INTB 3080 Exam 2 Questions with
Complete Solutions13
Mercantilism, as advocated in the 16th and 17th centuries, believed that countries should
simultaneously encourage both imports and exports. - ANSWERS-False
Largely discredited and primitive, mercantilism still influences the trade policies of many
countries today. - ANSWERS-True
Free trade refers to a situation where a government, through quotas or duties, attempts to
influence what its citizens can buy from another country, or what they can produce and sell to
another country. - ANSWERS-False
David Ricardo's theory of comparative advantage was the first to explain why unrestricted free
trade is beneficial to a country. - ANSWERS-False
Smith, Ricardo, and Heckscher-Ohlin suggest that a country's economy would gain only if its
citizens buy products that are made in that country. - ANSWERS-False
Embracing a free trade regime for an advanced economy often implies that the country will
produce less of some labor-intensive goods and more of some knowledge-intensive goods. -
ANSWERS-True
According to Porter, both advanced factor endowment and basic factor endowments are equally
significant for competitive advantage. - ANSWERS-False
According to Michael Porter, factor endowments can be affected by subsidies, policies toward
capital markets, and policies toward education. - ANSWERS-True
, The individual firm should invest substantial financial resources in trying to build a first-mover
advantage, even if that means several years of losses before a new venture becomes profitable.
- ANSWERS-True
The new trade theory suggests that a country may predominate in the export of a good simply
because it was lucky enough to have one or more pioneering firms to produce that good. -
ANSWERS-True
Climate and natural resource endowments explain all of the following happening, EXCEPT: -
ANSWERS-Switzerland exporting watches.
The difference in growth rates between Ghana and South Korea since 1970 can be attributed to
- ANSWERS-Both countries' attitudes towards international trade
Ghana's anti trade policy destroyed the Ghanaian economy because farmers - ANSWERS-
Switched to the production of subsistence food stuffs.
Tariffs are the instrument that the GATT and WTO have been most successful in limiting. -
ANSWERS-True
In recent decades, a fall in subsidies, quotas, and voluntary export restraints has been
accompanied by a corresponding fall in nontariff barriers - ANSWERS-False
Ad valorem tariffs reduce the cost of imported products relative to domestic products. -
ANSWERS-False
Japan has a long history of supporting inefficient domestic producers with farm subsidies. -
ANSWERS-True
Complete Solutions13
Mercantilism, as advocated in the 16th and 17th centuries, believed that countries should
simultaneously encourage both imports and exports. - ANSWERS-False
Largely discredited and primitive, mercantilism still influences the trade policies of many
countries today. - ANSWERS-True
Free trade refers to a situation where a government, through quotas or duties, attempts to
influence what its citizens can buy from another country, or what they can produce and sell to
another country. - ANSWERS-False
David Ricardo's theory of comparative advantage was the first to explain why unrestricted free
trade is beneficial to a country. - ANSWERS-False
Smith, Ricardo, and Heckscher-Ohlin suggest that a country's economy would gain only if its
citizens buy products that are made in that country. - ANSWERS-False
Embracing a free trade regime for an advanced economy often implies that the country will
produce less of some labor-intensive goods and more of some knowledge-intensive goods. -
ANSWERS-True
According to Porter, both advanced factor endowment and basic factor endowments are equally
significant for competitive advantage. - ANSWERS-False
According to Michael Porter, factor endowments can be affected by subsidies, policies toward
capital markets, and policies toward education. - ANSWERS-True
, The individual firm should invest substantial financial resources in trying to build a first-mover
advantage, even if that means several years of losses before a new venture becomes profitable.
- ANSWERS-True
The new trade theory suggests that a country may predominate in the export of a good simply
because it was lucky enough to have one or more pioneering firms to produce that good. -
ANSWERS-True
Climate and natural resource endowments explain all of the following happening, EXCEPT: -
ANSWERS-Switzerland exporting watches.
The difference in growth rates between Ghana and South Korea since 1970 can be attributed to
- ANSWERS-Both countries' attitudes towards international trade
Ghana's anti trade policy destroyed the Ghanaian economy because farmers - ANSWERS-
Switched to the production of subsistence food stuffs.
Tariffs are the instrument that the GATT and WTO have been most successful in limiting. -
ANSWERS-True
In recent decades, a fall in subsidies, quotas, and voluntary export restraints has been
accompanied by a corresponding fall in nontariff barriers - ANSWERS-False
Ad valorem tariffs reduce the cost of imported products relative to domestic products. -
ANSWERS-False
Japan has a long history of supporting inefficient domestic producers with farm subsidies. -
ANSWERS-True
