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5-1
Module 05 Political Forces That Affect Global Trade Answer Key
True / False Questions
1.
Only in communist countries do governments own the factors of production.
2.
The only reason firms are nationalized is to spread a socialist-communist ideology.
5-2
3.
When the U.S. military contracts out security details in war zones, it is engaged in
privatization.
4.
When people are kidnapped for ransom, the right response is to pay the ransom, get the
hostages released, and then retaliate.
5.
Kidnap, ransom, and extortion are techniques often used by terrorists against which no
insurance is available.
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6.
Businesses favor unstable governments because they present more profit opportunities.
7.
Unpredictable government actions create many business opportunities.
8.
The practice of country risk assessment is an exercise in xenophobic and ethnocentric
thinking.
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9.
Country risks are often political in nature.
10.
The length of the investment in a foreign country has no impact on the risk assessment for
that investment. What matters are the economic and political situations in the country.
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11.
The national defense argument for trade restrictions is based on the development level of
the country.
12.
U.S. ocean shipping companies are benefiting from U.S. government subsidies.
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13.
Sanctions are a trade restriction that is effective in forcing change.
14.
To protect an infant industry, trade restrictions might be effective.
15.
A comparison based on hourly wages is a reasonable guide to a need to protect domestic
jobs.
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16.
Fair competition is a strong rationale for trade barriers.
17.
Retaliatory trade restrictions are not made for dumping because price competition is
protected by the WTO.
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18.
Concession dumping is a type of trade discrimination.
19.
Subsidies that confer a benefit may well evoke countervailing duties.
20.
Voluntary export restraints are imposed by the importing nation to avoid violating WTO
rules.
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21.
Nontariff barriers that are not quantitative can be divided into two groups, those
established by the government participation in trade and those that are administrative.
22.
Unlike the topography, the political climate of a country has relatively little influence on its
exports.
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23.
One example of nationalization of private companies is with the nationalization of French-
owned firms in Europe after WWII.
24.
When government-owned companies compete with private companies, the private
companies have the advantage.
25.
The British prime minister David Cameron led the privatization movement.
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26.
One historic function of government has been the protection of the economic activities
within its borders.
27.
Terrorists avoid kidnapping because the repercussions can be harmful to their movement.
28.
Paying ransom makes sense because a life is saved and the payments can be traced.
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29.
To hedge the terrorism risk, there are insurance, antiterrorist schools, and even companies
to handle negotiations.
30.
Policy continuity and government stability are more important to a business than the type
of political system.
Multiple Choice Questions
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31.
When governments nationalize a firm, they don't seek to
32.
With privatization, all of these may occur, except
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33.
Nationalization and privatization are
34.
Government protection of economic activities is
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35.
Government stability refers to all but one of the following of a government:
36.
A government protects its citizens when they are abroad in the following way:
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37.
The trend for firms in regard to country risk assessment (CRA) is to
38.
What is the role of the home country in risk assessment?
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39.
Arguments for trade restrictions include all but
40.
Dumping is
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41.
The U.S. has been concerned about dumping and
42.
Social dumping occurs when an exporting country
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43.
An example of environmental dumping is not found in the
44.
Home country subsidies can be retaliatory because
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45.
Dumping includes
46.
Subsidies are problematic because they
