Question 1

The Trump Administration justified tariffs on foreign steel imports in 2018 by saying it was a national security issue.

Accepted Answer

A) True 
 B)False

Question 2

The World Trade Organization's TRIPS agreement focuses on extending free trade agreements to services.

Accepted Answer

A) True 
 B)False

Question 3

President Trump has voiced his opposition to many free trade deals. Because of this, some say that he maintains a(n)  ________ view on trade.

Accepted Answer

A)   comparative advantage
B)   expansionist
C)   absolute advantage
D)   open economy
E)   mercantilistF) D) and E)
G) C) and D)

Question 4

One form of political argument concerning free trade is based on protecting consumers. Provide examples of several real-world situations that demonstrate this argument.

Accepted Answer

Student examples will vary. Many governm...

Question 5

According to the ________, U.S. government agencies must give preference to U.S. products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.

Accepted Answer

A)   Export Administration Act
B)   Helms-Burton Act
C)   Hawley-Burton Act
D)   Buy America Act
E)   Volcker RuleF) A) and E)
G) B) and D)

Question 6

The WTO's Agreement on ________ is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules.

Accepted Answer

A)   Intellectual Property Rights Enforcement Directive (IPRE
D)  
B)   Court of Arbitration of Intellectual Property (CAIP) 
C)   Trade-Related Aspects of Intellectual Property Rights (TRIPS) 
D)   Intellectual Property Rights Enforcement and Resolution (IPRER) 
E)   International Body on Intellectual Property (IBIP) F) D) and E)
G) A) and B)

Question 7

Explain why there was greater pressure under GATT for protectionism around the world during the 1980s and 1990s.

Accepted Answer

During the 1980s and early 1990s, the tr...

Question 8

The principal function of the trade sanctions the United States has in place against Cuba is to

Accepted Answer

A)   prevent other countries from trading with Cuba.
B)   aid Cuba in creating a direct trade route to the United States
C)   create a nearby dumping site for large businesses.
D)   impoverish Cuba to lead to the downfall of the communist government.
E)   force Cuba to enter into the NATO agreement.F) A) and E)
G) A) and B)

Question 9

Indonesia might have a potential comparative advantage in manufacturing textiles but is unable to compete with established textile manufacturing in Japan, at least for the near future. Indonesia could claim the

Accepted Answer

A)   economic development argument.
B)   comparative advantage theory.
C)   national security argument.
D)   infant industry argument.
E)   mixed economy theory.F) B) and C)
G) A) and B)

Question 10

When the government provides a low-interest loan to a failing industry to bolster business, it is an example of a subsidy.

Accepted Answer

A) True 
 B)False

Question 11

Dumping occurs when companies sell goods in a foreign market at below their costs of production.

Accepted Answer

A) True 
 B)False

Question 12

Paul Krugman argues that although strategic trade policy looks unappealing in theory, in practice it is most likely to be workable.

Accepted Answer

A) True 
 B)False

Question 13

A major reason why many economists remain critical of the infant industry argument is because it

Accepted Answer

A)   makes the domestic industry inefficient.
B)   does not provide guaranteed employment for citizens.
C)   affects the standards of living and per capita income of the people.
D)   promotes foreign direct investment.
E)   leads to reduced prices in domestic markets.F) A) and B)
G) C) and E)

Question 14

Explain why a government would implement a local content requirement and discuss the role of the Buy America Act in the United States.

Accepted Answer

A local content requirement (LCR) is a r...

Question 15

How do voluntary export restraints affect the prices of goods?

Accepted Answer

A)   VERs do not affect the price of goods for consumers.
B)   VERs always reduce the domestic price of an imported good.
C)   VERs always raise the domestic price of an imported good.
D)   Typically, VERs will lower the price of goods while the quota is in place.
E)   VERs will always raise the export price of domestic goods.F) B) and D)
G) B) and C)

Question 16

Dumping takes place when foreign producers

Accepted Answer

A)   attempt hostile takeovers of domestic firms and usurp the available resources for production.
B)   indiscriminately exploit the natural resources of a foreign country to create a later demand that can be met only by imports.
C)   eliminate competition by subsidizing prices in a foreign market with home market profits and eventually raising prices to earn substantial profits.
D)   capture the niche market rather than the masses.
E)   export only a small quantity of their products into an importing country.F) A) and E)
G) A) and C)

Question 17

Governments can protect consumers from unsafe products by issuing a limit or a ban on such products.

Accepted Answer

A) True 
 B)False

Question 18

What is one major advantage the World Trade Organization had over the GATT agreement?

Accepted Answer

A)   Disagreements with the GATT policy were punishable by law.
B)   Procedures under the WTO had strict time limits.
C)   The WTO was not allowed to make rulings on intellectual property.
D)   The WTO procedures had to be mandated by the federal government.
E)   The procedures under GATT could only be between two nations.F) B) and C)
G) A) and E)

Question 19

According to ________, a government should use subsidies to support promising firms that are active in newly emerging industries.

Accepted Answer

A)   strategic trade policy
B)   public policy
C)   absolute advantage
D)   product life-cycle theory
E)   industrializationF) C) and D)
G) A) and D)

Question 20

Explain the organizational structure and the key functions of the WTO.

Accepted Answer

The WTO acts as an umbrella organization...

Exam 7: Government Policy and International Trade

The Trump Administration justified tariffs on foreign steel imports in 2018 by saying it was a national security issue.

Correct AnswerverifiedShow Answer

According to the ________, U.S. government agencies must give preference to U.S. products when putting contracts for equipment out to bid unless the foreign products have a significant price advantage.

Correct AnswerverifiedShow Answer

The principal function of the trade sanctions the United States has in place against Cuba is to

Correct AnswerverifiedShow Answer

The WTO's Agreement on ________ is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules.

Correct AnswerverifiedShow Answer

Explain why there was greater pressure under GATT for protectionism around the world during the 1980s and 1990s.

Correct AnswerverifiedDuring the 1980s and early 1990s, the tr...View AnswerShow Answer

One form of political argument concerning free trade is based on protecting consumers. Provide examples of several real-world situations that demonstrate this argument.

Correct AnswerverifiedStudent examples will vary. Many governm...View AnswerShow Answer

Dumping takes place when foreign producers

Correct AnswerverifiedShow Answer

Dumping occurs when companies sell goods in a foreign market at below their costs of production.

Correct AnswerverifiedShow Answer

Paul Krugman argues that although strategic trade policy looks unappealing in theory, in practice it is most likely to be workable.

Correct AnswerverifiedShow Answer

What is one major advantage the World Trade Organization had over the GATT agreement?

Correct AnswerverifiedShow Answer

Explain why a government would implement a local content requirement and discuss the role of the Buy America Act in the United States.

Correct AnswerverifiedA local content requirement (LCR) is a r...View AnswerShow Answer

How do voluntary export restraints affect the prices of goods?

Correct AnswerverifiedShow Answer

Indonesia might have a potential comparative advantage in manufacturing textiles but is unable to compete with established textile manufacturing in Japan, at least for the near future. Indonesia could claim the

Correct AnswerverifiedShow Answer

According to ________, a government should use subsidies to support promising firms that are active in newly emerging industries.

Correct AnswerverifiedShow Answer

When the government provides a low-interest loan to a failing industry to bolster business, it is an example of a subsidy.

Correct AnswerverifiedShow Answer

Governments can protect consumers from unsafe products by issuing a limit or a ban on such products.

Correct AnswerverifiedShow Answer

The World Trade Organization's TRIPS agreement focuses on extending free trade agreements to services.

Correct AnswerverifiedShow Answer

A major reason why many economists remain critical of the infant industry argument is because it

Correct AnswerverifiedShow Answer

Explain the organizational structure and the key functions of the WTO.

Correct AnswerverifiedThe WTO acts as an umbrella organization...View AnswerShow Answer

President Trump has voiced his opposition to many free trade deals. Because of this, some say that he maintains a(n) ________ view on trade.

Correct AnswerverifiedShow Answer

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During the 1980s and early 1990s, the tr...
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Student examples will vary. Many governm...
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Correct Answer
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Correct Answer
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Correct Answer
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A local content requirement (LCR) is a r...
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Correct Answer
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The WTO acts as an umbrella organization...
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Correct Answer
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