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A) Smoot-Hawley Act
B) Antidumping Act
C) Helms-Burton Act
D) D’Amato Act
62) Free trade as a government policy was first officially embraced by Great Britain in 1846,
when the British Parliament repealed a law that placed a high tariff on
A) all agricultural products.
B) wheat.
C) textiles.
D) corn.
63) The Smoot-Hawley Act was aimed at
A) diverting consumer demand toward foreign products.
B) promoting unrestricted free trade.
C) limiting global warming.
D) avoiding rising unemployment.
64) What was the result of the Smoot-Hawley Act?
A) Other countries reacted by raising their own tariff barriers.
B) Other countries reacted by lowering their trade barriers.
C) U.S. exports increased.
D) The United States began to get out of the Great Depression.
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65) Which of the following is a reason for the pressure for greater protectionism that occurred
during the 1980s and early 1990s?
A) The U.S. Congress erected an enormous wall of tariff barriers.
B) Japanese economic failure strained the world trading system.
C) The persistent trade surplus in the United States strained the world trading system.
D) Many countries found ways to get around GATT regulations.
66) Until 1995, GATT rules applied only to
A) services.
B) industrial goods.
C) textiles.
D) agricultural products.
67) According to the 1986 Uruguay Round, the _____ was to be created to implement the
GATT agreement.
A) World Trade Organization
B) International Monetary Fund
C) United Nations
D) World Bank
68) After the Uruguay Round of GATT negotiations extended global trading rules to cover
trade in services, the first two industries targeted for reform by the WTO were
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A) textiles and technology.
B) telecommunications and financial services.
C) automotive and aerospace.
D) agriculture and consulting services.
69) The WTO argues that removing tariff barriers and subsidies in the agricultural sector
could
A) protect domestic agriculture in developed nations.
B) lower the overall level of agricultural trade.
C) restrict global economic growth.
D) lower prices to consumers and make it fairer for developing nations.
70) The TRIPS regulations established at the 1995 Uruguay Round
A) established regulations on patents and copyrights.
B) set a new level of agriculture subsidies.
C) organized OECD countries to eliminate tariffs on textiles.
D) established new tariff levels on technology.
71) TRIPS regulations oblige WTO members to
A) grant and enforce patents lasting at least 100 years.
B) grant and enforce copyrights lasting 100 years.
C) comply with the rules within five years in the case of the rich countries.
D) comply with the rules within 10 years in the case of the poorest countries.
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72) _____ are the highest rate that can be charged, which is often, but not always, the rate
that is charged.
A) Ad valorem tariff rates
B) Tariff rents
C) Specific tariff rates
D) Bound tariff rates
73) The WTO’s GATS has taken the lead in
A) providing enhanced protection for intellectual property.
B) extending free trade agreements to services.
C) reducing agricultural subsidies.
D) enforcing GATT rules.
74) Tariff rates on agricultural products are generally
A) much lower than tariff rates on manufactured products or services.
B) much lower than import fees on electronics.
C) much higher than tariff rates on manufactured products or services.
D) much higher than import fees on electronics.
75) One issue at the forefront of the current agenda of the WTO is the
A) decrease in antidumping policies.
B) low level of protectionism in agriculture.
C) strong protection for intellectual property rights in many nations.
D) continued high tariff rates on goods and services in many nations.
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76) WTO rules allow countries to _____ foreign goods that are being sold cheaper than at
home, or below their cost of production, when domestic producers can show that they are being
harmed.
A) impose antidumping duties on
B) subsidize
C) lower the import quota on
D) place countervailing duties on
77) The _____ raised tariff barriers in the hope of protecting jobs and diverting consumer
demand away from foreign products.
A) Smoot-Hawley Act
B) Helms-Burton Act
C) General Agreement on Tariffs and Trade
D) Buy America Act
78) A key goal of the 1986 Uruguay Round was to
A) extend GATT to cover trade in commodities.
B) extend GATT rules to cover trade in services.
C) increase agricultural subsidies.
D) loosen the GATT’s monitoring and enforcement mechanisms.
79) A key issue in the “millennium round” of the WTO was to
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A) increase barriers to cross-border trade in agricultural products.
B) extend GATT to cover trade in commodities.
C) further reduce barriers to cross-border trade and investment.
D) extend GATT rules to cover trade in services.
80) Inadequate protections for intellectual property
A) increase the incentive for innovation.
B) led to the Smoot-Hawley Act.
C) reduce the incentive for innovation.
D) are one of the issues addressed by the local content requirement.
81) ________ in agriculture could jump-start economic growth among the world’s poorer
nations and alleviate global poverty.
A) Quota rents
B) Free trade
C) Strategic trade policy
D) Subsidies
82) Which of the following is a drawback of government intervention?
A) It may invite retaliation and trigger a trade war.
B) The policies may be captured by foreign investors and turned to their advantage.
C) Despite being well executed, the intervention is unlikely to work.
D) They usually establish new tariff levels on technology—to the detriment of all in the
industry.
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83) Which of the following is a trade barrier that affects a firm’s strategy?
A) Tariffs lower the cost of exporting.
B) Quotas may enhance a firm’s ability to serve a country from outside of that country.
C) To conform to local content regulations, a firm may have to locate more production
activities in a given market than it would otherwise.
D) The threat of antidumping actions promotes the firm’s ability to use aggressive
pricing to gain market share in a country.
84) Many firms, of all national origins, increasingly depend on _____ for their competitive
advantage.
A) globally dispersed production systems
B) specific tariffs
C) infant industries
D) subsidies
85) Identify the true statement about trade barriers.
A) They lower the costs of exporting products to a country.
B) They may put a firm at a competitive advantage to indigenous competitors.
C) They may help a firm to serve a country from locations outside of that country.
D) To conform to local content regulations, a firm may have to locate more production
activities in a given market than it would otherwise.
86) Many firms, of all national origins, increasingly depend on _____ for their competitive
advantage.
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A) globally dispersed production systems
B) specific tariffs
C) infant industries
D) subsidies
87) Business firms that lobby their governments to engage in protectionism may miss the
opportunity to build _____ by constructing a globally dispersed production system.
A) an absolute advantage
B) a competitive advantage
C) a strategic trade advantage
D) a comparative advantage
88) Tariffs are generally pro-consumer and anti-producer.
⊚ true
⊚ false
89) Export tariffs are far less common than import tariffs.
⊚ true
⊚ false
90) Under a tariff rate quota, a higher tariff rate is applied to imports within the quota than
those over the quota.
⊚ true
⊚ false
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91) Unlike other trade policies, local content regulations tend to benefit consumers and not
producers.
⊚ true
⊚ false
92) Local content regulations provide protection for a domestic producer of parts by limiting
foreign competition.
⊚ true
⊚ false
93) Antidumping policies are designed to punish foreign firms that are engaged in dumping.
⊚ true
⊚ false
94) Protecting industries deemed important for national security, consumer protection, and
retaliating against unfair foreign competition are economic arguments for government
intervention.
⊚ true
⊚ false
95) The infant industry argument is the latest argument for government intervention in trade.
⊚ true
⊚ false
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96) GATT has not recognized the infant industry argument as a legitimate reason for
protectionism.
⊚ true
⊚ false
97) Governments do not always act in the national interest when they intervene in the
economy; politically important interest groups often influence them.
⊚ true
⊚ false
98) Trade wars benefit countries with interventionist governments.
⊚ true
⊚ false
99) During the 1980s and early 1990s, the world trading system erected by the GATT gained
momentum as protectionist demands generally decreased across the world.
⊚ true
⊚ false
100) The World Trade Organization was created as part of the Uruguay Round.
⊚ true
⊚ false
101) The WTO does not have the power to impose trade sanctions.
⊚ true
⊚ false
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102) Antidumping actions are concentrated in certain sectors of the economy such as basic
metal industries, chemicals, plastics, and machinery and electrical equipment.
⊚ true
⊚ false
103) The TRIPS regulations oblige WTO members to grant and enforce patents lasting at least
20 years and copyrights lasting 50 years.
⊚ true
⊚ false
104) One of the successful outcomes of the Doha Round negotiations has been that many
nations have proceeded with bilateral free trade agreements.
⊚ true
⊚ false
105) Tariffs on industrial goods remain higher than tariffs on services.
⊚ true
⊚ false
106) Tariff barriers lower the costs of exporting products to a country.
⊚ true
⊚ false
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107) To conform to local content regulations, a firm may have to locate more production
activities in a given market than it would otherwise.
⊚ true
⊚ false
Answer Key
Test name: chapter 7
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