D270 FINAL PRACTICE QUESTIONS WITH 100% SOLVED ANSWERS!!
8 views 0 purchase
Course
D270
Institution
D270
D270 FINAL PRACTICE QUESTIONS WITH 100% SOLVED ANSWERS!!
Infant industries -Answer- Reason: Long-term growth comes from new, innovative industries, but... new industries are too small to compete with global competitors, so the government needs to protect them until they can compete.
Tools: Sub...
D270 FINAL PRACTICE QUESTIONS
WITH 100% SOLVED ANSWERS!!
Infant industries -Answer- Reason: Long-term growth comes from new, innovative
industries, but... new industries are too small to compete with global competitors, so the
government needs to protect them until they can compete.
Problems: Makes foreign products uncompetitive, limits foreign ownership, when does
an industry reach "adulthood"?
Infant industries example -Answer- Indian example on Tesla
Reduced import taxes for automakers willing to commit to local manufacturing of electric
vehicle
Fighting unemployment example -Answer- "Fight for our lives" unemployment protest
during covid
Developing an industrial base -Answer- Reason: promote industrialization instead of
agribusiness- terms of trade
Developing an industrial base example -Answer- Terms of trade= (index of average
export price/index of average import prices) x 100
Improving Comparative economic positions -Answer- Countries track performance
compared to others, deciding whether to impose trade restrictions to improve their
economic positions
Motivations: balances of trade adjustments, comparable access to fairness, import
restrictions as a bargaining tool, export restrictions, affecting import prices- preventing
foreign monopolies; preventing dumping
Improving Comparative economic positions example -Answer- -DeBeers diamonds in
the USA
-EU rule against Chinese giant bikes so they couldn't dump there
Setting an optimum tariff -Answer- Where a foreign producer will lower prices if the
destination country places a tariff on products
Setting an optimum tariff example -Answer- Ex: U.S. tariff of 10% on German cars,
BMW
,noneconomic rationales -Answer- 1. Maintaining essential industries
2. Promoting acceptable practices abroad
3. Maintaining or extending spheres of influence
4. Preserving national culture
Maintaining essential industries -Answer- Reason - Defense, transportation, scarce
resources should be controlled by domestic businesses. Important at times of war or
national emergencies
Tools - FDI regulations, regulatory standards, subsidies, export bans
Problem - Hurts foreign competitors, affects other countries' exports, how do you decide
what is "essential"?
Maintaining essential industries -Answer- The U.S. Healthcare industry
Promoting acceptable practices abroad -Answer- Trade limitations may be used to
compel a foreign country to amend an objectionable practice
tools: limiting exports/imports, restricting access to bank accounts/foreign aid
Promoting acceptable practices abroad example -Answer- U.S. imposed sanctions on
Iran
Maintain Spheres of influence -Answer- Governments use trade to support their spheres
of influence giving 8 and encouraging imports from countries that aligned with them or
vote in a preferred way.
Maintain Spheres of influence example -Answer- The Cotonou Agreement gave EU
influence on many African countries. Promotes trade and political cooperation.
Preserving culture -Answer- Reason: foreign products could harm the culture of the
country
Preserving culture example -Answer- No rice imported into South Korea to keep their
national rice grown there
Senators fighting over controversial catfish inspection program -Answer- -FDA is in
charge of inspecting now
-Shows the US overreacted with the inspections
-Very costly
-USDA still have not inspected any fish
-Following these efforts, even more catfish were imported
Tariff (duty): -Answer- is a tax levied on a good shipped internationally
Export tariff -Answer- tariffs collected by the exporting country
Transit tariff -Answer- collected by a country through which the goods pass
, Import tariff -Answer- collected by importing countries
Export tariff example -Answer- Saudi Arabia charges an export duty of 20% on crude oil
and petroleum products
Transit tariff example -Answer- Panama charges a toll for ships that use the Panama
Canal to transport goods between the oceans
Import tariff example -Answer- The US imposes a tariff of 25% on steel and 10% on
aluminum imports for most countries
Why would we impose an export tariff -Answer- Control domestic prices, protect local
farmers, generate revenue
Quotas -Answer- a quota limits the quantity of a product that can be imported or
exported in a given time frame, typically a year
Voluntary export restraints (VER) -Answer- country A asks country B to voluntarily
reduce its companies exports to country A. The term voluntarily is misleading, typically
either country B agrees to reduce its exports, or else country A may impose tougher
trade restrictions
Embargoes -Answer- a specific type of quota that prohibits all trade
Why do we impose transit tariffs? -Answer- -Generate revenue, regulate traffic,
negotiate trade agreements
Non-tariff barriers: direct price influences -Answer- Subsidies, agriculture subsidies
Subsidies -Answer- offer direct assistance to companies to boost their competitiveness
ex: EU has been accused of supporting Airbus with subsidized loans for the
development of new aircraft
Agriculture Subsidies -Answer- most necessary in developing countries
ex: In the US, subsidies are offered to farmers to help them overcome market
imperfections
Diff between embargo and sanction -Answer- Embargo is a trade barrier that results in
prohibition on commerce or trade with either one country or many countries
EX: U.S removes Cuba due to them not cooperating on counterterrorism efforts
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller victoryguide. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
