Trade and Gvt Intervention

Question 1

What are four reasons for the growth of international trade since 1950?

Answer 1

Openness to trade, advances in technology, global economic growth, population increase.

Question 2

Why might a firm choose to import?

Answer 2

Input unavailable domestically, cost reduction, diversify supply sources.

Question 3

What was the primary source of U.S. government revenue before 1913?

Answer 3

Tariffs.

Question 4

What percentage of goods are transported by sea?

Answer 4

Over 80%

Question 5

Examples of industrial clusters?

Answer 5

Silicon Valley (tech), Wall Street (finance), Bangalore (IT), Northern Italy (fashion).

Question 6

What are the six key cultural concepts affecting international business?

Answer 6

Power Distance, Uncertainty Avoidance, Social Orientation, Communication Context, Time Orientation, Personal Space

Question 7

Why do countries trade?

Answer 7

To access unavailable goods, increase efficiency, and improve competitiveness.

Question 8

How do tariffs generate government revenue?

Answer 8

Governments collect taxes on imported goods.

Question 9

What is government intervention in trade?

Answer 9

Actions by a government to influence international trade.

Question 10

What is the concept of “created competitiveness”?

Answer 10

A nation’s competitiveness is built through deliberate policy and development.

Question 11

What does the U.S. depend on Canada for?

Answer 11

Crude oil, electricity, and significant trade volume.

Question 12

What is an industrial cluster?

Answer 12

A geographic concentration of interconnected businesses in a specific field.

Question 13

What’s one way importers can respond to tariffs?

Answer 13

Source from alternate countries or renegotiate contracts.

Question 14

What does a national industrial policy aim to achieve?

Answer 14

Long-term growth and competitiveness in selected sectors.

Question 15

What does the Porter Diamond Model conclude?

Answer 15

National prosperity is created, not inherited.

Question 16

What are infant industries?

Answer 16

Emerging sectors that may need protection to grow and compete globally.

Question 17

What is the role of supporting industries in the Diamond Model?

Answer 17

They enhance efficiency and innovation in key sectors.

Question 18

What are some recent U.S. tariff increases (as of 2024)?

Answer 18

EVs (to 100%), semiconductors (to 50%), solar cells (to 50%), and others.

Question 19

What is an example of a failed tariff policy?

Answer 19

2009 U.S. tariffs on Chinese tires – temporary job gains but long-term consumer harm.

Question 20

How can companies mitigate effects of government intervention?

Answer 20

Diversify sourcing, lobby policymakers, adjust pricing, explore alternative markets.

Question 21

What is a real-world consequence of trade wars?

Answer 21

Higher prices, supply chain disruptions, and economic uncertainty.

Question 22

What drives the internationalization of business?

Answer 22

Increase in international trade and investment.

Question 23

What is a National Industrial Policy?

Answer 23

A government strategy to support key industries to enhance competitiveness.

Question 24

What is the goal of protecting domestic jobs through trade policy?

Answer 24

Prevent job loss to foreign competitors by limiting imports.

Question 25

What is the impact of high tariffs on consumers?

Answer 25

Higher prices and fewer choices.

Question 26

What are the four elements of the Porter Diamond?

Answer 26

Factor conditions, demand conditions, related/supporting industries, firm strategy/structure/rivalry.

Question 27

How can protectionism affect domestic innovation?

Answer 27

It may reduce competitive pressure, leading to less innovation.

Question 28

What is a trade surplus?

Answer 28

When a country exports more than it imports.

Question 29

Who can engage in international trade?

Answer 29

Individuals, companies, and governments.

Question 30

What is a trade war?

Answer 30

A cycle of retaliatory trade barriers between countries.

Question 31

What is the Porter Diamond Model?

Answer 31

A framework explaining national competitive advantage based on four factors.

Question 32

What percentage of U.S. exports go to Canada?

Answer 32

17%

Question 33

What industries has the U.S. traditionally supported with protectionist policies?

Answer 33

Steel, automotive, agriculture.

Question 34

What does liberalization of markets mean?

Answer 34

Reduction of government restrictions on trade and investment.

Question 35

What’s one way exporters can respond to tariffs?

Answer 35

Absorb costs, reclassify products, or relocate production.

Question 36

What are examples of government failure in trade policy?

Answer 36

Quotas on Japanese cars in the 1970s and steel tariffs that backfired.

Question 37

What is the impact of high tariffs?

Answer 37

Reduced competition, higher prices, potential trade wars.

Question 38

What makes clusters attractive for firms?

Answer 38

Access to specialized talent, suppliers, and knowledge-sharing.

Question 39

What percentage of Canada’s exports go to the U.S.?

Answer 39

75%

Question 40

What is a trade deficit?

Answer 40

When a country imports more than it exports.

Question 41

What are tariffs?

Answer 41

Taxes on imported goods.

Question 42

Why are trade agreements important?

Answer 42

They reduce barriers, promote cooperation, and boost trade flows

Question 43

What is protectionism?

Answer 43

Government actions that restrict international trade to protect local industries.

Question 44

What are key ways firms can compete internationally?

Answer 44

Be cheaper, better, faster, or better connected.

Question 45

Why is education critical for national competitiveness?

Answer 45

It builds human capital and drives innovation, yet often faces budget cuts.

Question 46

Common reasons for government intervention in trade?

Answer 46

National defense, politics, job protection, fair competition, revenue, infant industry support.

Question 47

What is a key takeaway from the Diamond Model?

Answer 47

Innovation and strong local conditions create global competitiveness.

Question 48

Why do firms need to be competitive in international trade?

Answer 48

Buyers have many options; firms must offer better price, quality, speed, or relationships.

Question 49

What are unintended consequences of tariffs?

Answer 49

Decreased innovation, hurt consumers, retaliation from other countries.

Question 50

What is the modern view on tariffs in global trade?

Answer 50

Generally discouraged due to negative side effects and reduced efficiency.

Question 51

What is international trade?

Answer 51

The exchange of goods and services across national borders.

Question 52

What industries were affected by recent U.S. tariff increases?

Answer 52

Automotive, electronics, medical, energy, and mineral sectors.

Question 53

What are examples of National Industrial Policy tools?

Answer 53

Tax incentives, infrastructure investment, education, legal reforms.

Question 54

What is the trade balance?

Answer 54

The difference between a country’s exports and imports.

Question 55

What is an example of a tariff backfiring?

Answer 55

U.S. tire tariffs in 2009 led to higher prices for consumers.