MGMT1005 Quiz 4

What is international trade?

• International trade is the buying, selling and exchange of goods and services across national borders.

• International trade is when economic agents buy, sell or exchange goods and services.

• International trade occurs across borders and across products and services.

• International trade is when goods and services are exchanged across borders.

Why do governments intervene in trade?

• Trade intervention occurs when governments try to meet their WTO and economic/political obligations.

• Trade intervention is used by governments to create and use influence.

• Government intervene in trade for a range of economic, political and cultural reasons.

• Governments intervene in trade for a range of reasons - to promote free trade through to meeting the obligations imposed by the WTO.

Which instruments do governments use to increase trade?

• Political and cultural threats and offers.

• Governments use a range of tools to increase trade - from subsidies and export financing through to trade agreements and government agencies.

• Trade agreements, lobbying and cash incentives.

• The best answer depends on the government we are analysing. However, governments do use a range of promotional strategies from subsidies and licencing through to embargoes and trade agreements.

Which instruments do governments use to decrease trade?

• Governments use a range of strategies from tariffs and quotas through to laws pertaining to local content and currency controls.

• Governments use political tools like lobbying, threats, and legislative requirements.

• The instruments used by governments vary from direct embargoes and restrictions to legislative requirements and subsidies.

• Governments use the tools provided by the WTO, including the special provisions.

What are the main goals of the World Trade Organisation (WTO)?

• The WTO exists to regulate trade among nations.

• The goals of the WTO are the promotion of free trade and open markets, whilst also assisting with trade negotiations.

• The WTO goals are to support free trade, assist with negotiations to open markets, and to settle trade disputes among members.

• The goals of the WTO are to promote free trade and set policy for it'smembers.

Why is free trade generally considered beneficial for nations?

• It encourages countries to specialise in goods they produce efficiently and trade for others.

• It ensures that every citizen benefits equally from trade.

• It protects local industries from international competition.

• It increases government control over the economy.

David Ricardo’s theory of _____________________ explains that countries should specialise in producing goods they can make most efficiently and trade for those they produce less efficiently.

According to the product life cycle theory, what typically happens when a product becomes standardised?

• Production remains in the innovator country to maintain quality and control, while exports continue at a lower rate.

• Manufacturing shifts to lower-cost countries, and the innovator may become an importer.

• Global demand for the product usually declines.

• Trade flows remain unchanged over time.

Name two ways governments can play a proactive role in promoting national competitive advantage, according to Porter’s Diamond model.

Which of the following is one of the main implications of international trade theory for business practice?

• Firms should centralise all operations in the home country.

• International trade theories are mainly academic and rarely apply to practice.

• Governments, not firms, determine international competitiveness.

• Managers should consider location, first-mover, and policy implications when forming strategy