Business Policy Mock Test

Which of the following is an example of an ad valorem tariff?

• only licensed importers can import automobiles

• 20% on imported automobiles

• $300 tariff on each imported computer

• D. 25% of automobile must be manufactured domestically

Answer explanation

Ad valorem tariffs: levied as a proportion of the value of an imported good.

Two of the first industries targeted for reform by the WTO with a view to encompass regulations governing foreign direct investment were:

• global telecommunication and financial services industries

• scientific research and defense sector

• pharmaceuticals and heavy metal industry

• agriculture and biotechnology

Answer explanation

Two of the first industries targeted for reform in terms of FDI regulations were the global telecommunication and financial services industries. These sectors were considered crucial due to their significant impact on international trade and investment flows

Which of the following illustrates the costs associated with regional economic integration?

• The Andean Pact was largely based on the EU model, but was far less successful at achieving its stated goals

• Due to the establishment of NAFTA, Canadian workers in the textile industry lost their jobs as Canadian firms moved production to Mexico

• Americans suffer job losses when technology support work is outsourced to cheaper locations to countries like India

• The euro is now used by 16 of the 27 member states of the European Union, with some countries opting to retain their national currencies

Answer explanation

Regional economic integration refers to the process of countries within a specific geographic region coming together to promote economic cooperation and integration

Which of the following are not criteria for entry into the Euro Zone?

• High national debt

• Sound fiscal situation

• High degree of price stability

• Converged long term interest rates

Answer explanation

The criteria for entry into the Euro Zone include:

1. 1. Sound fiscal situation: Countries must have a budget deficit that is below 3% of their GDP and a government debt that is below 60% of their GDP.

2. 2. High degree of price stability: Countries must have a low inflation rate and demonstrate the ability to maintain price stability.

3. 3. Converged long-term interest rates: Countries must have interest rates that are close to the average interest rates of the three countries with the lowest inflation rates in the Euro Zone.

In the US, which branch of government has the ability to impose antidumping duties?

• Judiciary

• House of Representative

• Senate

• President

Which of the following are not factors that led to the collapse of Bretton Woods?

• Role of US dollar in the system

• US macroeconomic policy

• US began importing more than it was exporting

• Speculative attack on the Japanese Yen

Which of the following are not considered political reasons for economic integration?

• Economic integration creates incentives for political cooperation

• Economic integration allows countries to enhance their political weight in the world

• Economic integration allows countries to eliminate nationalism and patriotism

• Economic integration reduces potential for violent conflict

Answer explanation

In fact, economic integration can coexist with national identity and patriotic sentiments.

In a _____ staffing approach, host country nationals have limited opportunities to gain experience outside their own country

• Geocentric

• Ethnocentric

• Transnational

• Polycentric

Answer explanation

The polycentric approach assumes that individuals from the host country possess the necessary knowledge, cultural understanding, and expertise to effectively manage local operations. This approach limits the mobility and opportunities for host country nationals to gain international experience or work in other countries within the organization.

Which of the following observations is true?

• Countries adopting the euro have to give up control over monetary policy

• Countries adopting the euro need not give up their own currencies

• Countries adopting the euro need only to satisfy the criteria of being democratic in nature

• Countries agreeing to the euro allow their exchange rates to float against each other

Which of the following are not reasons the radical view of FDI is in retreat:

• poor economic performance of countries that embraced this view

• collapse of communism in Eastern Europe

• strengthening US dollar all around the world

• strong economic performance of countries that embraced capitalism

Answer explanation

Three reasons for the retreat of radical view:
(1) The collapse of communism in Eastern Europe

(2) Poor economic performance of countries that embraced this view

(3) Strong economic performance embraced capitalism rather than radical ideology