Bonus Module A
IMF quotas are determined by the relative size of a nation in the global economy and A. are the nation's "dues" to the IMF. B. limit trade among IMF members. C. are payable in SDRs. D. may run in arrears for five years.
A
In a free trade area, members drop their tariffs with one another, A. but each retains external tariffs. B. and they also combine their tariffs with other nations. C. but their duties with one another remain in force. D. and labor can move freely among the members.
A
Informal institutions are of two types, A. normative and cognitive. B. successful and unsuccessful. C. normative and inspirational. D. normative and cultural.
A
The major function of the World Bank is to serve as A. a nonprofit banking cooperative for its members to meet development needs. B. a central bank for the world's central bankers. C. a nonprofit cooperative to finance the educational needs of its members. D. an investment in funds in global businesses to create value for its shareholders.
A
ASEAN began as a defensive alliance of 10 Asian nations concerned about A. trade barriers in the West. B. translation issues for their export products. C. the spread of communism in their region. D. Japan's influence in the region.
C
In a free trade area, members drop internal tariffs. External tariffs A. are also dropped. B. are coordinated so there is one agreed-upon set of external tariffs. C. are maintained independently by each member. D. do not apply to an FTA.
C
Most African nations have their main trade relationships A. within local FTAs. B. with other African nations due to transport costs. C. with developed nations, often built on former colonial ties. D. with China.
C
A common markets is a customs union with the addition of A. free movement of services, people, and capital among the members. B. shared pricing legislation. C. shared economic goals. D. shared movement of capital.
A
All member countries belong to the UN's A. Peace Jurga, the main deliberative body. B. General Assembly. C. Security Council. D. Central Bank.
B
Daily operations of the EU are conducted by the A. European Commission. B. European Parliament. C. Council of the European Union. D. European Administrative Coalition.
A
Institutions are vitally important to international business decision makers because A. they provide ways to settle conflicts. B. they provide methods for moving trade forward. C. they are the foundation for our interactions. D. they hold power of trade processes.
A
The last area to drop tariffs in NAFTA was A. corn exports into Mexico. B. milk products into Canada. C. lumber into the U.S. D. agricultural products into Panama.
A
The main difference between a free trade area and a customs union is that in a customs union, there is A. no need for passport controls. B. a shared border patrol. C. shared currency. D. a common external tariff.
D
EU policies A. affect global business, even if the EU is not directly involved. B. only affect trade with the EU. C. have little impact on global trade. D. are optional for most globally traded goods.
A
The first principle of the WTO's five basic principles is trade without A. negotiation. B. economic reform. C. discrimination. D. competition.
C
Informal institutions are composed of sets of A. mandatory agreements, a bit like the mind's software. B. orthodox accords whose goal is to establish rigor. C. agreements that are for the most part taken for granted. D. voluntary agreements.
D
ASEAN (Association of Southeast Asian Nations) initially was formed in 1967 A. with a political purpose, to mutually assist one another against the growing threat of communism in the region. B. to counter U.S. actions in Vietnam. C. with the goal of forming a common market and to reduce trade with the outside world. D. to mutually support development through trade.
A
Any kind of economic integration agreement A. brings reduced costs to members. B. results in increased costs for members. C. leads to increased costs for those outside the trading bloc. D. demands loyalty of the nation's traders to respect the trade rules.
A
Different institutions of the EU A. represent different constituencies, such as the people of Europe and the member states. B. are based on difference expertise areas, such as trade, politics, and governing. C. are organized to work differently (consensus, plurality, simple majority) so that many approaches are included. D. all share one concern: free trade among the member states.
A
The WTO is the only international organization designed to establish and help implement A. efforts at peace between nations. B. rules of trade among nations. C. security measures between nations. D. strategic planning for developing nations.
B
The idea that WTO members treat all members equally is known as A. the transparency principle. B. the fairness principle. C. the equity and equality principle. D. the MFN/most favored nation principle.
D
ASEAN +3 is A. the 10 ASEAN nations plus China, Japan, and Korea. B. the 10 ASEAN nations plus Australia, India, and the state of Hawaii. C. ASEAN's commitment to economic, political, and social prosperity. D. ASEAN's commitment to trade, collaboration, and economic independence.
A
An informal cognitive institution is A. a collection of shared ideas that define reality, such as a collection of assumptions around a cultural pattern. B. a culturally determined way of thinking, such as inductive. C. an approach to exploring ideas, such as Aristotelian dialog. D. a way to approach thinking challenges, such as brainstorming, tree diagrams.
A
Economic integration A. involves a common market and a high degree of political integration. B. is essentially a marketing program whose goal is to increase market penetration. C. has not been attempted since the dissolution of the Soviet Union. D. depends on the cultural similarities of its members.
A
Economic integration often progresses A. in stages, from free trade area to customs union to common market. B. in stages, totally dependent on the members' national economic strength. C. as a result of cultural beliefs and economic strength. D. in unpredictable ways due to unintended consequences.
A
Formal institutions gain compliance through A. laws and regulations that operate with threat of force. B. norms and values that operate with the force of social conformity. C. cognitive values that operate with the force of need to know. D. membership fees, with expulsion as a penalty for noncompliance.
A
Guanxi is A. a Chinese social relationship that combines ideas of social capital and mentoring. B. a part of Shanghai known for expatriate restaurants. C. a group of Mandarin texts drawing outlines of social behavior. D. one of the traditional practices involved in walking along the Great Wall.
A
IDA's purpose is to loan to A. the poorest nations. B. middle-income-level nations needing infrastructure. C. developed nations for use in trade stimulus efforts. D. any nation with collateral.
A
In developing economies, informal institutions tend to play a greater role than in developed economies, possibly because A. the developing economies have more ambiguity and lack formal institutions by definition, so informal institutions step into the breach. B. developing economies show cultural preference for informality. C. these economies have not learned about formal institutions. D. informal institutions are less expensive to develop.
A
Informal institutions operate like A. the mind's software. B. well-oiled machines. C. a bullet train. D. a smooth ride in a luxury car.
A
Informal institutions work on the principle of A. shared norms and values. B. group consensus. C. what goes round comes round. D. social guilt.
A
Informal normative institutions A. establish standards and propagate principles (UN, professional organizations). B. are recognized for their charity work. C. use class hierarchy to establish values. D. are found in few industrial economies.
A
Mark Malloch Brown suggests that A. as the world becomes more closely connected, it becomes less governable at the national level. B. the UN is the only institution that can help us deal with complexity. C. complexity can be addressed with trade organizations such as the EU and NAFTA. D. military alliances are needed for increased peace in an increasingly complex world.
A
Mercosur or Mercosul is A. a vital trading bloc in Latin America known as the Common Market of the South. B. a former trading bloc that was headed by Venezuela. C. a customs union between Brazil and Argentina. D. a customs union between Paraguay, Bolivia, and San Salvadore.
A
Most African countries have their main trade relationships with A. developed countries, often their former colonial powers. B. one another, within the continent. C. the U.S. and EU. D. China.
A
NAFTA has a carve-out for A. Canadian eggs, sugar, poultry, and dairy. B. Mexican corn and strawberries. C. U.S. beef. D. U.S. apples.
A
NAFTA is an agreement among A. Mexico, Canada, and the U.S. B. Mexico, Panama, Canada, and the U.S. C. Canada and the U.S. D. Mexico and the U.S.
A
NAFTA maintains restrictions on the movement of labor, so it is A. within the scope of a free trade area. B. within the scope of a common market. C. not in compliance with WTO regulations. D. unfair to Canadians and Americans.
A
New institutional theory divides institutions into A. two basic types: formal and informal. B. three basic types: formal, informal, and technical. C. two basic types: technical and nontechnical. D. three basic types: classified, unclassified, and unclassifiable.
A
New institutional theory suggests that institutions provide A. the rules of the game, so to speak. B. conflict-free approaches to problem solving. C. ways to alter tax assessments. D. ways to reduce trade tariffs.
A
Regional trade agreements have been growing A. to compensate for slow progress at the WTO's Doha Round. B. because it is natural for neighbors to made trade agreements. C. at the behest of the WTO. D. largely influenced by the U.S. and EU.
A
Regional trade agreements such as NAFTA impact the WTO A. negatively, because they undercut the nondiscrimination principle of the WTO. B. positively, because they extend most-favored-nation status to more nations. C. negatively, because they compete with the WTO for membership, given that nations can belong to only one trade group. D. negatively, because the U.S. and the EU do not have a regional trade agreement between them.
A
The Chinese concept of guanxi is an example of A. an informal, cognitive institution. B. a regulative, formal institution. C. a favorite cooking method of Chairman Mao. D. taken-for-granted approaches to friendship relations.
A
The Doha Development Agenda is A. a WTO conference on trade. B. an agreement on climate control and greenhouse gases. C. a decision-making approach to development. D. a development rules list.
A
The Doha Round's discussions are contentious on several major issues, including A. agriculture and intellectual property rights. B. industrial goods and agriculture. C. trade barriers and duties. D. nontariff barriers and agriculture.
A
The EU developed from a post-war (WWII) A. coal and steel common market for the two commodities, the European Coal and Steel Community. B. IMF and World Bank meeting charged to work out a settlement with Germany. C. effort to allocate U.S. relief (the Marshall Plan) throughout Europe. D. attempt to reduce the threat of the Soviet Union in Europe.
A
The Treaty of Rome, signed in 1957, established a common market for coal and steel for A. West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy. B. England, Ireland, Northern Ireland, Scotland, Wales, and France. C. Finland, Sweden, Norway, West Germany, Denmark, and Switzerland. D. Austria, Hungary, Slovakia, Poland, Romania, and Bulgaria.
A
The UN Millennium Development goals drawn on A. business models and business participation to accomplish their goals. B. not-for-profit models to achieve their goals. C. UN members to contribute added amounts to hit these goals. D. charity of the member nations to achieve these goals.
A
The UN is a humanitarian organization and A. also helpful in providing conditions that support business. B. not especially interested in business-related issues. C. is dedicated to peace-keeping as its primary activity. D. operates as a forum for trade negotiations among members.
A
The United Nations is A. a forum for the promotion of peace and global stability. B. an organization established to ensure dominance of the superpowers. C. a critical member of the WTO. D. a formal institution with strict regulations.
A
The WTO exists to A. establish and help implement rules of trade among nations to increase trade flows. B. monitor and reduce the amount of trade from developing nations to developed nations. C. ensure that the Industrial Revolution continues to support the economies of developed nations. D. encourage development of trade barriers.
A
The WTO has made progress on trade-related intellectual property rights (TRIPS). An example of this progress is A. an agreement that property rights should not take precedence over public health. B. an agreement that copyrights are inviolate. C. a shared recognition that private property is a basic human right. D. an agreement that governments should hold all pharmaceutical trade secrets.
A
The common interest of all nations in a workable international exchange rate system transcends their conflicting international interests is the premise of A. the International Monetary Fund/IMF. B. the Bank for International Settlements. C. the World Central Bank. D. the World Bank for Reconstruction and Development.
A
The economic integration of the EU is based on A. national willingness to forego sovereignty in some areas. B. self-interest and market common sense. C. a delicate balance of political will and authoritarianism. D. a commitment to build a trading bloc larger than the U.S.
A
The oldest customs union is A. the Southern African Customs Union. B. the EU. C. Mercosur. D. the Canadian-U.S. Customs Union.
A
The two major developed African economies are A. South Africa and Nigeria. B. Nigeria and Kenya. C. South Africa and Kenya. D. South Africa and the Central African Republic.
A
This country has dramatically increased trade with Africa, especially in extraction sectors. A. China B. U.S. C. Cuba D. Russia
A
This type of institution operates through laws and regulations, with coercion as the regulative mechanism. A. Formal B. Informal C. Normative D. Cognitive
A
Under new institutional theory, institutions can be categorized as formal and informal, and the informal institutions can be further categorized as A. normative and cognitive. B. normal and abnormal. C. informally cognitive and formally cognitive. D. effective and ineffective.
A
WTO agreement on TRIPS had led to member agreement to A. enforce 20-year patents and 50-year copyrights. B. reduce trade barriers. C. ensure immediate availability of generic drugs in developing economies. D. repatriate foreign citizens convicted of property rights violations.
A
When FTA members add shared external tariffs to their agreement, they have formed a A. customs union. B. free trade association, such as NAFTA. C. duties agreement. D. trade conglomerate.
A
Is the WTO's idea of "fair competition" really a code phrase for free trade? A. Yes, the WTO is in favor of free trade and only free trade under all circumstances. B. Not really. Trade relationships among nations can be exceedingly complex, and the WTO supports fair competition, which may mean freer trade rather than free trade. C. Yes, the WTO stands for trade liberalization, which requires transparency, economic reform, and no protectionism, regardless of the member nation's economic situation. D. Yes. The WTO supports free trade and the term fair competition is used to obtain buy-in from nations opposed to trade liberalization.
B
Strictly speaking, the impact of the EU on the WTO could be said to be negative, because A. a country could belong to only one of these organizations. B. the favored trade relationships among EU members are not extended to nonmember countries, so the EU undercuts the WTO. C. the euro threatens other hard currencies supported by the WTO, such as the dollar and the yen. D. the WTO does not collect dues from EU member nations.
B
The World Bank's two major institutions are the International Development Association and the A. collateral-based Lending Agency. B. International Bank for Reconstruction and Development. C. International Microloan Bank. D. International Bank for Development.
B
The EMU (the European Monetary Union or the Economic and Monetary Union) has established the euro, a currency that is used in A. all of the EU. B. all of the EU and much of the rest of Europe. C. some of the EU member countries. D. the Bank for International Settlements and the IMF.
C
The EU's impact on international business is A. negligible, given that the EU members tend to trade with each other. B. not significant, because the EU members need to trade with other developed economies. C. substantial, since EU standards, especially in the areas of ecology and sustainability, impact any firm that wants to do business in the EU. D. substantial, because the EU is a major exporter into developing nations.
C
The IMF initially played a central role in A. establishing trade initiatives through GAAP measures. B. supporting war-torn nations of Europe as they recovered from their devastation. C. setting fixed exchange rates among nations' currencies with an established par value based on gold. D. the monitoring of EU initiatives to restrain trade with South Africa.
C
The United Nations is probably the best known among A. nonprofit organizations. B. social service organizations. C. international organizations. D. military organizations.
C
At the end of World War II, the UN called for the conference that set up the World Bank and the IMF. This conference was A. convened in San Francisco. B. held in Yalta. C. held in Grasleben, Germany. D. held in Bretton Woods.
D
The Doha Development Agenda is A. a WTO plan to establish free trade among the emirates in the Persian Gulf. B. the government seat of Qatar and a source of significant WTO funding through Sheik Kalifa al-Thani. C. a UN plan to develop the Arab Emirates to ensure their independence. D. an extended conference of the WTO initially convened in Doha.
D
The EU began as a common market for A. all imported goods from beyond Europe. B. the textile and dairy industries. C. the transportation industries. D. the coal and steel industries.
D
The IBRD is a major institution of the World Bank whose function is to loan to A. countries whose income levels make them not creditworthy. B. private-sector development-focused firms. C. private individuals in developing nations whose entrepreneurial efforts support development. D. middle-income and creditworthy poor nations.
D
The UN's International Court of Justice is also known as A. the Court of Europe. B. the Court of International Law and Regulations (CILR). C. the International Court of Peace. D. the World Court.
D
The benefits of liberalized trade so far have been A. beneficial for developing economies. B. harmful for developing economies. C. unclear for developed economies. D. uneven for developing and developed economies.
D
The purpose of the International Financial Corporation (IFC) is to invest in companies and financial institutions in developing countries to build A. infrastructure. B. trade routes. C. domestic logistics. D. domestic capital markets.
D
