GTS-Topic 6

A situation where countries export a product at a price below the cost of its production is

       known as

• dumping.

• price skimming.

• new protectionism.

• price discrimination.

A specification of a maximum amount of a foreign produced good that will be allowed to

       enter the country over a given time period is known as a/an

• export quota.

• import quota.

• export subsidy.

• domestic subsidy.

Which of the following is NOT the political argument for government intervention?

• To protect the jobs and industries.

• To protect consumers from unsafe products.

• To protect the national security in defense-related industries.

• To assist the firm in obtaining first mover advantages in an industry.

This policy suggests that a government should use subsidies to support promising firms that are gaining first-mover advantage in an emerging industry.

• The infant industry argument

• Strategic trade policy

• The endogenous growth theory

• The retaliation policy

A _____ generates government revenue.

• quota

• subsidy

• export ban

• tariff

Which of the following statements BEST describes economic arguments for government intervention?

• Government protects consumers from unsafe products by limit the import of such products.

• Government uses trade policy to strengthen the relationship with another country.

• Government uses trade policy to improve the human rights policies of trading partners.

• Government provides subsidies to the domestic firms as the early entrant to the world market in order to boost the overall wealth of a country.

Free trade

• support mercantilist philosophy.

• was first proposed by David Ricardo under the theory of comparative advantage.

• refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country.

• encourages the government intervention toward trade and maintains that it is not in the best interests of a country.

When the United States imposed a VER on cars from Japan,

• Japanese firms were the recipients of the rents from the quantitative restriction.

• Japanese car companies responded by lowering the U.S. prices of their cars.

• it was implemented by the U.S. levying a 25% tariff on cars from Japan.

• the effect was to restrict U.S. imports from all foreign countries.

Which of the following is NOT the reason of government intervention in trade?

• To protect national security.

• To support foreign policy objectives.

• To retaliate to unfair foreign competition.

• To expose consumer to unsafe products.

In late 2012, the United States suspended trade sanctions against Myanmar in 

   response to democratic reforms in that country.

This example of government intervention in trade BEST describes the protection of   

• human rights.

• national economy.

• jobs and industries.

• consumers from dangerous products.