Test Bank For International Business 15th Edition by Daniels

International Business: Environments and Operations, 15e (Daniels et al.)

Chapter 6 Governmental Influence on Trade

1) Protectionism will most likely affect which aspect of a company’s operations?

A) selecting employees

B) investing short-term capital

C) acquiring foreign supplies

D) relocating personnel overseas

Answer: C

Diff: 2

Learning Outcome: Define the fundamental concepts of international business

Skill: Concept

Objective: 1

AACSB: Application of knowledge

2) The term protectionism, when applied to international trade, refers to ________.

A) governmental restrictions and competitive support actions to affect trade flows

B) payments to dock workers to prevent pilferage of imported shipments

C) border checks to prevent the entry of illegal aliens

D) methods used to prevent intellectual property theft

Answer: A

Diff: 1

Learning Outcome: Define the fundamental concepts of international business

Skill: Concept

Objective: 1

AACSB: Application of knowledge

3) Why should managers have an understanding of trade protectionism?

A) Trade protectionism targets factor endowments, thus affecting the best country to locate production.

B) Trade protectionism affects a company’s ability to sell abroad and ability to compete at home.

C) Trade protectionism affects the number of people permitted to practice a specific profession.

D) Trade protectionism prevents companies’ enactment of merger and acquisition agreements.

Answer: B

Diff: 2

Learning Outcome: Define the fundamental concepts of international business

Skill: Concept

Objective: 1

AACSB: Analytical thinking

4) Managers should understand the effect of trade protectionism because ________.

A) trade protectionism may limit the number of people permitted to practice a specific profession

B) trade protectionism requires the payment of high insurance rates to transport goods internationally

C) trade protectionism may prevent companies’ enactment of merger and acquisition agreements

D) trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers

Answer: D

Diff: 2

Learning Outcome: Define the fundamental concepts of international business

Skill: Concept

Objective: 1

AACSB: Application of knowledge

5) The government of Country X imposes import restrictions on steel to help the domestic steel industry in depressed areas. What is the most likely result of such restrictions?

A) damaging other industries in Country X

B) devaluing the currency of Country X

C) lowering steel prices in Country X

D) triggering boycotts in Country X

Answer: A

Diff: 2

Learning Outcome: Discuss arguments for and against government intervention in international business

Skill: Application

Objective: 1

AACSB: Analytical thinking

6) Assume a government places restrictions on a specific product from a specific foreign country. What would be the government’s most likely concern about the foreign country’s response?

A) the foreign producers raising the prices of their exports

B) the foreign country restricting its own imports

C) the foreign country restricting its exports in that industry

D) the foreign producers seeking other markets

Answer: B

Diff: 2

Learning Outcome: Discuss arguments for and against government intervention in international business

Skill: Application

Objective: 1

AACSB: Analytical thinking

7) Assume a government is considering import restrictions on sugar because sugar imports are hurting the domestic industry. Which of the following groups is LEAST likely to speak out on the subject?

A) politicians in areas that grow sugar

B) employees of sugar companies

C) sugar company owners

D) sugar consumers

Answer: D

Diff: 2

Skill: Application

Objective: 2

AACSB: Analytical thinking

8) What is the most likely reason that consumers rarely protest import restrictions that raise the prices they pay for a specific product?

A) They reason that if the import restrictions are removed, the foreign producers will raise their prices to those of the domestic producers anyway.

B) Many countries prohibit consumers to band together to influence political actions.

C) Typically, although the added costs to consumers for a given product are high in aggregate, they are fairly trivial for most individual consumers.

D) They reason that if they do something to hurt domestic employment for one product, the displaced workers will then do something that will hurt their own employment.

Answer: C

Diff: 3

Skill: Concept

Objective: 2

AACSB: Analytical thinking

9) Unemployed workers are most apt to form a pressure group to support ________.

A) export restrictions

B) import restrictions

C) price limitations

D) import subsidies

Answer: B

Diff: 1

Skill: Concept

Objective: 2

AACSB: Application of knowledge

10) Successful trade retaliation is most likely achieved ________.

A) on agricultural products

B) on manufactured products

C) by a large trading country

D) by a small trading country

Answer: C

Diff: 2

Skill: Concept

Objective: 2

AACSB: Reflective thinking