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If France decides it wants to make it difficult for other countries to export wine to French businesses and creates bottling standards that don't exist anywhere else in the world, it would be implementing ________ policies as a way to restrict these imports.


A) antidumping
B) voluntary export restraint
C) administrative trade
D) monopolistic competition
E) tariff rent

F) B) and C)
G) A) and E)

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If a country is experiencing a surge of electronic imports from a trading partner, it might ask that country to set a limit on how much can be exported. This limit is known as a


A) tariff rate quota.
B) quota rent.
C) voluntary export restraint (VER) .
D) quota share.
E) export embargo.

F) B) and D)
G) A) and B)

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Another basis for Krugman's argument is that strategic trade policy can be captured by ________, which will distort the policy so it benefits their own needs.


A) consumers
B) special-interest groups
C) government committees
D) state-owned businesses
E) national leaders

F) A) and E)
G) A) and C)

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The country of Plena imposes an ad valorem tariff of 10 percent on 1 million tons of rice imports, after which an out-of-quota tariff of 80 percent is applied. What trade policy instrument is Plena using?


A) subsidy
B) tariff rate quota
C) voluntary export restraint
D) tariff ceiling
E) local content requirement

F) B) and E)
G) C) and D)

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The WTO rules say that a country can impose antidumping duties on


A) violators of intellectual property laws.
B) farmers who receive subsidies for more than two years.
C) foreign governments that replicate products made by a foreign producer.
D) foreign goods being sold cheaper than at home.
E) nations that don't cooperate with trade agreements.

F) C) and E)
G) A) and B)

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Domestic producers experience limited import competition when a VER is in place. As a result, these producers make extra profit because supply is artificially limited by the import quota. This extra profit is called


A) net profit.
B) quota rent.
C) trade surplus.
D) profit margin.
E) quota share.

F) All of the above
G) B) and D)

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Krugman's main concern with a strategic trade policy is the growth of monopolies within the marketplace.

A) True
B) False

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The Smoot-Hawley Act aimed to liberalize trade by eliminating tariffs, subsidies, and import quotas.

A) True
B) False

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Firms engage in dumping in order to


A) unload excess production in foreign markets.
B) cut labor costs to reduce the costs of production.
C) provide a wider range of products for consumers in foreign markets.
D) meet the voluntary export requirements imposed on it.
E) obtain subsidies from the importing country.

F) C) and E)
G) A) and D)

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In 1975, OPEC did not allow the export of U.S. crude oil in order to drive up the price of oil. This action is an example of a(n)


A) local content requirement.
B) export ban.
C) trade surplus.
D) subsidy agreement.
E) export tariff.

F) A) and C)
G) A) and E)

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Discuss subsidies and detail how they can help domestic producers.

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A subsidy is a government payment to a d...

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Review the two major events that occurred in 2016 that made some believe that not all countries are interested in embracing free trade and lowering trade barriers between nations.

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In 2016, two events challenged the long-...

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Briefly describe the two components of strategic trade policy.

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The strategic trade policy argument has ...

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AllMetal Corp., based in Houston, believes the ideal way for the United States to respond when foreign competitors are already being supported by government subsidies is not to retaliate but to establish rules that help minimize trade-distorting subsidies. Which theorist does AllMetal's management agree with?


A) Krugman
B) Hofstede
C) Hamilton
D) Heckscher-Ohlin
E) Ricardo

F) B) and E)
G) B) and D)

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The WTO was encouraged to extend its reach to encompass regulations governing foreign direct investment, something GATT had never done. Two of the first industries targeted for this reform were


A) global telecommunication and financial services industries.
B) scientific research and defense sector.
C) pharmaceuticals and heavy metal industry.
D) pharmaceuticals and biotechnology.
E) scientific research and agriculture.

F) C) and D)
G) A) and B)

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What is one provision of the Uruguay Round Agreement?


A) A wide range of services were to be excluded from GATT fair trade and market access rules.
B) Tariffs on industrial goods were to be raised by more than one-third, and tariffs were to be scrapped on more than 50 percent on a wide range of services.
C) The International Monetary Fund (IMF) was to be created to implement the GATT agreement.
D) Barriers on trade in textiles were to be significantly reduced over 10 years.
E) Average tariff rates imposed by developed nations on manufactured goods were to be raised by 20 percent of the value, the highest level in modern history.

F) A) and D)
G) B) and E)

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What is a voluntary export restraint? Why do exporting countries agree to VERs? Explain with an example.

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A voluntary export restraint is a quota ...

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Paint products containing lead are banned from entering the United States. This ban is in place to


A) protect domestic businesses from unfair pricing.
B) protest the pricing of paint below its costs of production.
C) protect consumers from unsafe products.
D) increase the trade surplus of the United States.
E) reduce dumping of lead paint.

F) B) and D)
G) A) and E)

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A loophole in antidumping laws that is being exploited by many countries to pursue protectionism is the


A) slackness of enforcement agencies.
B) WTO's noncommittal approach to antidumping laws.
C) bilateral VERs which subvert antidumping laws.
D) vague definition of what constitutes "dumping."
E) lack of consensus among member nations.

F) A) and E)
G) C) and D)

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The economic prosperity enjoyed by ________ during the 1980s and 1990s strained the world trading system and created the demand for increased protectionist measures.


A) the United States
B) India
C) the Soviet Union
D) Japan
E) China

F) A) and C)
G) B) and E)

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