BUS 313 - Chapter 2: Homework

The table shown below lists a variety of functions performed by various international organizations. Indicate which organization has primary responsibility for each function. Do this by inserting the appropriate organization identification label in the response box associated with each function. The ID labels​ are: M = The International Monetary Fund B = The World Bank T = The World Trade Organization G = The General Agreement on Tariffs and Trade 1. Binds the tariffs and trade policies of nations and limits arbitrary charges 2. Makes technical expertise and advice available to developing nations 3. Keeps markets for goods as open as possible 4. Provides technical expertise and advice to national governments 5. Acts as a lender of last resort in the case of debt crisis or foreign exchange crisis

1. G 2. B 3. G 4. M 5. T

China's alternative to the IMF is called A. AIIB. B. MERCOSUR. C. ASEAN. D. TIIP.

A. AIIB.

A lender of last resort can prevent the spread of financial crises. A. True B. False

A. True

Many of the important international governmental institutions that deal with the global economy have their roots in the Bretton Woods conference at the end of World War II. A. True B. False

A. True

The GATT was A. an international treaty governing trade B. a U.S. government agency. C. an International Monetary Fund agency with trade oversight. D. a collection of tariff standards. E. an international U.N. agency with trade oversight.

A. an international treaty governing trade

One of the most important and most visible roles of the IMF is to A. intercede by invitation when countries cannot pay their international debts. B. provide loans to countries that need capital to develop their economies. C. hold regular negotiations over tariff reductions. D. investigate countries that are charged with being unfair traders.

A. intercede by invitation when countries cannot pay their international debts.

International Monetary Fund​ (IMF) "quotas" refer to A. the IMF membership fee paid by countries. B. the fixed amount of borrowing that each country is allowed to undertake from the IMF. C. the amount of foreign exchange reserves that each member country is obligated to hold at its central bank. D. country quantity restrictions on imported products.

A. the IMF membership fee paid by countries.

A country experiencing a debt or currency crisis would contact the World Bank. A. True B. False

B. False

A​ nation's votes at the IMF are proportional to its population. A. True B. False

B. False

International economic crises are relatively rare events. A. True B. False

B. False

The​ IMF, because it can force nations to take loans and bail out​ packages, has more power than other international governmental organizations dealing with the global economy. A. True B. False

B. False

A free trade agreement plus a common set of tariffs toward non−members is called A. a free trade area. B. a customs union. C. an economic union. D. a common market.

B. a customs union.

Which of the following is​ FALSE? A. Common markets allow for labor mobility between participating nations. B. NAFTA is an example of a free trade area. C. A common market is more deeply integrated than an economic union. D. The European Union is a deeper form of integration than NAFTA.

C. A common market is more deeply integrated than an economic union.

What is the relationship between GATT and​ WTO? A. GATT and WTO have only a minor relationship. B. GATT continues and expands the efforts of WTO. C. WTO continues and expands the efforts of GATT. D. WTO is a new name for GATT.

C. WTO continues and expands the efforts of GATT.

The original mission of the World Bank was to A. help countries manage their exchange rates. B. provide capital to firms around the world. C. provide financial assistance for the reconstruction of war−damaged nations. D. provide capital to underdeveloped countries.

C. provide financial assistance for the reconstruction of war−damaged nations.

The international organization that serves as a forum for trade discussions and the development of trade rules is called A. the United Nations B. the World Bank C. the WTO D. the IMF

C. the WTO

A​ country's foreign exchange reserves refers to A. the currency of the nation itself. B. the​ country's Special Drawing Rights​ (SDRs) at the IMF. C. the​ country's holdings of gold and internationally accepted currencies. D. the total amount of a​ country's currency held by other nations.

C. the​ country's holdings of gold and internationally accepted currencies.

Which of the following is FALSE about the International Monetary Fund​ (IMF)? A. The IMF was created after the Bretton Woods Conference to help to maintain the international fixed exchange rate system that was introduced. B. The IMF lends to national​ governments, initially to maintain the fixed exchange rate​ system, and today to deal with debt or currency crises. C. One of the criticisms of the IMF and other international governmental organizations that deal with the global economy is that their decision making may be biased toward policies that favor industrialized nations. D. Multinational corporations can get IMF loans if they agree to invest in economies that are internationally perceived as risky and otherwise unlikely to receive direct foreign investment.

D. Multinational corporations can get IMF loans if they agree to invest in economies that are internationally perceived as risky and otherwise unlikely to receive direct foreign investment.

Which of the following is NOT a feature of a common​ market? A. Free trade in goods and services between the members B. Common external barriers to trade C. Factor mobility D. Substantial coordination of macroeconomic policies among the members

D. Substantial coordination of macroeconomic policies among the members

Which of the following is NOT a criticism of international institutions such as the​ IMF, the World​ Bank, or the​ WTO? A. They ignore potentially large adjustment costs for developing nations of implementing their policies. B. They violate national sovereignty by imposing unwanted domestic policies. C. They fail to understand the effects of their policies on the vulnerable. D. Their decision−making is biased in favor of underdeveloped nations.

D. Their decision−making is biased in favor of underdeveloped nations.

Which of the following was NOT a creation of the Bretton Woods​ conference? A. IBRD B. IMF C. World Bank D. WTO

D. WTO

One of the strongest motivations for holding the Bretton Woods Conference was to design new international institutions that would A. ensure that world prices were not rising too rapidly. B. provide a collective defense security for Western Europe and North America. C. contain communism. D. help countries avoid the mistakes of the 1920s and 1930s.

D. help countries avoid the mistakes of the 1920s and 1930s.

The primary mission of the World Bank today is to A. help countries manage their exchange rates. B. provide capital to firms around the world. C. provide financial assistance for the reconstruction of war−damaged nations. D. provide capital to underdeveloped countries.

D. provide capital to underdeveloped countries.