The ________ clause embodied the fundamental principle of GATT—trade without discrimination.

The ________ clause embodied the fundamental principle of GATT—trade without discrimination.

A) most-favored-nation
B) nontariff barriers
C) free rider
D) normal trade relations


Answer: A) most-favored-nation

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Multinational Business Chapter 7

• NAFTA was primarily formed because the member nations have ________.
• Which of the following are members of NAFTA?
• Which of the following recently threatened the future of the EU's common currency?
• Korman Industries is a foreign multinational that recently established operations in the European Union. What is the most likely advantage for Korman as a result?
• Hudson Manufacturing is an MNE based in the U.S. with operations in Asia. The firm is considering expansion into the European Union. Executives at the firm are debating whether central Europe or Eastern Europe would be best for the firm. Which of the following best supports a decision to establish operations in Eastern Europe?
• Hudson Manufacturing is an MNE based in the U.S. with operations in Asia. The firm is considering expansion into the European Union. Which of the following questions is most relevant to the decision?
• Which of the following members of the European Union has NOT adopted the euro?
• Which of the following statements about the euro is true?
• The ________ is the common currency of the European Union.
• Critics of the Lisbon Treaty primarily argue that the legislation will ________.
• Which of the following was primarily responsible for establishing the euro?
• The EU organization that ensures consistent interpretation and application of EU treaties is the ________.
• The EU organization that provides political leadership, drafts laws, and runs the daily programs of the EU is the ________.
• The three major responsibilities of the ________ are legislative power, control over the budget, and supervision of executive decisions.
• The ________ is the European Union's ultimate decision-making body and is composed of the different ministers of the member countries.
• Because the size of the market increases when trade barriers fall, companies can increase their production, which will result in lower costs per unit. This phenomenon is known as ________.
• Assume that U.S. companies are importing the same product from Mexico and Taiwan. The United States enters into an FTA with Mexico but not with Taiwan. Consequently, the United States begins to import more goods from Mexico (due to lower tariffs) than from Taiwan, even though the Mexican products are not any better or cheaper. This is most likely an example of ________.
• A free trade agreement is likely to increase efficiency because of ________.
• Since production has shifted to more efficient producers due to comparative advantage, consumers in Country X have had access to more goods at lower prices. Which of the following most likely exists?
• When the European Union was formed, the size of the market increased for European companies. This is most likely an example of a ________.
• Trade shifting to countries within a regional trade agreement at the expense of trade with countries not in the agreement is called ________.
• ______ effects of economic integration are the overall growth in the market and the impact on a company caused by expanding production and by the company's ability to achieve greater economies of scale.
• ______ effects of trade agreements are the shifting of resources from inefficient to efficient companies as trade barriers fall.
• Members of the Andean Community (CAN) have a common external tariff. CAN is most likely a ________.
• A ________ results when free mobility of factors of production is added to a customs union.

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