Mgmt 335

Question 110 pts

Which of the following occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area?

| Efficiency gain |

| Trade diversion |

| Trade deficit |

| Trade creation |

Question 210 pts

The European Community was established by:

| the Treaty of Rome signed in 1957. |

| the Maastricht Treaty signed in 1991. |

| the Maastricht Treaty of 1994. |

| the Single European Act of 1987. |

Question 310 pts

Country A and Country B entered into a free trade agreement recently. After this, Country A starts importing heavy machinery from Country B. Country A used to previously import such machinery at lower rates from another country. Which of the following has occurred in this scenario?

| Trade creation |

| Efficiency gain |

| Trade deficit |

| Trade diversion |

Question 410 pts

Which of the following is a major drawback of using the product life-cycle theory in explaining FDI?

| It ignores the fact that firms invest in a foreign country when demand in that country will support local production. |

| It does not explain why firms invest in developing countries when cost pressures become intense. |

| It fails to identify when it is profitable to invest abroad. |

| It ignores the fact that licensing as an entry strategy has its limitations. |

Question 510 pts

To ensure that a free trade agreement does not result in trade diversion, which of the following has to come within the scope of WTO?

| Nontariff barriers |

| Services |

| Energy markets |

| Tax rates |

Question 610 pts

Why is the European Council said to be the ultimate controlling authority within the EU?

| Since it is responsible for implementing EU legislation and monitoring compliance with EU laws by member states |

| Since its role in setting competition policy is becoming increasingly important to business |

| Since it has the right to vote on the appointment of...