INBU 3301 Final Exam with complete
solutions 2024/2025
Specific Tariff - ANSWER- levied as a fixed charge for each unit of a good
Ad Valorem Tariff - ANSWER- levied as a proportion of the value of the imported good
Subsidies - ANSWER- gov't payments to domestic producers
import quotas - ANSWER- restrict quantity that may be imported into a country
tariff rate quotas - ANSWER- lower tariff applied to imports within quota than those over
the quota
quota rent - ANSWER- extra profit that producers make when supply is artificially limited
by an import quota
voluntary export restrictions - ANSWER- quotas on trade imposed by exporting country,
at request of importing country's gov't
local content requirements - ANSWER- specific fraction of a good be produced
domestically
admin policies/gov't intervention - ANSWER- bureaucratic rules design to make it
difficult for imports to enter a country
anti-dumping policies - ANSWER- designed to punish foreign firms that engage in
dumping and thus protect domestic producers from unfair foreign competition
dumping - ANSWER- Selling goods in another country below market prices
, 2 main arguments for gov't intervention in mkt - ANSWER- political: protecting interests
of certain groups (usually at expense of consumer, favor producers)
economic:boosting overall wealth of nation
political argument for gov't intervention in mkt (6) - ANSWER- 1. protecting jobs
2. protecting industries important for national security
3. retaliation for unfair foreign competition
4. protecting consumers from dangerous products
5. furthering goals of foreign policy
6. protecting human rights of individuals in exporting countries
economic arguments for gov't intervention (2) - ANSWER- 1. infant industry argument
2. strategic trade policy
WTO # of countries - ANSWER- 164
WTO focuses - ANSWER- rising anti-dumping policies
high level of protectionism in agriculture
lack of strong protection for intellectual property rights
continued tariffs on nonagricultural goods and services in many nations
FDI - ANSWER- acquisition or construction of physical capital by a firm from one
source/home country in another host country
2 types of FDI - ANSWER- greenfield & acquisitions/mergers
3 benefits of inward FDI for host country - ANSWER- 1. resource transfer effects
(capital, tech, etc.)
2. employment effects (jobs)
3. BOP effects (current account surplus)
3 costs of inward FDI for host country - ANSWER- 1. adverse effects on competition
2. adverse BOP effects (too many imports)
3. loss of national sovereignty and autonomy
3 benefits of outward FDI for home country - ANSWER- 1. capital account increase from
foreign earnings
2. employment effects
3. gains from learning valuable skills
solutions 2024/2025
Specific Tariff - ANSWER- levied as a fixed charge for each unit of a good
Ad Valorem Tariff - ANSWER- levied as a proportion of the value of the imported good
Subsidies - ANSWER- gov't payments to domestic producers
import quotas - ANSWER- restrict quantity that may be imported into a country
tariff rate quotas - ANSWER- lower tariff applied to imports within quota than those over
the quota
quota rent - ANSWER- extra profit that producers make when supply is artificially limited
by an import quota
voluntary export restrictions - ANSWER- quotas on trade imposed by exporting country,
at request of importing country's gov't
local content requirements - ANSWER- specific fraction of a good be produced
domestically
admin policies/gov't intervention - ANSWER- bureaucratic rules design to make it
difficult for imports to enter a country
anti-dumping policies - ANSWER- designed to punish foreign firms that engage in
dumping and thus protect domestic producers from unfair foreign competition
dumping - ANSWER- Selling goods in another country below market prices
, 2 main arguments for gov't intervention in mkt - ANSWER- political: protecting interests
of certain groups (usually at expense of consumer, favor producers)
economic:boosting overall wealth of nation
political argument for gov't intervention in mkt (6) - ANSWER- 1. protecting jobs
2. protecting industries important for national security
3. retaliation for unfair foreign competition
4. protecting consumers from dangerous products
5. furthering goals of foreign policy
6. protecting human rights of individuals in exporting countries
economic arguments for gov't intervention (2) - ANSWER- 1. infant industry argument
2. strategic trade policy
WTO # of countries - ANSWER- 164
WTO focuses - ANSWER- rising anti-dumping policies
high level of protectionism in agriculture
lack of strong protection for intellectual property rights
continued tariffs on nonagricultural goods and services in many nations
FDI - ANSWER- acquisition or construction of physical capital by a firm from one
source/home country in another host country
2 types of FDI - ANSWER- greenfield & acquisitions/mergers
3 benefits of inward FDI for host country - ANSWER- 1. resource transfer effects
(capital, tech, etc.)
2. employment effects (jobs)
3. BOP effects (current account surplus)
3 costs of inward FDI for host country - ANSWER- 1. adverse effects on competition
2. adverse BOP effects (too many imports)
3. loss of national sovereignty and autonomy
3 benefits of outward FDI for home country - ANSWER- 1. capital account increase from
foreign earnings
2. employment effects
3. gains from learning valuable skills
