Government Policy and International Trade

What is the definition of Free Trade?

• A direct restriction on the quantity of some good that may be imported into a country

• A tax levied on imports

• Absence of barriers to the free flow of goods and services between countries

• A government payment to a domestic producer

What is the purpose of tariffs?

• To further foreign policy objectives

• To ban certain goods from being imported

• To protect consumers from unsafe products

• To help domestic producers compete against low-cost foreign imports

What is the main objective of subsidies?

• To punish foreign firms that engage in dumping

• To restrict the quantity of imported goods

• To make it difficult for imports to enter a country

• To help domestic producers gain export markets

What is the purpose of an import quota?

• To protect national security

• To restrict the quantity of some good that may be imported into a country

• To further foreign policy objectives

• To protect consumers from unsafe products

What is the definition of dumping?

• Selling goods in a foreign market below their cost of production

• A tax levied on imports

• A government payment to a domestic producer

• A direct restriction on the quantity of some good that may be imported into a country

What is the purpose of antidumping policy?

• To help domestic producers compete against low-cost foreign imports

• To protect consumers from unsafe products

• To punish foreign firms that engage in dumping

• To further foreign policy objectives

What is the Infant Industry Argument?

• An industry should be protected until it can develop and be viable and competitive internationally

• Governments can help raise national income if domestic industry can gain first-mover advantages

• Strategic trade policies aimed at establishing domestic firms in a dominant position in a global industry

• A tax levied on imports

What is the main reason for governments to intervene in international trade for political reasons?

• Boosting the overall wealth of a nation

• Strategic trade policy

• The Infant Industry Argument

• Protecting jobs and industries

What is the main reason for governments to intervene in international trade for economic reasons?

• Protecting jobs and industries

• Boosting the overall wealth of a nation

• Strategic trade policy

• The Infant Industry Argument

What is the purpose of local content requirements?

• To punish foreign firms that engage in dumping

• To make it difficult for imports to enter a country

• To demand that a specific fraction of a good be produced domestically

• To help domestic producers compete against low-cost foreign imports