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BUSI 3250 Exam 2 Questions with Complete Answers
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BUSI 3250 Exam 2 Questions with Complete Answers
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BUSI 3250 Exam 2 Questions withComplete Answers
Nationalization - Answer-The taking of private property by a government to make it
public (also called expropriation)
Why does nationalization occur? - Answer-motivated by the belief that the government
can manage a public good or necessity better than the private, profit-driven sector
Stable government - Answer-maintains itself in power and whose fiscal, monetary, and
political policies are predictable and not subject to sudden, radical changes
Instable government - Answer-Cannot maintain itself in power or makes sudden,
unpredictable, or radical policy changes
protection from unfair competition - Answer-Protects the economic activities of citizens.
Unfair competition is minimized through national laws, negotiations between
governments, efforts of institutions like World Bank.
Terrorism - Answer-unlawful acts of violence committed for a wide variety of reasons
kidnapping - Answer-provides a source of operating funds for terrorists (kidnappers take
home more than $1.5 billion a year)
Piracy - Answer-hijacking and kidnapping on the seas
Cybercrime - Answer-Any illegal Internet-mediated activity that takes place in electronic
networks (North Korea tries to hack Phizer for COVID data)
Country Risk Assessment (CRA) - Answer-An assessment of a country's economic
situation and politics to determine how much risk to employees, property, and
investment exists for the firm doing business there (usually political)
Reasons for restricting trade - Answer-*1. Provide for National Defense
2. Impose Sanctions
3. Protect an Infant or Dying Industry*
4. Protect Domestic Jobs
5. Ensure Fair Competition
*6. Retaliate*
Provide for National Defense (reasons restricting trade) - Answer-- Certain industries
need protection from imports because they are vital to security.
- Economists say this is a weak argument and used to gain emotional advantage.
, Impose Sanctions (reasons restricting trade) - Answer-- Inflict economic damage,
punish, or encourage change of behavior.
- Seldom achieve their goal.
- Produce collateral economic damage.
Protect an Infant or Dying Industry (reasons restricting trade) - Answer-- Give infant
industries a chance to grow and build comparative advantage.
- Without this, lower-cost imports will underprice in local market.
- Slow down impact of dying industry—move capital into other sectors.
Retaliate (reasons restricting trade) - Answer-Dumping
1. Selling product abroad for less than cost of production.
2. Selling product abroad for less than price in home market.
3. Selling product abroad for less than price to third-party countries.
Laws against dumping - Answer-US first pass a law against foreign goods dumping in
1916. No law against US companies dumping abroad though
Predatory Dumping - Answer-setting price below another country's to put them of out
business/competition
Social Dumping - Answer-when producers have lower wage rates, lower social costs,
poor worker benefits/conditions
Environmental Dumping - Answer-when an exporter can sell at lower costs due to the
country's loose environmental standards
Tariffs - Answer-taxes on imported goods for the purpose of raising their price to reduce
competition for local producers or stimulate local production
Ad Valorem Duty - Answer-an import duty levied as a percentage of the invoice value of
imported goods
nontariff barriers - Answer-all forms of discrimination against imports other than import
duties
Quantitative Barriers - Answer-numerical limits for specific goods imported during
specific period (quotas and tariff rate)
Voluntary Export Restraint (VER) - Answer-Quota on trade imposed by the *exporting
country*, typically at the request of the importing country's government
Nonquantitative Nontariff Barriers - Answer-(most impactful)
- Direct government participation in trade (subsidy)
- Customs and other administrative procedures
- Gov't & Private Standards
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