IPE Quiz Questions

After WWII, the following actors were influential in the conduct of IPE:

- Multinational corporations (MNCs) - The international Monetary Fund (IMF) - The World Bank - The United States

How do governments renege on commitments to (or "break contracts" with) foreign investors?

- Restrict investors' transfers of funds to other countries - Arbitrarily revoke or cancel licenses - Nationalization - Force contract renegotiation

In the balance of payments accounting system, if a country:

Has a current account deficit, it must have a capital account surplus

Which of the following is not a consequence of the export-oriented development strategy adopted by a group of East Asian countries?

Increase of the importance of agriculture in these countries' economies

Which of the following is not true of embedded liberalism?

It allows governments to enact pro-trade policies without having to compensate those at home who are displaced by these policies

In light of both the Frankel reading and the Keohan and Victor reading, which of the following is NOT true about the Environmental Kuznets curve?

It posits that growth and environmental damage are positively related at every stage of development

Which of the following did not occur during the "Bush Boom" in the United States:

Job creation in manufacturing and agriculture

Democratic institutions exert a positive effect on FDI inflows through which of the following mechanisms:

enhanced property rights protections

Which actors attempt to influence US trade policy?

- Labor Unions - Business associations - Human-rights groups - Environmental groups - Firms

Larry Summers, will serving as Chief Economist at the World Bank, wrote in a 1991 internal memo the following: "Just between you and me, shouldn't the World Bank be encouraging more migration of the dirty industries to the LDCs?" To what TWO concepts does this relate?

- Eco dumping - Pollution havens

Which two of the following are true of FDI?

- FDI hurts domestic capital in developing countries by redistributing income to labor in the form of higher wages - FDI allows a firm to keep its assets within the firm

Which three of the following are true of foreign investment?

- Foreign investment only allows as much growth as desired by foreign management - Foreign investment allows a country only to grow when it does not compete with its domestic savings - Foreign investment allows a country to enjoy faster growth than would be possible if it were forced to rely solely on its domestic savings.

Which two of the following are true of intangible assets?

- Intangible assets include routines, sets of skills, patented designs, and know-how - intangible assets often give rise to horizontally integrated firms

Which three of the following are true of a high international reserves/GDP ratio?

- It has been common in developing countries since the 1980s - It indicates international-reserve hoarding - It has been observed in China in the early 2000s

Which two of the following are true of the "disappearing middle"?

- It hypothesizes that countries will either adopt hard pegs or fully flexible exchange rate regimes - It has not been observed

In the article "A split euro is the solution for Europe's single currency", Stiglitz proposes some changes to the EMU system. Which of the following is NOT one of the proposed changes?

A monetary policy focused on inflation control He proposed: - A common banking union - Industrial and other policies to help straggler countries to catch up - A common deposit insurance

Which domestic group "wins" from a strong (appreciated) currency?

Consumers of imports

Which of the following is true of the Doha Round?

Countries have struggled to make headway on key issues

In choosing policy for monetary stability, ______ tend to rely on independent central banks while ______ tend to have fixed exchange rates.

Democracies, dictatorships

Liberalism in IPE

Emerged in Britain during the 18th century to challenge mercantilism which was dominant

All states of the European Union are members of the European Monetary Union

FALSE

Stiglitz contends that an end to common currency (the euro) would be the end of the European Project

FALSE

A middle or high income economy is as likely to experience rapid growth as a poor economy is

False

According to Chinn and Frieden, the features of "Bush Boom" between 2001 and 2007 were unique to the US

False

Import substitution industrialization (ISI) was a development strategy employed by Latin American countries that oriented domestic economies towards world markets

False

Jensen argues that investment incentives play a powerful role in attracting firms to locations that they might not otherwise consider

False

The political risk that multinational corporations face when investing in foreign countries is not related at all to their nationality.

False

Consider the "Unholy Trinity" framework. Which three policy goals cannot be attained at the same time?

Fixed exchange rate, domestic autonomy of monetary policy, and capital mobility

In constitutional democracies politicians must win approval of veto players to adjust macroeconomic policies to their benefit. Examples of veto players do not include:

Foreign government institutions

Which two of the following actors support central-bank independence?

Pensioners and banks

The interaction between the supply of and the demand for currencies in the foreign exchange market leads exchange rates to change. If more individuals want to buy than sell euros, the euro will gain value and appreciate, relatively to other currencies.

TRUE

Eichengreen argues that...

The coalition formed by light manufacturing and agriculture was influential in the passage of Smooth-Hawley

Which two groups are considered to be the biggest winners of globalization from 1988 to 2008?

The middle class in emerging markets and the global 1%

The Factor Model (also called the Heckscher-Ohlin model) predicts that

Trade politics are driven by competition between capital and labor

Between 1995 and 2001 when the dollar appreciated against America's largest trading partners, American exporters found it increasingly more difficult to sell in foreign markets.

True

By the logic of collective action, producers, rather than consumers, dominate trade politics

True

The more the MNC exerts monopolistic control over things valued by the host country (ex: technology), the more bargaining power the MNC will have relatively to the host country.

True

Between 1988 and 2005, on average, global inequality_____, and inequality within most large economies_____.

decreased, increased

With global efforts to combat climate change, potential joint gains are ______, and agreements ______ self-enforcing.

high, are

For developing countries, foreign-owned firms tend to pay ____ wages than do domestic firms, and foreign direct investment (FDI) _____ wages in developing countries.

higher, increases

Pandy's findings suggest that education affects individual preferences for FDI inflows through which of the following mechanisms:

level of skill

What WTO principle requires member countries to treat all other members the same?

most-favored nation

A public good is a good that is non-excludable and non-rival. All of the below have public good characteristics, except...

movie theatres

The costs of ISI were primarily borne by...

rural agriculture

The US _________ after WWI The US _________ after WWII

shirked the role of global leader, assumed the role of global leader

According to Dunning, which of the following is NOT a perceived advantage that motivate firms to invest abroad?

strong domestic interest groups