INTB 3080 Exam 2 Questions with Correct Answers Graded A+
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
Administrative trade policies are bureaucratic rules that are designed to make it easy for imports to
enter a country. - Answers False
Dumping is variously defined as selling goods in a foreign market at below their costs of production or as
selling goods in a foreign market at below their "fair" market value. - Answers True
The infant industry argument is the oldest economic argument for government intervention. - Answers
True
Brazil's auto industry, once the world's tenth-largest and built behind tariff barriers and quotas, has
been proven to be one of the world's most inefficient. - Answers True
The Smoot-Hawley Act was a multilateral agreement whose objective was to liberalize trade by
eliminating tariffs, subsidies, and import quotas. - Answers False
In the Uruguay Round of the WTO, member countries sought to exempt trade in services from GATT
rules. - Answers False
The United States wanted the WTO to allow governments to impose tariffs on goods imported from
countries that did not abide by what the United States saw as fair labor practices during a WTO meeting
at the end of November 1999. - Answers True
The Multi-Fiber Agreement (MFA) of 1974 fixed upper limits on exports of textiles from all major
exporting countries to all major importing countries. The MFA is an example of: - Answers voluntary
export restraint
The two US agencies that deal with antidumping complaints are the: - Answers Commerce Department
and the International Trade Commission
How did U.S. Magnesium justify its dumping claim against Russian and Chinese producers? - Answers
These producers are selling in the US below the cost of production of these goods
With developed nations still accounting for the largest share of FDI inflows, FDI into developing nations
has steadily decreased over the past decade. - Answers False
By limiting imports through quotas, governments reduce the attractiveness of FDI and licensing. -
Answers False
FDI was governed by the GATT until the 1990s. - Answers False
Walmarts move into Japan is considered to be - Answers horizontal FDI
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
Administrative trade policies are bureaucratic rules that are designed to make it easy for imports to
enter a country. - Answers False
Dumping is variously defined as selling goods in a foreign market at below their costs of production or as
selling goods in a foreign market at below their "fair" market value. - Answers True
The infant industry argument is the oldest economic argument for government intervention. - Answers
True
Brazil's auto industry, once the world's tenth-largest and built behind tariff barriers and quotas, has
been proven to be one of the world's most inefficient. - Answers True
The Smoot-Hawley Act was a multilateral agreement whose objective was to liberalize trade by
eliminating tariffs, subsidies, and import quotas. - Answers False
In the Uruguay Round of the WTO, member countries sought to exempt trade in services from GATT
rules. - Answers False
The United States wanted the WTO to allow governments to impose tariffs on goods imported from
countries that did not abide by what the United States saw as fair labor practices during a WTO meeting
at the end of November 1999. - Answers True
The Multi-Fiber Agreement (MFA) of 1974 fixed upper limits on exports of textiles from all major
exporting countries to all major importing countries. The MFA is an example of: - Answers voluntary
export restraint
The two US agencies that deal with antidumping complaints are the: - Answers Commerce Department
and the International Trade Commission
How did U.S. Magnesium justify its dumping claim against Russian and Chinese producers? - Answers
These producers are selling in the US below the cost of production of these goods
With developed nations still accounting for the largest share of FDI inflows, FDI into developing nations
has steadily decreased over the past decade. - Answers False
By limiting imports through quotas, governments reduce the attractiveness of FDI and licensing. -
Answers False
FDI was governed by the GATT until the 1990s. - Answers False
Walmarts move into Japan is considered to be - Answers horizontal FDI
