DAVIS D270 FINAL TEST PREPARATION QUESTIONS AND ANSWER!!!
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Course
DAVIS D270
Institution
DAVIS D270
DAVIS D270 FINAL TEST PREPARATION QUESTIONS AND ANSWER!!!
1) The recent global economic crisis has led to which of the following?
A) governments seeking to impose more constraints on capitalism
B) governments seeking to eliminate constraints on capitalism
C) governments seeking to increase th...
DAVIS D270 FINAL TEST PREPARATION
QUESTIONS AND ANSWER!!!
1) Trade protectionism will most likely affect which aspect of a company's operations?
A) selecting employees
B) investing short-term capital
C) acquiring foreign supplies
D) relocating personnel overseas -Answer- C
2) The term protectionism when applied to international trade refers to ________.
A) governmental restrictions and competitive support actions to affect trade flows
B) payments to dock workers to prevent pilferage of imported shipments
C) border checks to prevent entry of illegal aliens
D) methods used to prevent intellectual property theft -Answer- A
3) Why should managers have an understanding of trade protectionism?
A) Trade protectionism targets factor endowments, thus affecting the best country to
locate production.
B) Trade protectionism affects a company's ability to sell abroad and ability to compete
at home.
C) Trade protectionism affects the number of people permitted to practice a specific
profession.
D) Trade protectionism prevents companies' enactment of merger and acquisition
agreements. -Answer- B
4) Managers should understand the effect of trade protectionism because ________.
A) trade protectionism may limit the number of people permitted to practice a specific
profession
B) trade protectionism requires the payment of high insurance rates to transport goods
internationally
C) trade protectionism may prevent companies' enactment of merger and acquisition
agreements
D) trade protectionism may make it difficult for a company to buy what it needs from
foreign suppliers -Answer- D
5) The government of Country X imposes import restrictions on steel to help the
domestic steel industry in depressed areas. What is the most likely result of such
restrictions?
A) damaging other industries in Country X
B) devaluing the currency of Country X
C) lowering steel prices in Country X
D) triggering boycotts in Country X -Answer- A
,6) Assume a government places restrictions on a specific product from a specific foreign
country. What would be the government's most likely concern about the foreign
country's response?
A) the foreign producers raising the prices of their exports
B) the foreign country restricting its own imports
C) the foreign country restricting its exports in that industry
D) the foreign producers seeking other markets -Answer- B
7) Assume a government is considering import restrictions on sugar because sugar
imports are hurting the domestic industry. Which of the following groups is LEAST likely
to speak out on the subject?
A) politicians in areas that grow sugar
B) employees of sugar companies
C) sugar company owners
D) sugar consumers -Answer- D
8) What is the most likely reason that consumers rarely protest import restrictions that
raise the prices they pay for a specific product?
A) They reason that if the import restrictions are removed, the foreign producers will
raise their prices to those of the domestic producers anyway.
B) Many countries prohibit consumers to band together to influence political actions.
C) Typically, although the added costs to consumers for a given product are high in
aggregate, they are fairly trivial for most individual consumers.
D) They reason that if they do something to hurt domestic employment for one product,
the displaced workers will then do something that will hurt their own employment. -
Answer- C
9) Unemployed workers are most apt to form a pressure group to support ________.
A) export restrictions
B) import restrictions
C) price limitations
D) import subsidies -Answer- B
10) Successful trade retaliation is most likely achieved ________.
A) on agricultural products
B) on manufactured products
C) by a large trading country
D) by a small trading country -Answer- C
11) Imports can stimulate exports by ________.
A) redistributing the work force
B) curtailing domestic competition
C) generating more tax revenue
D) increasing foreign income -Answer- D
,12) All of the following are generally true about trade-displaced workers EXCEPT which
one?
A) They move abroad to take new jobs.
B) They earn less in their new jobs than they earned in their old ones.
C) They spend their unemployment benefits on living rather than retraining.
D) They have difficulty finding new work because of educational deficiencies. -Answer-
A
13) The rationale for the infant-industry argument for trade protection is that ________.
A) incubator centers in which business, government, and academia cooperate will
develop entrepreneurial companies
B) a country should give one firm in an industry a monopoly status so that it will grow
large enough to be competitive internationally
C) it takes time for an industry to become competitive in world markets, so protection is
needed to help this industry pass through the critical period
D) lower restrictions should be placed on products coming from countries where a
government has a large sphere of political influence -Answer- C
14) Which of the following statements most likely undermines the infant-industry
argument?
A) Total unit costs decrease through economies of scale.
B) High tariffs to prevent foreign competition increase government revenues in the
protected country.
C) Domestic entrepreneurs need assistance to compete in industries with high entry
barriers.
D) Experience of operating over time triggers higher productivity and global
competitiveness. -Answer- B
15) A problem that can arise in using trade protectionism to develop international
competitiveness for a domestic industry is that ________.
A) it is difficult to identify industries that have a high probability of reaching
competitiveness
B) assistance should be given only if entry barriers to new firms are very low
C) the protecting countries lose too much revenue from import duties
D) a short product life cycle makes the industry quickly noncompetitive -Answer- A
16) Which of the following is a problem with the infant-industry argument for protection?
A) Most developed countries increasingly have a larger portion of retirees than youth.
B) Consumer groups become very active in protesting the higher prices that result
during infancy.
C) Other countries retaliate by limiting exports of technology needed by the infant
industry producers.
D) If the industry does not lower costs sufficiently to be competitive, it becomes a
formidable pressure group for continued protection. -Answer- D
, 17) The industrialization argument for trade protection in developing countries is based
on the assumption that ________.
A) the protected industry will become competitive over time with economies of scale
B) unemployment and underemployment exists in rural areas, so little agricultural output
is lost as people move into industrial jobs
C) subsidizing production is a better means of protection than limiting imports
D) it is better to depend on buying agricultural surpluses from developed countries than
to produce these agricultural goods -Answer- B
18) Unlike the infant-industry argument, the industrialization argument for trade
protection ________.
A) requires independence from other countries
B) stresses labor-intensive production methods despite high costs
C) emphasizes use of locally available raw materials for manufacturing inputs
D) presumes that economic growth will occur even if domestic manufactured prices are
not globally competitive -Answer- D
19) Developing countries have sometimes adopted policies to shift people out of
agriculture and into industry by protecting manufactured production. One of the
problems they have encountered is that ________.
A) people have been too reluctant to leave rural areas to go to the cities
B) food shortages have increased in rural areas because of worker shortages
C) demand for social and political services has increased excessively in the cities
D) developed countries have retaliated with protection of products from the developing
countries -Answer- C
20) Terms of trade refers to ________.
A) the quantity of imports that a given quantity of a country's exports can buy
B) specific requirements placed on imports and exports at the port of entry or exit
C) requirements agreed upon by two countries to regulate bilateral trade
D) an account statement showing a country's annual imports and exports -Answer- A
21) Which term refers to restricting imports in order to boost domestic production and
consumption of goods that would otherwise be imported?
A) import substitution
B) terms-of-trade
C) most-favored nation
D) in-sourcing -Answer- A
22) Export-led development refers to ________.
A) a country's efforts to promote its exports in order to reduce its trade deficits
B) a policy to promote domestic production of goods that would otherwise be imported
C) a program to promote industries with export potential
D) decreases in infrastructure development due to the loss of revenue from export tariffs
-Answer- C
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