Ch. 2 Exam
Which of the following is FALSE? A. Foreign investors may not have a legal right to impose policies on a nation state, but the nation state may still experience consequences of poor policies. B. National sovereignty limits outsiders' ability to change the trade laws and practices of individual nation states. C. Because of international recognition of national sovereignty, individual nations are unaffected by global trade and capital flows. D. Because trade policies are laws of individual nations, it is difficult for other nations and international organizations to force changes on unwilling nation states.
C
Critics of regional trade agreements argue that the formation of regional trade agreements A. often discriminate against lower income countries. B. undercuts country efforts directed to multilateral trade liberalization (as through the World Trade Organization). C. are bad, since free trade is not a worthy goal in a typical context. D. A and B only.
D
International Monetary Fund (IMF) "quotas" refer to A. the amount of foreign exchange reserves that each member country is obligated to hold at its central bank. B. country quantity restrictions on imported products. C. the fixed amount of borrowing that each country is allowed to undertake from the IMF. D. the IMF membership fee paid by countries.
D
One reason markets may fail to provide the optimal quantity of public goods is the problem of A. nondiscrimination. B. determining what the public wants. C. economic integration. D. free riders.
D
The goals of Bretton Woods included the formation of organizations and institutions that would A. facilitate agreements to reduce trade barriers. B. create an exchange rate system to help stabilize exchange rates. C. create an international organization to help nations that are unable to pay their international debts. D. All of the above.
D
The primary mission of the World Bank today is to A. provide financial assistance for the reconstruction of war−damaged nations. B. help countries manage their exchange rates. C. provide capital to firms around the world. D. provide capital to underdeveloped countries.
D
Which of the following are true statements regarding public goods? A. They are non-rival. B. They are non-excludable. C. Private markets in public goods often fail due to free riding. D. All of the above.
D
A country's foreign exchange reserves refers to A. the country's holdings of gold and internationally accepted currencies. B. the country's Special Drawing Rights (SDRs) at the IMF. C. the total amount of a country's currency held by other nations. D. the currency of the nation itself.
A
It is often costly for developing countries to adjust to trade agreements because A. developing countries often have limited social safety nets to provide support to workers in transition. B. trade agreements systematically expect more liberalization by developing countries than is expected of developed countries. C. their economies are more diversified than those of developed countries. D. All of the above.
A
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. investigate countries that are charged with being unfair traders. C. hold regular negotiations over tariff reductions. D. provide loans to countries that need capital to develop their economies.
A
One of the strongest motivations for holding the Bretton Woods Conference was to design new international institutions that would A. help countries avoid the mistakes of the 1920s and 1930s. B. contain communism. C. provide a collective defense security for Western Europe and North America. D. ensure that world prices were not rising too rapidly.
A
The original mission of the World Bank was to A. provide financial assistance for the reconstruction of war−damaged nations. B. help countries manage their exchange rates. C. provide capital to firms around the world. D. provide capital to underdeveloped countries.
A
When the United States gives MFN status to China, it means that A. China is treated the same as other U.S. trading partners. B. China is treated better than other U.S. trading partners. C. China is legally bound to reciprocate. D. China is treated worse than other U.S. trading partners.
A
Which of the following is TRUE? A. A common market is more deeply integrated than a customs union. B. NAFTA is an example of a customs union. C. The European Union is a shallower and broader form of integration than NAFTA. D. Customs unions require the creation of a common currency.
A
Which of the following is TRUE? A. The General Agreement on Tariffs and Trade created the World Trade Organization in the negotiations and treaty known as the Uruguay Round. B. The World Trade Organization has no power to resolve trade disputes and to enforce their resolution. C. A country experiencing a debt or currency crisis would contact the World Trade Organization. D. The World Trade Organization was formed at the Bretton Woods conference.
A
A free trade agreement plus a common set of tariffs toward non−members is called A. an economic union. B. a customs union. C. a free trade area. D. a common market.
B
An important function of international institutions during times of crisis is to A. prevent nondiscrimination. B. prevent free riding. C. make goods nonrival. D. make goods nonexcludable.
B
From the late 1940s until the creation of the WTO, the organization that was primarily responsible for conducting rounds of trade negotiations was the A. IMF. B. GATT. C. World Bank. D. United Nations. E. ITO.
B
IMF conditionality refers to the A. minimum size of a national debt problem that a country must have before the IMF gets involved. B. changes a country must make in order to receive IMF financial assistance. C. maximum−sized loan the IMF will make. D. minimum−sized loan the IMF will make. E. technical assistance the IMF gives.
B
Institutions are A. the same thing as organizations. B. a set of rules governing behavior, whether written or not. C. associations of individuals or groups. D. always embodied in a written set of rules.
B
The Tokyo Round of the GATT negotiations was notable because it was the first round A. that included textiles and apparel. B. to begin establishing rules on subsidies. C. to begin discussions of exchange rates. D. that included Japan.
B
Until the Uruguay Round of trade negotiations, which of the following sectors were NOT included in the rules for international trade? A. Automobiles and agriculture B. Agriculture and apparel C. Steel and agriculture D. Steel and textiles
B
Which of the following criticisms is NOT directed to the IMF? A. It lacks openness in its decision−making process. B. It creates a free−riding problem. C. It serves the interests of wealthier countries. D. It violates national sovereignty.
B
Which of the following is a problem that arises when trying to classify regional trade agreements? A. Some agreements include cultural issues while others do not. B. Many agreements combine elements from different categories. C. The definition of free trade area includes that of a customs union. D. The most favored nation clause includes all of them.
B
Which of the following is FALSE? A. NAFTA is an example of a free trade area. B. A common market is more deeply integrated than an economic union. C. The European Union is a deeper form of integration than NAFTA. D. Common markets allow for labor mobility between participating nations.
B
If a good or service does not get used up as it is consumed, then it is said to be A. nonconsumable. B. nonexcludable. C. nonrival. D. nondiscrimination.
C
The United States is an example of A. a customs union. B. a free trade area. C. an economic union. D. a common market.
C
The international organization that serves as a forum for trade discussions and the development of trade rules is called A. the IMF. B. the World Bank. C. the WTO. D. the United Nations.
C
Which of the following is NOT an example of an international public good? A. Open markets during a recession B. Last−resort lending C. Regional trade agreements D. Capital flows to less−developed countries
C
Which of the following is an example of an institution whose primary concern is global stability? A. OPEC (Oil Producing and Exporting Countries) B. NAFTA (North American Free Trade Agreement) C. IMF (International Monetary Fund) D. Asian Development Bank
C
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
Which of the following is NOT a feature of a common market? A. Factor mobility B. Free trade in goods and services between the members C. Common external barriers to trade D. Substantial coordination of macroeconomic policies among the members
D
With a partial trade agreement A. goods and services are allowed to cross boundaries without tariffs. B. two or more countries allow the free mobility of inputs such as labor and capital. C. two or more countries set common tariffs toward non−members. D. two or more countries agree to liberalize trade in a selected group of categories.
D
A country experiencing a debt or currency crisis would contact the World Bank. True or False?
False
A nation's votes at the IMF are proportional to its population. True or False?
False
The World Bank formed the World Trade Organization when it became clear that to alleviate poverty in developingnations, agricultural trade barriers were going to have to be reduced. True or False?
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. True or False?
False
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. True or False?
True
The World Bank was created as a result of the Bretton Woods conference and was originally focused on the reconstruction of Europe after World War II. True or False?
True
Which of the following was NOT a creation of the Bretton Woods conference? A. IBRD B. IMF C. WTO D. World Bank
WTO
