology will harm the country’s economy.
c. restriction of consumers‘ choices.
d. protection of the health of its citizens.
e. helping the foreign country become more competitive.
98. The United States does not sell fighter jets, such as F–16s, to Libya. The rationale for this restriction is most likely
to
a. protect national security.
b. protect domestic jobs.
c. protect the health of its citizens.
d. retaliate for Libya‘s trade restrictions.
e. protect domestic manufacturers.
99. If the Korean government charged tariffs on Japanese automobiles and in turn the Japanese government put tariffs
on Korean automobiles, Japan’s major rationale for imposing these tariffs would be to
a. protect national security.
b. protect domestic jobs.
c. retaliate for Korea’s tariffs.
d. lower prices for consumers.
e. protect an infant industry.
100. All of the following are reasons against having trade restrictions except
a. the loss of jobs.
b. the misallocation of international resources.
c. the restriction of consumers’ choices.
d. higher prices for consumers.
e. the protection of the health of citizens.
101. Howard believes that there should be no trade restrictions for any reason. What effect would Howard say that
trade restrictions have on prices?
a. He would argue that by encouraging competition with trade restrictions, prices are likely to decrease.
b. He would argue that restrictions would cause greater competition and therefore lead to higher prices.
c. He would say that trade restrictions have no impact on prices, but they do restrict consumers’ choices.
d. He would say that restrictions reduce competition and therefore cause an increase in prices.
e. He would argue that trade restrictions increase prices because they break up domestic monopolies.
102. Alberto complained that it took some time to locate a distributor of an imported light bulb that he had to replace. He
was further annoyed that he had to pay an artificially high price. When asked for his opinion, Alberto would
probably argue
a. against trade restrictions.
b. for the trade deficit.
c. for exports.
d. for tourism.
e. against international free trade associations.
103. Despite trade restrictions, international business is
a. moving slowly.
b. growing.
c. slowing down.
d. struggling for survival.
e. decreasing.
104. Who are the top two export partners of the United States?
a. Japan and China
b. Canada and the United Kingdom
c. Mexico and Canada
d. Mexico and China
e. The United Kingdom and Japan
105. Which is the largest emerging Asian market?
a. Japan
b. Indonesia
c. Korea
d. Malaysia
e. China
106. Globalization represents a huge opportunity for
a. all countries—rich or poor.
b. the United States.
c. Japan.
d. China.
e. Asia.
107. U.S. exports to developing and newly industrialized countries
a. have remained stable.
b. have declined in recent years.
c. are on the rise.
d. are prohibited by the U.S. government.
e. were scheduled to begin in 2009.
108. In 2008, U.S. exports as a percentage of GDP
a. exceeded 25 percent.
b. equated to approximately 5 percent.
c. reached the highest levels since the early 1900s.
d. were at an all-time low.
e. reached the highest levels in history.
109. Jacque owns a medium-sized business in the United States. Approximately how likely is it that her company
exports?
a. It is extremely likely because almost all U.S. companies export their products and services to foreign
countries.
b. It is quite likely because about 75 percent of all companies in the United States are now exporters due to the
growth of the Internet.
c. Roughly half of U.S. companies export products and services, so there is about a 50 percent chance that
Jacque’s company exports.
d. About one-third of the companies in the United States export to foreign countries, therefore Jacque’s
company has about a 33 percent chance of being an exporter.
e. Despite use of the Internet, exporting is still mostly done by large corporations, so Jacque‘s company is
unlikely to export.
110. Suppose the country of Gaditia wanted to join GATT and thus be treated the same as other GATT members. What
GATT principle is Gaditia interested in receiving?
a. Free trade
b. Importation/exportation
c. The Tokyo Round
d. Foreign-exchange control
e. Most-favored-nation status
111. What are the Kennedy Round, the Tokyo Round, the Uruguay Round, and the Doha Round?
a. Amendments to the General Agreement on Tariffs and Trade
b. Negotiations sponsored by GATT to reduce trade restrictions
c. A series of disagreements among the members of GATT
d. World Trade Organization meetings to encourage trade
e. Political negotiations among many of the world‘s nations
112. When was GATT first established?
a. At the turn of the twentieth century
b. Following World War I
c. At the end of World War II
d. During the Great Depression
e. In the early 1960s
113. The gave President Kennedy the authority to negotiate reciprocal trade agreements that could reduce U.S.
tariffs by as much as 50 percent.
a. Foreign Corrupt Practices Act
b. Trade Expansion Act
c. Securities Exchange Act
d. Federal Trade Commission Act
e. Robinson-Patman Act
114. An international organization formed at the end of World War II by the United States and twenty-two other
countries whose goal was to reduce or eliminate tariffs and other barriers to world trade is called the
a. Trade Expansion Act.
b. Kennedy Round.
c. GATT.
d. Tokyo Round.
e. Common Market.
115. If a small country wants to buy aircraft from the United States and the United States wants to export its aircraft,
the United States may work through
easily purchase the aircraft.
a. OPEC
b. IMF
c. WTO
d. EEC
e. LAFTA
in removing preset trade barriers so that the small country can more
116. The World Trade Organization was created by the
a. Kennedy Round.
b. United Nations.
c. League of Nations.
d. Tokyo Round.
e. Uruguay Round.
117. What types of products did GATT focus on during the Kennedy Round?
a. Business services and textiles
b. Agricultural products and textiles
c. Industrial products and business services
d. Industrial and agricultural products
e. Textiles and intellectual property rights
118. The United States is a member of the , which is the successor to GATT.
a. World Trade Organization
b. North American Free Trade Agreement
c. United Nations
d. Economic Community
e. Kennedy Round
119. If the United States and Japan can’t settle their trade disputes on their own, they probably should settle them
through the
a. Tokyo Round.
b. Kennedy Round.
c. Uruguay Round.
d. WTO.
e. United Nations.
120. The Tokyo Round
a. was completed in 1947.
b. resulted in 50 percent tariff cuts.
c. was implemented over a fifteen-year period.
d. increased nontariff barriers.
e. eased import quotas and unrealistic quality standards for imports.
121. The primary objective of the World Trade Organization is to
a. help underdeveloped nations increase their standard of living.
b. achieve world peace.
c. remove barriers to trade worldwide.
d. enforce worldwide political and trade regulations.
e. promote the invention of new technologies.
122. Suppose Brazil, Argentina, Columbia, Peru, and Chile decide to form the South American Union to increase trade
among these nations. This would be an example of a(n)
a. world trade organization.
b. peace agreement.
c. economic community.
d. free trade agreement.
e. global marketplace.
123. An organization of nations formed to promote the free movement of resources and products among its members
and to create common economic policies is called a(n)
a. economic community.
b. free trade association.
c. common market.
d. international alliance.
e. none of the above.
124. CAFTA, NAFTA, OECD, and OPEC are all examples of
a. political organizations.
b. peace treaties.
c. international economic communities.
d. World Trade Organization members.
e. democratic organizations.
125. One example of an economic community is the organization started by France, Germany, Belgium, Italy, the
Netherlands, and Luxembourg. This organization is known as the
a. General Agreement on Tariffs and Trade.
b. European Economic Area.
c. European Free Trade Agreement.
d. European Union.
e. Euro Economic Alliance.
126. Who are the members of NAFTA?
a. The United States, Canada, and Mexico
b. Greenland, Iceland, and Canada
c. Guatemala, Honduras, and Mexico
d. The United States, Mexico, and Japan
e. The United States, Canada, and the United Kingdom