Assume That Denmark, a Member of the European Community, Is

question 47

Multiple Choice

Assume that Denmark, a member of the European Community, is contemplating the enactment of a protective tariff for its fledgling electronics industry due to domestic political and economic pressures. Assume further that the EC has a tariff that it has also enacted for all electronics manufacturers within the EC that is considerably lower than the one that is being proposed in Denmark. The policy behind the lower EC tariff is to promote freer trade even at the risk of destroying some of the weaker manufacturers in that organization. In this situation:

• A) Denmark could enact the higher tariff since EC members give up no authority to the organization in regulating trade and business practices.
• B) Generally, when EC economic policies conflict with the laws of member nations, EC law will prevail. Thus, Denmark's tariff may be illegal.
• C) Denmark could petition the United Nations Council of Economic Policy and if it concurs with Denmark, the EC tariff policy would be overridden.
• D) Assuming Denmark is a signatory to GATT, the General Agreement on Tariffs and Trade, it could retain its higher tariff since the purpose of GATT is to protect domestic industries by promoting higher tariffs.

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Definitions:

Transactions

The financial events that affect the financial statements of a business, involving transfers or exchanges of value between two parties.

Current Ratio

An indicator of a business's capacity to meet its obligations due in the next twelve months.

Calculated

Determined by mathematical methods; involving the process of using mathematical or logical techniques to derive a result.

Measure

A method or tool used to quantify or evaluate a variable or quantity.