IB (topic 4) government policy and international trade

What is free trade?

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

• A government payment to a domestic producer

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

• A tax levied on imports

What is the purpose of subsidies in international trade?

• To punish foreign firms that engage in dumping

• To make it difficult for imports to enter a country

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

• To restrict the quantity of imported goods

What is an import quota?

• A tax levied on imports

• A quota on trade imposed by the exporting country

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

• A government payment to a domestic producer

What is the purpose of voluntary export restraints?

• To punish foreign firms that engage in dumping

• To help domestic producers gain export markets

• To restrict the quantity of imported goods

• To make it difficult for imports to enter a country

What is a local content requirement?

• A tax levied on imports

• A quota on trade imposed by the exporting country

• A demand that some specific fraction of a good be produced domestically

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

What are administrative policies in international trade?

• A government payment to a domestic producer

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

• A tax levied on imports

• Rules designed to make it difficult for imports to enter a country

What is the purpose of antidumping policy?

• To make it difficult for imports to enter a country

• To restrict the quantity of imported goods

• To punish foreign firms that engage in dumping

• To help domestic producers gain export markets

What is the infant industry argument in international trade?

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

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

• Governments do not always act in the national interest when they intervene in the economy

• Governments can help firms overcome barriers to entry into industries where foreign firms have an initial advantage

What is strategic trade policy?

• Governments do not always act in the national interest when they intervene in the economy

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

• Governments can help firms overcome barriers to entry into industries where foreign firms have an initial advantage

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

What is the concern with retaliation and trade war in international trade?

• Strategic trade policies may provoke retaliation from other countries

• Governments do not always act in the national interest when they intervene in the economy

• 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