Review

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Chapter 6

Review Questions

1.) At the beginning of the chapter 6 the author cites a number of nations that put up barriers to imports. Give the nations and the means used by each nation to block imports.

Pg 196 - 197

2.) What does the author claim as the benefits of free trade? What are the ultimate consequences when a nation tries to limit trade?

Pg 198

3.) Who are the winners when a nation decides to manipulate trade? Who loses?

Pg 199

4.) Are subsides a good idea for a nation to use in agriculture sector of its economy? How about in the high technology sectors like commercial aircraft or semiconductors?

Pg 200

5.) In the Country Focus section on page 201 the author provides the example of Japan and wheat growers. What means did Japan use in this example to support their wheat growers? What was the impact on the citizens of Japan?

Pg 201

6.) What is the Buy America Act and what effect does it have on foreign firms wanting to sell items to the US government?

Pg 203

7.) In the Management Focus section on page 204 the author discusses the ITC and the magnesium market. Do you think the ITC acted correctly or not when it ruled in favor of anti-dumping measures? Explain

pg 204

8.) What are the political arguments for government intervention in trade? What are the economic arguments?

Pg 205 – 211

9.) What would be Paul Krugman’s argument for creating the WTO?

Pg 211

10.) What was the enforcement mechanism under the GATT and what would be the penalty to a country that did not comply to its ruling? What is the enforcement mechanism under WTO and what penalty that is used to force compliance?

Pg 213 – 215 & 209

11.) What are the other barriers beside trade that the WTO has worked on since its creation?

Pg 216

12.) The 1999 WTO meeting in Seattle, WA can be characterized as having many contentious parties both inside and outside the organization. What was the contentious issue that came up among members...