Inb Bus Mid Ch. 3

The EMU (European Monetary Union or Economic and Monetary Union) has established the euro, a currency that is used in:

16 of the EU member-countries.

How many countries in the EU use the euro as their currency?

17

NAFTA maintains restrictions on the movement of labor, a limitation that suggests it is:

A free trade area

Examples of informal, normative institutions would include local town/city governments and the U.S. government. T/F

False

Formal institutions operate through laws and regulations. They require members to make a written commitment. T/F

False

Informal cognitive institutions are not important to international managers because such managers localize their hiring, and so they can draw on local talent. T/F

False

The Doha Development Agenda is an extended development plan for Doha, Qatar. T/F

False

The World Bank's two major institutions are the International Development Association and the:

International Bank for Reconstruction and Development (IBRD).

The EU is a supranational body that has become, essentially, a regional government. T/F

True

EU rulings:

affect all businesses within the EU and those that trade within the EU.

Trade without discrimination" in the WTO means that

all trading partners must be treated the same.

The WTO has made progress on trade-related intellectual property rights (TRIPS). An example of this progress is:

an agreement that property rights should not take precedence over public health.

The Doha Development Agenda is:

an extended conference of the WTO initially convened in Doha.

The UN is important to international business for many reasons, including that it:

develops standards and norms in technical areas.

The first principle of the WTO's five basic principles is trade without:

discrimination

The WTO exists to:

establish and help implement rules of trade among nations in order to increase trade flows.

This type of institution operates through laws and regulations, with coercion as the regulative mechanism.

formal

The IBRD is a major institution of the World Bank whose function is to loan to:

middle-income and creditworthy poor nations.

Regional trade agreements such as NAFTA can be seen to impact the WTO:

negatively, because they undercut the nondiscrimination principle of the WTO.

The major function of the World Bank is to serve as a:

nonprofit banking cooperative for its members to meet development needs.

The WTO is the only international organization designed to establish and help implement:

rules of trade among nations.

The IMF initially played a central role in:

setting fixed exchange rates among nations' currencies with an established par value based on gold.

The EU's impact on international business is:

substantial, since EU standards, especially in the areas of ecology and sustainability, impact any firm that wants to do business in the EU.

That the common interest of all nations in a workable international exchange rate system transcends their conflicting international interests is the premise of:

the International Monetary Fund (IMF).

The idea that WTO members treat all members equally is known as:

the MFN (most-favored-nation) principle.

The EU began as a common market for:

the coal and steel industries.

The impact of the EU on the WTO could be said to be negative, since:

the favored trade relationships among EU members are not extended to nonmember countries, so the EU undercuts the WTO.

The Council of European Union, the primary policy-setting institution of the EU, is composed of:

the member-states' ministers who represent the specific area being discussed.

The results of liberalized trade so far have been:

uneven for developing and developed economies.

In developing economies, informal institutions tend to play a greater role than in developed economies, possibly because:

A and C A. the developing economies have more ambiguity and lack formal institutions by definition, so informal institutions step into the breach. C. informal institutions emerge to give order to the unstructured, chaotic environment.

IMF quotas are determined by the relative size of a nation in the global economy and:

All of the Above A. determine the weight of the nation's voting in the IMF. B. determine how much a nation can borrow from the IMF. C. are the nation's "dues" to the IMF.

The following country is not a member of ASEAN:

China

All EU members use the euro and thus have given up part of their national sovereignty to the EU. T/F

False

Although India is a member of the WTO and has benefited greatly from increased trade as a result of WTO agreements, China is not yet a member. T/F

False

Although the EU can influence the practices of businesses located in non-EU-member countries, Microsoft has been able to maintain business in the EU much as it conducts business in the United States. T/F

False

Among trading blocs, the EU has the largest GDP per capita. T/F

False

An important assumption that the IMF makes is that a strong organization with rules and penalties for their violation is necessary to support trade. T/F

False

As discussed in the chapter, institutions are organizations constructed to create jobs for government employment initiatives. T/F

False

Economic cooperation often begins with a common market, as in the case of the EU. T/F

False

Recently, regional trade agreements have grown, a trend that may be seen to strengthen the WTO, according to the text. T/F

False

The Bretton Woods Conference established the European Union currency, the euro. T/F

False

The EU has been unsuccessful at harmonizing customs and tax formalities within member nations' borders. T/F

False

The EU is administered by the European Commission, a group composed of 27 commissioners elected at the EU level. T/F

False

The WTO supports trade with discrimination as a basic right of trading nations. T/F

False

The World Bank funds infrastructure projects in developed countries. T/F

False

The World Bank is made up of one large institution, IBRD. T/F

False

Is the WTO's idea of "fair competition" really a code phrase for free trade?

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.

An example of an informal, cognitive institution would be the celebration of Halloween. T/F

True

Institutions are constructed to provide meaning and stability to social life, regulate the relations of individuals to each other, and limit behavior of individuals and firms. T/F

True

New institutional theory suggests that institutions be understood as collections of rules and codes of conduct that limit behavior. T/F

True

One of the significant differences between formal and informal institutions is how they gain compliance. T/F

True

Some think that renewed focus on exchange rates would be a good path forward for the IMF, which is struggling with core issues related to its purpose. T/F

True

The WTO has negotiated a TRIPS agreement whereby property rights do not take precedence over public health.

True

The Doha Development Agenda is:

a WTO conference on trade.

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:

held at Bretton Woods, New Hampshire.

Economic integration often progresses:

in stages, from free trade area to customs union to common market.

International institutions are important to international business managers because, in general, they:

limit choices, thereby providing ways to settle disagreements and resolve conflicts.

Under new institutional theory, institutions can be categorized as formal and informal, and the informal institutions can be further categorized as:

normative and cognitive

The most serious recent challenge to the EU has been:

the recent financial crisis.

Informal institutions are composed of sets of:

voluntary agreements.