INBU 3301 Final Exam || very Flawless.
Specific Tariff correct answers levied as a fixed charge for each unit of a good
Ad Valorem Tariff correct answers levied as a proportion of the value of the imported good
Subsidies correct answers gov't payments to domestic producers
import quotas correct answers restrict quantity that may be imported into a country
tariff rate quotas correct answers lower tariff applied to imports within quota than those over the
quota
quota rent correct answers extra profit that producers make when supply is artificially limited by
an import quota
voluntary export restrictions correct answers quotas on trade imposed by exporting country, at
request of importing country's gov't
local content requirements correct answers specific fraction of a good be produced domestically
admin policies/gov't intervention correct answers bureaucratic rules design to make it difficult
for imports to enter a country
anti-dumping policies correct answers designed to punish foreign firms that engage in dumping
and thus protect domestic producers from unfair foreign competition
dumping correct answers Selling goods in another country below market prices
2 main arguments for gov't intervention in mkt correct answers 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) correct answers 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) correct answers 1. infant industry argument
2. strategic trade policy
WTO # of countries correct answers 164
WTO focuses correct answers 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 correct answers acquisition or construction of physical capital by a firm from one
source/home country in another host country
2 types of FDI correct answers greenfield & acquisitions/mergers
3 benefits of inward FDI for host country correct answers 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 correct answers 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 correct answers 1. capital account increase from
foreign earnings
2. employment effects
3. gains from learning valuable skills
2 costs of outward FDI for home country correct answers 1. BOP suffers from initial capital
outflow, also substitute for direct exports
2. employment can be negatively affected if FDI substitutes domestic production
how can gov't encourage outward FDI correct answers gov't backed insurance (ex. EDC)
how can gov't restrict outward FDI correct answers limit capital outflows, manipulate tax rules,
or prohibit FDI
how can gov't encourage inward FDI correct answers offer incentives to foreign firms
gain from resource-transfer and employment effects and capture potential FDI
how can gov't restrict inward FDI correct answers use ownership restraints and performance
requirements
OECD correct answers Organization for Economic Cooperation and Development (gathers info
about activities of various countries to be used by business people and gov'ts)
free-trade area correct answers eliminates all barriers to the trade of goods and services among
member countries (NAFTA)
customs union correct answers eliminates trade barriers between member countries and adopts a
common external trade policy (Andean Community)
Specific Tariff correct answers levied as a fixed charge for each unit of a good
Ad Valorem Tariff correct answers levied as a proportion of the value of the imported good
Subsidies correct answers gov't payments to domestic producers
import quotas correct answers restrict quantity that may be imported into a country
tariff rate quotas correct answers lower tariff applied to imports within quota than those over the
quota
quota rent correct answers extra profit that producers make when supply is artificially limited by
an import quota
voluntary export restrictions correct answers quotas on trade imposed by exporting country, at
request of importing country's gov't
local content requirements correct answers specific fraction of a good be produced domestically
admin policies/gov't intervention correct answers bureaucratic rules design to make it difficult
for imports to enter a country
anti-dumping policies correct answers designed to punish foreign firms that engage in dumping
and thus protect domestic producers from unfair foreign competition
dumping correct answers Selling goods in another country below market prices
2 main arguments for gov't intervention in mkt correct answers 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) correct answers 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) correct answers 1. infant industry argument
2. strategic trade policy
WTO # of countries correct answers 164
WTO focuses correct answers 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 correct answers acquisition or construction of physical capital by a firm from one
source/home country in another host country
2 types of FDI correct answers greenfield & acquisitions/mergers
3 benefits of inward FDI for host country correct answers 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 correct answers 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 correct answers 1. capital account increase from
foreign earnings
2. employment effects
3. gains from learning valuable skills
2 costs of outward FDI for home country correct answers 1. BOP suffers from initial capital
outflow, also substitute for direct exports
2. employment can be negatively affected if FDI substitutes domestic production
how can gov't encourage outward FDI correct answers gov't backed insurance (ex. EDC)
how can gov't restrict outward FDI correct answers limit capital outflows, manipulate tax rules,
or prohibit FDI
how can gov't encourage inward FDI correct answers offer incentives to foreign firms
gain from resource-transfer and employment effects and capture potential FDI
how can gov't restrict inward FDI correct answers use ownership restraints and performance
requirements
OECD correct answers Organization for Economic Cooperation and Development (gathers info
about activities of various countries to be used by business people and gov'ts)
free-trade area correct answers eliminates all barriers to the trade of goods and services among
member countries (NAFTA)
customs union correct answers eliminates trade barriers between member countries and adopts a
common external trade policy (Andean Community)
