Final

Question 1

Is the simple average tariff rate normally lower than the weighted average tariff rate?

Answer 1

No

Question 2

Does the higher the HH market concentration index mean the greater diversification of a country’s trading partners?

Answer 2

Yes

Question 3

When Burberry decided to cut off their deal with Sanyo Shokai and open its own flagship stores in Japan, did they move from licensing to franchising?

Answer 3

No

Question 4

Is the management complexity and financial return from exporting to a foreign market less than using an FDI strategy?

Answer 4

Yes

Question 5

How can the CIF value be calculated?

Answer 5

By summing the cost of goods, shipping cost, and insurance cost together

Question 6

What is a subsidy?

Answer 6

Financial assistance or support given by the government to help reduce costs or encourage certain activities

Question 7

What are local content requirements?

Answer 7

Regulations or policies that mandate a certain percentage of a product/service to be sourced or produced domestically

Question 8

What is an ad valorem tariff?

Answer 8

A tax imposed on imports based on the value of the product

Question 9

What is a specific tariff?

Answer 9

A fixed fee or tax imposed on an imported product based on its quantity, weight, or volume, rather than its value

Question 10

Are administrative policies, rules or guidelines set by an organisation or government to manage its operations and activities?

Answer 10

Yes

Question 11

What are antidumping policies?

Answer 11

Regulations/measures that a government puts in place to prevent unfair pricing from foreign companies

Question 12

What are voluntary export restraints (VERs)?

Answer 12

Agreements between exporting and importing nations where the exporting country agrees to limit the quantity of goods it sends to the importing country

Question 13

What are countervailing duties?

Answer 13

Tariffs imposed by a country on imported goods that have received unfair subsidies from the exporting country’s government

Question 14

If FDI is considered as a substitute for direct export, what will it contribute to the home country?

Answer 14

Current account deficit

Question 15

What law did the U.S. enact during the 1930s to limit the importing of foreign goods?

Answer 15

The Smooth-Hawley Act

Question 16

In the 2001 Doha talks state 4 things the WTO spoke about?

Answer 16

Cutting tariffs on industrial goods/services, removing subsidies to agricultural producers, reducing barriers to cross-border investment, and limiting the use of antidumping laws

Question 17

Does the USA believe that if they strike a deal with Kenya, this will lead to being able to strike deals elsewhere in Africa and counter China’s growing influence there?

Answer 17

Yes

Question 18

When was free first officially embraced?

Answer 18

By Great Britain, when they repealed from the Corn Laws

Question 19

What was the GATTs main purpose?

Answer 19

To liberalise trade by eliminating tariffs, subsidies, import quotas etc

Question 20

What was different about the Uruguay round compared to the Doha round?

Answer 20

More protection for intellectual property rights

Question 21

Which round caused a huge dip in the average tariff in the United States?

Answer 21

Tokyo round in 1979

Question 22

What are infant industries?

Answer 22

New or emerging industries that is not yet able to compete with established industries because it is still developing and lacks experience, resources, or economies of scale

Question 23

Do tariffs used to protect infant industries promote more efficient use of resources?

Answer 23

No

Question 24

In which industry does the U.S. want China to reduce overcapacity in?

Answer 24

Steel

Question 25

What is a common hybrid of a quota and a tariff known as, and what does a tariff rate quota do?

Answer 25

Tariff rate quota, and a lower tariff is applied to imports within the quota than those over the quota

Question 26

Define quota rent

Answer 26

Extra profit producers make when supply is artificially limited by an import quota

Question 27

What is one focus of strategic trade policy?

Answer 27

To help domestic companies gain a first-mover advantage (

Question 28

When can an investment be considered FDI?

Answer 28

Typically it is when the investor owns at least 10% of a company's equity or voting shares in another country

Question 29

If a company considers FDI as a substitute for direct export, would it generate current account deficit for its home country, and current account surplus for its host country?

Answer 29

Yes

Question 30

What would the initial outflow for FDI be considered as for a home country, and for a host country?

Answer 30

Capital transfer payment for the home country, and capital transfer receipt for the host country

Question 31

What would the outflow of earnings be considered as for the home, and host nation respectively?

Answer 31

Primary income receipt for the home nation, and primary income payment for the host nation

Question 32

What does the stock of FDI refer to?

Answer 32

The total accumulated value of foreign-owned assets at a given time

Question 33

State an example of franchising

Answer 33

Dipper Donuts licenses its brand name to foreign firms, however this firms must follow the same operations as Dipper Donuts restaurants elsewhere. The foreign firms then have to pay Dipper Donuts a percentage of their profits

Question 34

Does FDI occur when a firm invests directly facilities to produce or market a good/service in a foreign country?

Answer 34

Yes

Question 35

What is a Greenfield investment?

Answer 35

The establishment of a new operation in a foreign country

Question 36

What is proprietary technology?

Answer 36

Technology, software, or innovations that are owned and controlled by a specific company or individual

Question 37

What is multipoint competition?

Answer 37

When two or more enterprises encounter each other in different regional markets, national markets, or industries

Question 38

What would a country that relies on the pragmatic nationalist view say about FDI?

Answer 38

That it should be allowed so long as the benefits outweigh the costs

Question 39

What effect does a nation putting government-backed insurance programs in place to cover major types of foreign investment risk have?

Answer 39

Encouraging outward FDI by a home country

Question 40

Does a common market have any barriers to trade among member countries?

Answer 40

No

Question 41

Does a customs union create a central source for coordinating the economic, social, and foreign policy of member states?

Answer 41

No

Question 42

Do economic theories suggest that free trade and investment is a zero-sum game, where all participating countries stand to lose?

Answer 42

No

Question 43

Has complete success of a free trade regime been achieved?

Answer 43

No

Question 44

When does trade creation occur?

Answer 44

When high-cost domestic producers are replaced by low-cost producers within the free trade area

Question 45

As of 2020 had all members of the EU adopted the euro as their currency?

Answer 45

No

Question 46

Would the common currency of the euro make it easier to compare prices and increase the competition between companies?

Answer 46

Yes

Question 47

Did the USMCA reduce how much of an automobile's content needed to be produced in the United States?

Answer 47

Yes

Question 48

Has Mercosur been successful in creating a customs union between Peru and Colombia?

Answer 48

No

Question 49

What countries are the core members of Mercosur?

Answer 49

Argentina, Brazil, Paraguay, Uruguay

Question 50

What would you find under a common market agreement?

Answer 50

Free movement of labor because there are no restrictions on immigration or emigration

Question 51

Define trade diversion

Answer 51

When a country shifts its imports from a more efficient producer outside a trade bloc to a less efficient producer within the bloc

Question 52

How many trade blocs are in Europe?

Answer 52

Two

Question 53

Define free trade?

Answer 53

Countries can buy and sell goods and services between each other without tariffs or quotas. Does not set a common external trade policy

Question 54

Define custom union

Answer 54

A group of countries that agree to remove tariffs on trade between them and adopt the same tariffs on goods coming from outside the group

Question 55

Define common market

Answer 55

The same as custom union but also allows the free movement of people, services, and capital (money)

Question 56

Did ASEAN sign a free trade agreement with China that removes tariffs on 90% of traded goods?

Answer 56

Yes

Question 57

Is the Andean community a customs union?

Answer 57

Yes

Question 58

Has ASEAN seen little progress to foster free trade?

Answer 58

Yes

Question 59

Was the Andean community based on the EU model in 1969?

Answer 59

Yes

Question 60

Had the Andean community all but collapsed in the 1980s?

Answer 60

Yes

Question 61

Did Venezuela join the Andean community but then withdraw?

Answer 61

Yes

Question 62

In its current state at which level of economic integration can EU be described as?

Answer 62

Political union

Question 63

Does a common market have a common currency?

Answer 63

No

Question 64

Why was the Single European Act put in place?

Answer 64

Remove all impediments to the formation of a single market

Question 65

What can currency arbitragers profit from?

Answer 65

The different currency exchange rates in different markets

Question 66

What is a spot exchange rate?

Answer 66

The real-time exchange rate you get when you exchange currencies right away

Question 67

What might happen when a company has an outstanding account payable/receivable denominated in a foreign currency?

Answer 67

Transaction exposure due to exchange rate fluctuation

Question 68

When you have concern of exchange fluctuations should you purchase a forward contract to ensure that you pay the same price when the payment comes around?

Answer 68

Yes

Question 69

Will market psychology impact the value of currency in the long term?

Answer 69

No

Question 70

Define translation exposure

Answer 70

The impact of currency exchange rate changes on the reported financial statements of the company

Question 71

Are the majority of foreign exchange transactions forward exchange rates?

Answer 71

Yes

Question 72

What exchange rate does Vietnam have?

Answer 72

Pegged

Question 73

What is a pegged exchange rate?

Answer 73

When a country's currency is tied to another currency (stronger currency)

Question 74

Can a currency being pegged to another be a problem?

Answer 74

Yes

Question 75

Would a depreciation in the value of the U.S. dollar be most beneficial for Vietnam's coffee growers?

Answer 75

Yes

Question 76

Define economic exposure

Answer 76

The extent to which a firm's future international earning power is affected by changes in exchange rates

Question 77

What does Trump mean by China being a money manipulator?

Answer 77

China intervening in the foreign exchange market to influence the value of the yuan to benefit Chinese interests

Question 78

Define arbitrage

Answer 78

The purchase of securities in one market for immediate resale in another to profit from a price discrepancy

Question 79

When is a market efficient?

Answer 79

When it's prices reflect all available public information

Question 80

Define countertrade

Answer 80

Goods and services can be traded for other goods and services

Question 81

How are spot exchange rates determined?

Answer 81

By the interaction between demand and supply of a currency relative to other currencies

Question 82

State a country that has adopted dollarisation as its currency?

Answer 82

Belize

Question 83

In what year was the Bretton Woods System established?

Answer 83

1944

Question 84

Under the Bretton Woods system, how many USD was pegged to an ounce of gold?

Answer 84

$35

Question 85

Which U.S. president announced the ending of the Bretton Woods agreement in 1971?

Answer 85

Richard Nixon

Question 86

What kind of exchange rate regime did the U.S. switch to following the Bretton Woods agreement?

Answer 86

Floating

Question 87

What could be done by a central bank to prevent further depreciation of its home currency against USD?

Answer 87

Sell USD and buy home currency

Question 88

Which two international institutions were founded at Bretton Woods conference in 1944?

Answer 88

World Bank and International Monetary Fund (IMF)

Question 89

Prior to the intervention of the IMF in 2016, what exchange rate policy did Egypt follow?

Answer 89

Pegged

Question 90

When does a currency crisis occur?

Answer 90

When an attack on the exchange value of a currency results in a sharp depreciation of the currency

Question 91

Can a crisis currency force authorities to expand large volumes of international currency reserves and sharply increase interest rates?

Answer 91

Yes

Question 92

When was the Jamaica agreement and what did it accomplish?

Answer 92

It was made in 1976, and it officially ended the system where currencies were tied to gold

Question 93

What two things are currently reflected in foreign exchange activities?

Answer 93

Speculation and government intervention

Question 94

Can a floating exchange rate go up or down depending on things like trade, investment, and global events?

Answer 94

Yes

Question 95

How is the value of a currency determined under a floating exchange rate system?

Answer 95

By market forces of supply and demand

Question 96

Does the United States use a floating exchange rate system?

Answer 96

Yes

Question 97

What is a managed float system (dirty float)?

Answer 97

Mainly run on supply and demand in the market, with the government/central bank stepping in occasionally

Question 98

When could the Bretton Woods system not work?

Answer 98

If the U.S. dollar was under speculative attack

Question 99

Is the foreign exchange market a mixed system?

Answer 99

Yes

Question 100

Is profit growth measured by the percentage increase in a company's total revenue overtime?

Answer 100

No

Question 101

How is the value a firm creates measured?

Answer 101

By the difference between costs of production and the value consumers perceive in its products

Question 102

Did Michael Porter once state that the only way for firms to create superior value is to export all manufacturing processes?

Answer 102

No

Question 103

Can support activities be just as important as primary activities when attaining a competitive advantage?

Answer 103

Yes

Question 104

What is location economies?

Answer 104

Economies that arise from performing a value creation activity in the optimal location

Question 105

What does a localisation strategy not focus on?

Answer 105

Mass production of products to meet general tastes and preferences

Question 106

According to researchers should firms facing strong cost pressures and pressures for local responsiveness pursue a global standardisation strategy?

Answer 106

No

Question 107

Define consumer surplus

Answer 107

The difference between what a consumer is willing to pay and what they actually pay

Question 108

What is value creation formula?

Answer 108

Customer's willingness to pay - cost to produce

Question 109

What does Michael Porter say the two basic strategies for creating value and attaining a competitive advantage in an industry are?

Answer 109

Differentiation and low-cost

Question 110

What are primary activities in terms of the operation of a company?

Answer 110

Core processes directly involved in creating and delivering a product or service to customers

Question 111

Define learning effects

Answer 111

Improvements in efficiency and performance that occur as individuals or organisations gain experience with a task or process overtime

Question 112

Define transnational strategy

Answer 112

About balancing global consistency with flexibility in different countries to compete effectively in the international market

Question 113

What does regionalism refer to?

Answer 113

The idea of promoting and supporting the interests of a specific area, often in contrast to global concerns

Question 114

What does the experience curve refer to?

Answer 114

As a company produces more of a product overtime, it becomes more efficient at making it, reducing cost per unit

Question 115

What do firms that pursue global standardisation focus on?

Answer 115

Increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies

Question 116

Define opportunism

Answer 116

The act of taking advantage of situations for personal gain, exploiting opportunities that arise