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A small country in Central America previously produced all of its own clothing because it has a strong textiles industry. Recently, it began importing clothing from Philippines, Vietnam, and Bangladesh. What is the likely result for the importing country?


A) it will experience higher clothing prices
B) it will shift additional resources into its own textile industry
C) it will shift resources from textiles to a higher value industry
D) it will export less overall

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

Correct Answer

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When Canada levies a tax on coffee from Ecuador, what type of tax is involved?


A) export duty
B) barter
C) export
D) tariff

E) All of the above
F) A) and B)

Correct Answer

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A medium-sized hardware manufacturer wants to become deeply involved in exporting, but it does not yet wish to actually manufacture any of its products overseas. The company wants to maintain control over its sales while gaining experience in foreign markets. Which option would be best for this company?


A) selling its products outright to an export/import merchant
B) hiring an export/import agent to assist with foreign sales
C) developing totally owned facilities in a foreign market
D) establishing its own sales offices in foreign countries

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

Correct Answer

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If Brazil enacts an import embargo on sugar from other countries, what is the most likely result?


A) decrease in sugar imports
B) increase in sugar imports
C) increase in sugar exports
D) devaluation of Brazilian currency

E) All of the above
F) C) and D)

Correct Answer

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If the value of the Canadian dollar increases substantially relative to other currencies, what is the likely result?


A) Canadian exports and imports will increase.
B) Canadian exports and imports will decrease.
C) Canadian exports will increase and imports will decrease.
D) Canadian exports will decrease and imports will increase.

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

Correct Answer

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If Canada were to increase the tariff for steel by 50%, what would be the desired effect of this change?


A) to increase the price and amount of steel imports
B) to decrease the price and amount of steel imports
C) to increase the price of steel imports and decrease the amount of steel imports
D) to decrease the price of steel imports and increase the amount of steel imports

E) A) and C)
F) None of the above

Correct Answer

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Absolute advantage is the ability to produce a specific product more efficiently than any other country. Canada has an absolute advantage in which of the following?


A) oranges
B) wheat
C) water
D) copper

E) None of the above
F) A) and B)

Correct Answer

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Suppose the Canadian dollar is strong relative to the euro. Which of the following would one expect to see regarding imports and exports?


A) imports to Canada decrease while Canadian exports increase
B) imports to Canada increase while Canadian exports increase
C) imports to Canada decrease while Canadian exports decrease
D) imports to Canada increase while Canadian exports decrease

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

Correct Answer

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Suppose Gillette is seeking a manufacturer in Bangladesh that will produce and market Gillette razors in that country. Gillette expects a royalty from its partner in Bangladesh. Which arrangement will be the best choice for Gillette?


A) export/import agent agreement
B) joint venture
C) licensing
D) multinational agreement

E) C) and D)
F) None of the above

Correct Answer

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Reasons cited for imposing restrictions on foreign trade include which of the following?


A) the loss of jobs in foreign countries
B) higher prices for consumers
C) restriction of consumer choices
D) protection of the health of its citizens

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

Correct Answer

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Member nations of this economic community include Australia, Japan, and the United States.


A) EU
B) NAFTA
C) APEC
D) ASEAN

E) None of the above
F) A) and C)

Correct Answer

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C

The goals of regional economic integration include which of the following?


A) increased trade barriers
B) lower tariffs
C) smaller flow of international trade
D) lower import quotas

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

Correct Answer

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Canada is considered the global leader in many high-value industries. Which of the following is NOT one of those industries that Canada is a global leader in?


A) financial services
B) telecommunications
C) agriculture
D) technology development

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

Correct Answer

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Howard believes that there should be no trade restrictions for any reason. What would Howard say are the negative consequences of trade restrictions?


A) lower tariffs
B) lower prices
C) more consumer choice
D) higher prices

E) None of the above
F) All of the above

Correct Answer

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D

Which entity has a collective economy that is larger than the United States and almost three times larger than Japan?


A) NAFTA
B) EU
C) APEC
D) ASEAN

E) B) and C)
F) A) and D)

Correct Answer

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Companies that purchase calculators in Taiwan and have them shipped back to Canada for resale are engaging in which of the following practices?


A) exporting
B) shipping
C) importing
D) dumping

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

Correct Answer

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Suppose that India changes the tariff on all imports from 40% to 10%. What is the desired effect of this change?


A) to increase the price and amount of imports
B) to decrease the price and amount of imports
C) to increase the price of imports and decrease the amount of imports
D) to decrease the price of imports and increase the amount of imports

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

Correct Answer

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Tunisia has struggled with economic stability due to political transitions, work stoppages, and terrorist attacks that devastated the tourism industry. Which organization may be able to help Tunisia?


A) The IMF
B) The WTO
C) The United Nations
D) The World Bank

E) None of the above
F) All of the above

Correct Answer

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A

Totally owned facilities overseas are an example of which of the following?


A) indirect investment
B) direct investment
C) licensing
D) joint venture

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

Correct Answer

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If Indonesia enacts an embargo on all goods from Canada and changes average import tariffs from 10% to 30%, what is the expected impact in Indonesia?


A) increased exports to Canada
B) more consumer choice
C) less consumer choice
D) lower prices for Indonesian consumers

E) B) and C)
F) A) and D)

Correct Answer

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