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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) Only in communist countries do governments own the factors of production.
⊚ true
⊚ false
2) When the U.S. military contracts out security details in war zones, it is engaged in
privatization.
⊚ true
⊚ false
3) A government nationalizes a firm when it shifts the ownership from public to private.
⊚ true
⊚ false
4) Recently, many governments, including the U.S. government, have contracted out certain
services to private companies.
⊚ true
⊚ false
5) The British prime minister, David Cameron, led the privatization movement.
⊚ true
⊚ false
6) Unfair international competition for a company can be minimized through the enaction of
national laws.
⊚ true
⊚ false
7) Terrorists avoid kidnapping because the repercussions can be harmful to their movement.
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⊚ true
⊚ false
8) Policy continuity and government stability are more important to a business than the type
of political system.
⊚ true
⊚ false
9) When people are kidnapped for ransom, all governments agree that the right response is
to pay the ransom, get the hostages released, and then retaliate.
⊚ true
⊚ false
10) Piracy is a form of cybercrime.
⊚ true
⊚ false
11) Unpredictable government actions create many business opportunities.
⊚ true
⊚ false
12) Country risks are often political in nature and include wars and coups.
⊚ true
⊚ false
13) The national defense argument for trade restrictions is based on the development level of
the country.
⊚ true
⊚ false
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14) U.S. ocean shipping companies are benefiting from U.S. government subsidies.
⊚ true
⊚ false
15) Sanctions are a trade restriction that is effective in forcing change.
⊚ true
⊚ false
16) Fair competition is a strong rationale for trade barriers.
⊚ true
⊚ false
17) Retaliatory trade restrictions are not made for dumping because price competition is
protected by the WTO.
⊚ true
⊚ false
18) Subsidies are implemented by the government to a domestic firm as a way to encourage
exports or protect the firm from imports.
⊚ true
⊚ false
19) Voluntary export restraints are imposed by the importing nation to avoid violating WTO
rules.
⊚ true
⊚ false
20) A quota is an example of a qualitative nontariff barrier.
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⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
21) Democratic nations that follow free-trade capitalism sometimes nationalize businesses,
such as
A) the U.S. bailout during the 2009 financial crisis, when the U.S. government took
control of several large U.S. corporations.
B) Canada’s purchase of Hershey.
C) The French purchase of Totale.
D) the move from New York to Russia of a major sports team owned by a Russian.
22) Examples of expropriation without compensation involve the following governments:
A) the Unite States confiscated Iranian property in the United States and Cuba
confiscated property during the Cuban revolution of the 1950s, and Zimbabwe confiscated land
owned by white Zimbabwean citizens.
B) China with Hong Kong and Japan with the Kuril Islands.
C) the United Kingdom with the Falklands.
D) Canada with northern Maine.
23) This country engaged in many privatizations in the aftermath of the 2008‒2009 financial
crisis.
A) Greece
B) Germany
C) the United Kingdom
D) Portugal
24) When governments nationalize a firm, they don’t seek to
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A) extract more money from the firm.
B) increase the firm’s profitability.
C) preserve jobs.
D) sell the firm to foreign investors.
25) When a government transfers the assets of a company from the public sector to the
private sector, it is an example of
A) privatization.
B) isolationism.
C) expansionism.
D) nationalization.
26) Nationalization and privatization are implemented by
A) big business.
B) the government.
C) international affiliates.
D) consumers.
27) The governments of some countries may decide they want to extract more money from
businesses. What measure might they take to achieve this?
A) They would nationalize businesses.
B) They would enact isolationism.
C) They would privatize businesses.
D) They would enact expansionism.
28) Governments nationalize private firms in order to
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A) extract money from the firms when the firms are suspected of concealing profits.
B) decrease exports to balance the balance of payments.
C) learn about business development experientially.
D) assist firms in making greater profits to boost the economy.
29) One motivation for government privatization is to
A) have the businesses run more efficiently.
B) punish corporate conglomerates.
C) explore alternative revenues.
D) exert increased government control.
30) Government stability has to do with
A) policies that are permanent or change gradually.
B) democratic processes and free elections.
C) a commitment to military strength.
D) leadership that listens to citizens and responds to their needs.
31) Governments provide stability by
A) protecting business from unfair competition and from attacks and theft.
B) pursuing open market values.
C) fostering competition and enforcing nontariff barriers.
D) supporting imports.
32) The practice of terrorism contributes to
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A) an unstable environment that is detrimental to business.
B) an increase in business opportunities.
C) the warning signals on global values clashes.
D) religious and political stability.
33) Government protection of economic activities is
A) an historical function of government.
B) a recent responsibility of government.
C) a socialist characteristic.
D) stronger in democracies.
34) A government that holds to predictable fiscal, monetary, and political policies is
considered
A) global.
B) unstable.
C) domestic.
D) stable.
35) A government protects its citizens when they are abroad in what way?
A) A powerful country can send in the marines to protect citizens.
B) A government can assert the rights of its citizens and that its laws follow its citizens,
no matter where they are (extraterritoriality).
C) Politicians can influence how a foreign country’s rules are applied to its own
nationals.
D) Government embassies can provide information and emergency assistance, monitor
and where appropriate, make protests.
36) Government stability is a characteristic of a government that
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A) makes sudden radical policy changes.
B) readily shifts alliances to maintain power.
C) maintains predictability in fiscal, monetary, and political policies.
D) maintains authoritarian rule over an extended period of time.
37) Keenan worked in his company’s international office in Indonesia for many years. During
his time there, political unrest caused many U.S. citizens, like Keenan, to have questions. What
do governments put in place to represent their citizens in situations like this?
A) legislatures
B) justices
C) embassies
D) acquisitions
38) A government that makes radical changes to existing policies is demonstrating
A) democracy.
B) instability.
C) communism.
D) stability.
39) ”Express kidnapping” targets
A) expatriates.
B) legislators.
C) home country nationals.
D) domestic affiliates.
40) Among the cybercrimes that most often target businesses are
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A) hacking and data espionage.
B) check kiting.
C) prospecting and phishing.
D) accessing unauthorized accounts.
41) The sectors most frequently attacked by cybercriminals include
A) defense, energy and utilities, and finance.
B) retail.
C) oil and gas.
D) the auto industry.
42) The cybercrime context is described as
A) fluid, so the learning process is ongoing, because cyber criminals are bright and
quick.
B) relatively static, so a firewall can be effective for a good six months in this
environment.
C) rapidly evolving, so that cybercrime will soon be eliminated.
D) increasingly competitive, with switchovers between security personnel and
criminals.
43) The cost of cybercrime to the perpetrator is
A) exceedingly high, so as to be a deterrent.
B) almost nonexistent, because few criminals are apprehended.
C) difficult to determine, because security issues prohibit publication of trials.
D) negligible, because few laws have been updated to include cybercrime.
44) Businesses that conduct country risk assessment do so
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A) as part of their legal profile.
B) to protect their assets, including people and property.
C) to satisfy their top management teams.
D) because, much as with executive salaries, there is a herd mentality.
45) The trend for firms in regard to country risk assessment (CRA) is to
A) avoid it as an added cost in competitive markets.
B) concentrate much more on CRA in making decisions about foreign activities.
C) use CRA in obviously dangerous locations, but only in those situations, to control
costs.
D) hire consultants to reduce CRA insurance costs.
46) What is the role of the home country in risk assessment?
A) It has no role. What matters is the country in which the business is conducted.
B) It is a significant consideration.
C) It is used initially, but then more micro issues become the focus of CRA.
D) Country risk does not involve political considerations at all.
47) Country risk assessment is a measure of the
A) threat of nationalization.
B) threat of losing an investment or not being paid.
C) kidnapping rate.
D) rate of unfunded exposures.
48) A corporation would implement a country risk assessment in order to
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A) estimate the risk to business employees, property, and investment.
B) predict risk of marketing errors, given cultural variables.
C) predict responses of citizens to new product lines.
D) analyze the impact of diversity in a country’s workforce.
49) A business would obtain KRE insurance to cover losses associated with
A) kidnapping situations associated with a foreign involvement.
B) unpredictable international real estate investments.
C) manufacturing operations that do not meet host country standards.
D) higher tariffs when exporting to developing countries.
50) One reason a government chooses to restrict trade would be to
A) to eliminate domestic jobs.
B) foster relations with other nations.
C) to indicate an isolationist stance.
D) protect domestic infant industries.
51) Dumping is defined as
A) selling a product abroad for less than its production cost or cost in the home market.
B) selling a product abroad tax-free and with an extended warrantee.
C) exporting a product to a third country without correct documentation.
D) selling a product at its domestic market value.
52) How has the United States responded to the activity of dumping?
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A) It only enacted antidumping measures in 2006.
B) It enacted antidumping measures for its exporting companies as early as 1856.
C) It became the first country to prohibit dumping into its own market in 1916.
D) It welcomes dumping activity to boost tariffs.
53) Social dumping occurs when an exporting country
A) imposes an export tax on domestic businesses that export, to compensate for the
opportunity cost to the domestic market.
B) creates unfair competition based on lower costs because the exporting country
provides little social support system to the worker.
C) targets markets that consist of specific vulnerable groups in the importing country.
D) exports goods that are not sellable in the domestic environment due to hazards and
safety issues.
54) A country that can sell its products at a lower cost because it has lower standards for
emissions from manufacturing facilities is making use of
A) predatory dumping.
B) social dumping.
C) subsidy dumping.
D) environmental dumping.
55) Which type of subsidies are currently the focus of the World Trade Organization?
A) agricultural
B) health care
C) industrial
D) educational
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56) Henson Electronics Corp. decided to lower its export price in order to force the domestic
producers in the importing nationsout of business. Once these competitors are gone, Henson
Electronics plans to raise its prices. What is this an example of?
A) social dumping
B) subsidies
C) predatory dumping
D) greenfield investments
57) Countervailing duties are put in place to
A) balance trade agreements.
B) offset the effects of a subsidy.
C) encourage dumping efforts.
D) avoid import tariffs.
58) The primary reason tariffs are put in place is to
A) raise government revenue at the cost of importers.
B) raise the price of imports, to protect domestic goods.
C) punish countries over political issues.
D) encourage foreign consumption.
59) The Smoot-Hawley Tariff Act was the result of lobbying efforts by which group?
A) farmers
B) manufacturers
C) service providers
D) military groups
60) At Kaiser Manufacturing, the company pays import duties that are a stated percentage of
the invoice value of the product. Which type of tariff does this company pay?
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A) countervailing
B) specific
C) compound
D) ad valorem
61) Peterson Soft Drink Corp. imports fruit flavors for use in its products. The company pays
$0.86 per pound on every shipment. Which type of tariff does the company pay?
A) ad valorem
B) specific
C) compound
D) countervailing
62) Tariffs on some products no longer serve their original purpose of protecting domestic
producers but they are still levied by the government. What are these types of tariffs called?
A) nuisance
B) nontariff
C) countervailing
D) variable
63) A variable levy exists when a country
A) creates a tariff that requires a percentage of the entire invoice value be paid on
imports.
B) allows one importer to pay a lower tariff than another importer for the same type of
goods or services.
C) removes expected tariffs based on supply and demand for a good or service.
D) guarantees that the market price of an import will be the same as that of domestically
produced goods.
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64) Quotas are a quantitative barrier that set
A) limits, established by the importer.
B) goals, established by the exporter.
C) specific quantities of imports or exports, based on price.
D) expectations on domestic and foreign sales.
65) Some producers of goods use transshipping as a way to
A) reduce shipping costs.
B) avoid import administration.
C) evade allocated quotas.
D) evade local manufacture requirements.
66) The U.S. government assigns specific amounts of sugar imports that can come from 40
nations. What type of quota does this represent?
A) allocated
B) absolute
C) primary
D) variable
67) In some countries, when an import of a product reaches the government-specified
amount, then no further imports of that product are allowed for the year. What type of quota does
this represent?
A) tariff-rate
B) variable
C) absolute
D) allocated
68) Unlike quotas, voluntary export restraints (VERs) are imposed by
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A) the importing country’s government.
B) the exporting country’s government.
C) either the importing or exporting country’s government.
D) the importing company.
69) Examples of orderly marketing arrangements are
A) voluntary export restraints.
B) greenfield investments.
C) variable levies.
D) absolute quotas.
70) What is one of the major groupings of nonquantitative nontariff barriers?
A) ad valorem dutiesies
B) customs
C) quotas
D) VERs
71) The most common form of direct government participation in trade is
A) the subsidy.
B) shipping on national vessels.
C) import duties.
D) export quotas.
72) Customs procedures in many countries often
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A) are transparent and fair.
B) discriminate against imports or favor exports.
C) are online and impersonal.
D) aid importers and exporters in estimating their total costs.
73) The Food and Drug Administration in the United States works to protect citizens from
harmful products and companies must meet the regulations it sets. Which classification of
nonquantitative nontariff barrier does this represent?
A) customs
B) direct participation
C) VER
D) standards
74) How do barriers to trade affect the citizens of a country?
A) They are a political issue, but don’t affect the cost of imports except marginally.
B) They cost consumers billions of dollars per year.
C) They save jobs in unprotected industries at $231,289 per job per year.
D) They affect corporations but not citizens directly.
75) The national defense argument for trade restrictions has been used in the United States by
the Trump administration for imposing tariffs on
A) subway cars.
B) uniforms.
C) steel.
D) ethanol.
76) An argument against using sanctions to punish an offending nation is that
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A) sanctions seldom achieve their goal of forcing change in the offending country.
B) sanctions are relatively harmful to the citizens of the offending country.
C) sanctions are not condoned by the U.N.
D) sanctions decrease the cost of doing business.
77) Counterarguments to the “protect domestic jobs from cheap foreign labor” argument
include that
A) the labor rate is not all of the labor cost.
B) wage rates are incidental.
C) cheap foreign labor is a natural occurrence.
D) comparative advantage recognizes cheap labor as a competitive right.
78) Tariff barriers may be used to
A) protect domestic industry from foreign, lower-cost producers.
B) reduce the need for foreign workers.
C) increase government revenues.
D) protect borders from gray market goods.
79) Timmerson Corp. was frustrated to learn that it would have to pay the same import duty
on shipments worth $100 as it did for shipments costing $2,000. What does the government have
in place that creates this situation for Timmerson Corp.?
A) an official price
B) an embargo
C) an ad valorem duty
D) an absolute quota
80) How does a variable levy affect domestic producers?
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A) It prevents an imported good from being priced lower than the domestic good.
B) It lowers the cost of an imported good compared to the cost of the domestic good.
C) It raises the cost to develop a domestic good compared to the cost of developing an
imported good.
D) It eliminates any competition from imported goods.
81) Trade barriers create costs that are paid ultimately by the
A) government erecting the barrier.
B) consumer.
C) country exporting the goods.
D) exporter.
82) The national defense argument for trade restrictions suggests that
A) some industries, even if they are not competitive, may need protection from imports.
B) the military is an area that can be exempted from import restrictions.
C) national defense requires no trade restrictions.
D) exporters of material would do well to monitor trade restrictions and permissions.
83) Until just a few years ago, the United States levied a 54-cents-a-gallon import duty on
foreign produced ethanol. Which of the reasons for restricting trade does this represent?
A) impose sanctions
B) protect an infant industry
C) ensure fair competition
D) provide for national defense
84) One of the problems associated with the “cheap foreign labor” argument for restricting
trade is that
A) wages don’t account for all production costs.
B) foreign competition will achieve an unfair advantage.
C) inflicting economic damage might have reverse affects.
D) the national defense must be kept at maximum levels.
85) An example of retaliatory trade restrictions is
A) the U.S. response to the EU ban of hormone-treated beef.
B) the EU restraint on Microsoft for bundling its product.
C) the Japanese refusal to allow U.S. military equipment in Japan.
D) China’s tightening control of the export of rare earths.
86) Social dumping occurs when exporting producers
A) have lower wage rates, social costs, and environmental regulations.
B) allow for free migration, thereby exporting poverty.
C) allow the import of environmentally sensitive waste.
D) take knowing advantage of a social class system.
87) The main goal of tariffs is to
A) increase the selling price of imported goods, thereby reducing competition for
domestic producers.
B) raise revenues for the importing government.
C) reduce earnings for the exporting government, thereby creating a trade war.
D) penalize importers for not buying domestic goods.
88) A specific duty is a