22. Differential Exchange Rates:
a.
can be used to promote imports of desirable and necessary goods
b.
can be used to discourage imports of less desirable and necessary goods
c.
are favorable to the international firm importing products into this market
d.
all of the above
23. Which of the following countries is most likely to require a foreign exchange permit?
a.
The United States
c.
China
b.
Germany
d.
Each of the above is equally likely.
24. One arguments for free trade suggests that opening up the home market increases ____ , thus lowering
prices for local consumers.
a.
tourism
c.
substitutes
b.
competition
d.
inflation
25. Approximately how may countries are a member of the World Trade Organization?
a.
50
c.
150
b.
100
d.
180
26. The General Agreement on Trade in Services (GATS) initially covered which industry?
a.
Retailing
c.
Banking
b.
Franchising
d.
Manufacturing
27. Which of the following is not protected under the Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS)?
a.
Trademarks
c.
Copyrights
b.
Patents
d.
Each of the above is protected.
28. Which of the following is not a member of the G8?
a.
Canada
c.
Italy
b.
France
d.
China
29. Which of the following has been hailed as a success for the G8?
a.
Challenging China on its human rights record
b.
Helping Eastern Europe in its process of transition to a market economy
c.
Improving Japan’s economy
d.
Helping Europe to produce jobs and faster growth
30. The International Monetary Fund and the World Bank were created as a result of the
a.
Bretton Woods Agreement
c.
Asian economic meltdown
b.
Paris Accords
d.
World War I Reconstruction
31. Which bank is the largest international bank that sponsors economic development projects?
a.
The African Development Bank
b.
The Asian Development Bank
c.
The European Bank for Reconstruction and Development
d.
The World Bank
32. Which of the following is not a development bank?
a.
The Inter-American Development Bank
b.
The European Bank for Reconstruction and Development
c.
The Australian Development Bank
d.
The African Development Bank
33. Which of the following United Nations Organizations often provides turn-key factories to countries in
need?
a.
The United Nations Industrial Development Organization
b.
The United Nations Conference on Trade and Development
c.
The Food and Agriculture Organization
d.
The Regional Economic Commission for Africa
34. Which of the following statements about foreign trade zones is inaccurate?
a.
A foreign trade zone can be as small as a building.
b.
Merchandise in the FTZ is outside the jurisdiction of the host country customs services.
c.
Foreign trade zones are usually located near ports of entry.
d.
All of the above statements are accurate.
35. In the United States, which entity regulates foreign trade zones?
a.
The Export-Import Bank
c.
The Food and Drug Administration
b.
The Federal Trade Commission
d.
The Department of Commerce
36. A foreign trade zone
a.
always increases the prices for goods sold in the importing country.
b.
raises the insurance expense for a company.
c.
may promote a favorable country-of-origin effect.
d.
typically creates entry barriers for foreign firms.
37. A maquiladora is an example of a(n)
a.
black market.
c.
development bank.
b.
customs-privileged facility.
d.
nonautomatic import license.
38. Free trade zones in China
a.
attracted $60 billion in investments.
b.
are always export processing zones.
c.
encourage nonautomatic import licensing
d.
all of the above
39. The free trade zones in China attracted ____ billion in investments
a.
$10
c.
$60
b.
$110
d.
$90
40. Free trade zones
a.
are also called export processing zones
b.
offer duty free import and storage
c.
are owned by development banks
d.
are outside the reach of the law
41. China
a.
has allowed the creation of 25 export processing zones
b.
has allowed the creation of 15 free trade zones
c.
employs 2 million people working for its free trade zones.
d.
all of the above.
42. Which of the following countries received the Permanent-Normal-Trade-Relations status in 2007?
a.
Saudi Arabia
c.
Vietnam
b.
Iran
d.
North Korea
43. The African Growth and Opportunity Act (AGOA) focuses specifically on sub-Saharan Africa and
a.
offers incentives for African countries to open their economies and build free markets
b.
allows countries in sub-Saharan Africa to use third-country fabrics and export them
duty-free to the U.S.
c.
focuses specifically on sub-Saharan Africa
d.
all of the above
COMPLETION
1. The ___________________________________ argument is used when a country fears that foreign
competitors would be able to offer higher quality products at lower costs and would undoubtedly
undercut local manufacturers attempting to break into the market.
2. ____________________ are any type of tax imposed on goods entering a particular country.
3. Orderly market arrangements, voluntary import expansion, and voluntary export restraints are all
examples of ____________________ barriers.
4. ____________________ specify a maximum quantity or a value of a product that may be imported
during a specified period.
5. ___________________________________ are issued on a discretionary basis and are used to restrict
imports of a given product.
6. Under a voluntary _________________________, a country agrees to open its markets to imports.
7. Voluntary _________________________ are self-imposed quotas and constitute a barrier to trade
often used in the 1980’s to protect local industries.
8. ____________________ uses price controls to ensure that locally-produced rice is not at a
disadvantage relative to rice imports from the United States.
9. Exxon-owned Esso has been the target of a high-profile ____________________ campaign by groups
angered at its support of the U.S. government’s rejection of the Kyoto climate change pact.
10. A(n) ____________________ prohibits all business deals with a country.
11. A country using a(n) ______________________________ strategy does not allow importers to
exchange local currency for the seller’s currency.
12. GATT’s ____________________ Round substantially changed international trade regulation by
replacing the original GATT regulations with a newly-empowered World Trade Organization.
13. The International Monetary Fund and the _________________________ were created at the United
Nations Monetary and Financial Conference, as a result of the Bretton Woods Agreement.
14. Membership in the World Bank requires membership in the ______________________________.
15. Unlike other development organizations discussed in the text, USAID is an arm of the
______________________________, supporting the economic development of and trade with
developing countries aligned politically with the United States.
16. The Department of Commerce regulates trade by issuing ____________________ licenses and by
offering food, health and safety inspections and certification.
17. A(n) ______________________________ is a tax-free area in a particular country that is not
considered part of the respective country in terms of import regulations and restrictions.
18. Foreign trade zones are usually bonded and must be secured and enclosed, which make them safer than
most ports of entry – thus decreasing ____________________ costs for companies using them.
19. Special Economic Zones in China and ____________________ in Mexico are examples of
customs-privileged facilities that typically exist in countries with low-cost labor.
20. Today, there are ____________________ free-trade zones (FTZs) and ____________________
export-processing zones in China.
21. _________________________ zones in China attracted $60 billion in investments, employed 2
million people, and contributed a fourth to the nation’s exports.
22. ______________________________ are established only within existing economic and technological
development zones.
23. Free trade zones in China contributed _________________________ percent to the nation’s exports.
24. In China, free trade zones employ ____________________ million people.
25. ________________________________________ status grants equal tax treatment on imported
products from most countries, with the exception of rogue nations.
26. The ______________________________________ focuses specifically on sub-Saharan Africa: It was
signed into law in 2001, and it offers incentives for African countries to open their economies and
build free markets. Among others, it allows countries in sub-Saharan Africa to use third-country
fabrics and export them duty-free to the United States.
27. In 2007, Vietnam received the ______________________________ status.
ESSAY
1. Which arguments are most often advanced to justify the imposition of tariff and nontariff trade
barriers?
2. What are the World Trade Organization’s (WTO‘s) main functions?
3. Explain what a foreign trade zone is.
4. What benefits does an international firm operating in a foreign trade zone receive?
5. What is the Permanent-Normal-Trade-Relations status?