Type:
Test Bank
Resource:
International Economics
Edition:
7th Edition
Author(s):
James Gerber
International Economics, 7e (Gerber) Chapter 1 The United States in a Global Economy 1.1 Introduction: International Economic Integration 1) There are no questions for this section. Topic: Introduction: International Economic Integration 1.2 Elements of International Economic Integration 1) Countries such as the United States that have large populations tend to have A) higher trade-to-GDP ratios. B) lower trade-to-GDP ratios. C) relatively greater capital outflows. D) relatively smaller capital outflows. Answer: B Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.2 Compute the trade-to-GDP ratio and explain its significance. AACSB: Application of knowledge 2) The trade-to-GDP ratio for a nation that had $600 million in exports, $400 million in imports, and GDP of $2,000 million would be A) 0.1. B) 0.2. C) 0.5. D) -0.1. Answer: C Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.2 Compute the trade-to-GDP ratio and explain its significance. AACSB: Application of knowledge 3) The trade-to-GDP ratio is calculated by A) exports divided by GDP. B) imports divided by GDP. C) exports plus imports divided by GDP. D) exports minus imports divided by GDP. Answer: C Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.2 Compute the trade-to-GDP ratio and explain its significance. AACSB: Application of knowledge
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4) A relative measure of the importance of trade is A) the dollar value of trade. B) trade as a percentage of GDP. C) the dollar value of trade adjusted for inflation. D) trade as a percentage of investment. Answer: B Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.2 Compute the trade-to-GDP ratio and explain its significance. AACSB: Application of knowledge 5) An important factor that increased international capital flows in the latter part of the 1800s was A) the creation of the International Monetary Fund. B) the creation of numerous regional trade agreements. C) the rapid rate of East Asian economic growth. D) technological innovations. Answer: D Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 6) Labor mobility was A) less in 1900 than in 2010. B) unimportant to global integration until the 1960s. C) greater in 1900 than in 2010. D) never controversial. Answer: C Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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7) A major impact of the transatlantic telegraph was A) a reduction in time required to complete a financial transaction between New York and London B) an increase in labor flows across the Atlantic. C) a decrease in trade barriers between the United States and Europe. D) an increase in trade conflicts between the United States and Europe. Answer: A Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 8) The trade-to-GDP ratio for the United States reached its lowest point of the last 100 years A) around 1970. B) around World War II. C) around World War I. D) around 2008. Answer: B Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 9) Countries that have high rates of savings also have A) high rates of investment. B) low rates of investment. C) stock market bubbles. D) low rates of growth. Answer: A Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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10) Since the end of World War II, A) world trade has grown more slowly than world GDP in the same time period. B) world trade has grown more slowly than during the years leading up to World War II. C) the trade-to-GDP ratios of most countries have fallen. D) world trade has grown more rapidly than world output. Answer: D Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 11) One of the reasons we know that international labor mobility has been higher at other times is because A) the percent of our population that was foreign born was higher. B) wages were lower. C) labor was important in agriculture. D) the population was younger. Answer: A Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 12) One important difference between the international economy of today and the economy of 100 years ago is A) that labor is much more mobile. B) for the first time, technological innovations have reduced the barrier of distance. C) for the first time, capital is mobile. D) the presence of international bodies such as the IMF and World Bank. Answer: D Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge
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13) One of the distinguishing characteristics of capital mobility today is that A) there are far more kinds of financial instruments than there were 100 years ago. B) nations are no longer dependent on their own national savings for their investment funds. C) the bulk of foreign capital flows are tied to labor flows. D) currency markets play a less significant role than they did in the past. Answer: A Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 14) Which of the following is FALSE? A) Capital flows today are larger mainly because economies are larger. B) The last two decades are the first time in history that a nation has borrowed more than 10 percent of its GDP. C) There are important qualitative differences between capital flows today and in the past. D) Today most international financial transactions involve buying and selling assets denominated in foreign currencies. Answer: B Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 15) Your text mentions several ways that international trade flows are qualitatively different than they were a century ago. Which of the following is NOT one of those ways? A) Firms' investment spending on capital goods is more important than in the past. B) International trade in raw commodities and agricultural products is more important than it was in the past. C) It is possible to trade some types of services in a way that was not possible in the past. D) Multinational corporations play a bigger role in production than they did in the past. Answer: B Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge
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16) Financial capital flows could include A) real estate purchases. B) construction of factories. C) the purchase of the physical assets and operations of a multinational corporation by another. D) currency market transactions. Answer: D Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 17) An example of a foreign direct investment (FDI) would include A) a U.S. couple buying land for their dream retirement home in Costa Rica. B) a U.S. mutual fund manager buying shares of stock in a Brazilian oil company. C) a U.S. firm expanding its U.S. operations. D) a wealthy Mexican buying U.S. Treasury bills. Answer: A Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 18) All of the following are differences in capital flows today from the past, EXCEPT A) the increasing variety of financial instruments. B) the larger number of companies listed on world stock exchanges. C) the need to protect from sudden changes in currency values. D) the problem of volatility in financial capital flows. Answer: D Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge
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19) Which of the following is true? A) Domestic policies are never barriers to trade. B) Tariffs and quotas in industrial nations are significantly higher now than they were in 1950. C) Tariffs and quotas are the primary trade barrier in industrialized countries. D) Domestic policies intended to protect consumers or the environment may become trade barriers. Answer: D Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 20) Economists A) describe reducing tariffs and quotas as shallow integration. B) describe reducing tariffs and quotas as deep integration. C) believe that changing domestic policies affecting trade is a relatively simple process. D) believe that the work of reducing trade barriers is done since most tariffs are low and most quotas eliminated. Answer: A Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 21) Deep integration A) is easier to achieve than shallow integration. B) is less controversial than shallow integration. C) does not require changing domestic policies unrelated to tariffs and quotas. D) requires cooperation with other national governments or international bodies. Answer: D Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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22) Made in the USA or Made in China has less meaning for products that A) are a commodity such as iron ore. B) are an agricultural product such as wheat. C) are technological and involve assembling many different types of sometimes sophisticated components. D) are produced and consumed domestically. Answer: C Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 23) Which of the following kinds of agreements between two or more countries would be an example of a shallow integration measure? A) An agreement to accept another nation's certification of architects B) An agreement to unify customs forms in order to speed up cross-border traffic C) An agreement to use the same environmental standards D) An agreement to impose the same limits on cartels and monopolies Answer: B Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 24) Which of the following kinds of agreements between two or more countries would be an example of a deep integration measure? A) An agreement to reduce tariffs and quotas B) An agreement to unify customs forms in order to speed up cross-border traffic C) An agreement to impose the same limits on cartels and monopolies D) An agreement to reduce exports Answer: C Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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25) While the world was fairly integrated at the turn of the last century, most trade was in agricultural and raw materials, whereas today manufactured consumer and producer goods play a much greater role in determining exports and imports. Answer: TRUE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 26) Capital and labor only very recently have been free to move across international borders. Answer: FALSE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 27) Capital flows between countries are smaller than in past decades in absolute terms. Answer: FALSE Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge 28) Open economies grow more slowly than closed economies. Answer: FALSE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 29) Daily foreign exchange transactions have grown from about $15 billion in 1973 to over $5 trillion today. Answer: TRUE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge
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30) Most economists support open trade because it increase our choices as consumers, lowers costs for producers, increases competition and innovation, and leads to greater diffusion of technological change. Answer: TRUE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 31) Domestic agricultural subsidies intended to support the nation's farmers would not be considered a trade barrier so would not be disputed internationally. Answer: FALSE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 32) Most of what we buy and sell never makes it out of domestic markets. Answer: TRUE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 33) The four criteria for economic integration include trade flows, capital flows, people flows, and the similarity of prices in separate markets. Answer: TRUE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 34) Transactions costs in international financial markets are higher today than they were in the past. Answer: FALSE Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge
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35) Why are high domestic savings rates important? Answer: High savings rates are correlated with high domestic investment. Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 36) What are the positive impacts of migration on migrants and the firms that hire them? Answer: Higher incomes for migrants and lower labor costs for firms Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 37) What are the negative impacts of migration for the nation receiving migrants? Answer: More competition for other workers and greater social tensions Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 38) Which type of integration requires adapting domestic policies to coordinate with those of trading partners? Answer: Deep integration Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge 39) What do economists call movements of labor and capital between nations? Answer: Factor flows Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.4 List the three types of evidence to support the idea that trade supports economic growth. AACSB: Application of knowledge
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40) Compare and contrast globalization as it existed in the late nineteenth century with globalization today. Answer: I would expect my students to address the following: • That in percentage terms, a significant portion of world economic activity was engaged in trade in both periods. • That in the prior period, trade was mostly in agricultural products and commodities, whereas today capital goods play an increasingly important role. • That labor may have been more mobile in the past than it is today due to changes in immigration policies. • That capital was mobile in both periods, but might be more so today, especially given new instruments. • That changes in transportation and communication were significant in both periods in terms of reducing transaction costs and encouraging product and factor mobility. Topic: Elements of International Economic Integration Difficulty: Difficult Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Analytical thinking 41) What are some of the main advantages and disadvantages of the extensive financial and commercial networks linking nations today? Answer: Some of the advantages are that buyers receive lower prices, more choice, and more access to innovative technology. The major disadvantage is that a crisis is more likely to spread from one part of the world to another. Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 42) How has the composition of trade flows changed from the early 20th century to today? Compared to the past, is anything about trade today new? Answer: Prior to World War I, most trade consisted of agricultural commodities and raw materials, while today trade is primarily manufactured consumer goods and capital goods. Given recent advances in telecommunications, services now can be outsourced and service industries face growing international competition. Topic: Elements of International Economic Integration Difficulty: Moderate Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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43) Describe at least three ways that global capital markets are different today from what they were like in the late 19th century. Answer: There are more varieties of financial instruments available. A major difference is that exchange rates were fixed then which meant less exchange rate risk and uncertainty then and now higher costs and transactions volume given the need to manage that risk. Transaction costs are significantly lower today than in the past. Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Application of knowledge 44) How is the international economy qualitatively different in the first part of the 21st century from what it was like in the first part of the 20th century? Answer: Since tariffs and quotas have been reduced (and would have been the common barriers in the past), now nations are addressing issues related to deeper levels of integration, which involve domestic policies such as labor or environmental standards or investment policies. Today there are multilateral international governmental organizations that address global economic issues where none existed then. There has been a significant increase in the number of regional trade agreements. Topic: Elements of International Economic Integration Difficulty: Easy Objective: LO 1.3 Describe three factors in the world economy today that are different from the economy at the end of the first wave of globalization. AACSB: Analytical thinking 1.3 Twelve Themes in International Economics 1) Which region of the world experienced a decade-long crisis and stagnant or even negative growth rates during the 1980s? A) Latin America B) East Asia C) The United States and Canada D) The European Union Answer: A Topic: Twelve Themes in International Economics Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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2) Which nations does the acronym BRIC stand for? Answer: Brazil, Russia, India and China Topic: Twelve Themes in International Economics Difficulty: Easy Objective: LO 1.1 Discuss historical measures of international economic integration with data on trade, capital flows, and migration. AACSB: Application of knowledge
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International Economics, 7e (Gerber) Chapter 2 International Economic Institutions Since World War II 2.1 Introduction: International Institutions and Issues Since World War II 1) Institutions are A) the same thing as organizations. B) associations of individuals or groups. C) always embodied in a written set of rules. D) a set of rules governing behavior, whether written or not. Answer: D Topic: Introduction: International Institutions and Issues Since World War II Difficulty: Easy Objective: LO 2.1 Classify with examples the main types of international economic organizations. AACSB: Application of knowledge 2) Which of the following is an example of an institution whose primary concern is global stability? A) NAFTA (North American Free Trade Agreement) B) OPEC (Oil Producing and Exporting Countries) C) IMF (International Monetary Fund) D) Asian Development Bank Answer: C Topic: Introduction: International Institutions and Issues Since World War II Difficulty: Easy Objective: LO 2.1 Classify with examples the main types of international economic organizations. AACSB: Application of knowledge 3) 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. Answer: TRUE Topic: Introduction: International Institutions and Issues Since World War II Difficulty: Easy Objective: LO 2.1 Classify with examples the main types of international economic organizations. AACSB: Application of knowledge
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2.2 The IMF, the World Bank, and the WTO 1) The international organization that serves as a forum for trade discussions and the development of trade rules is called A) the WTO. B) the World Bank. C) the IMF. D) the United Nations. Answer: A Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 2) Which of the following was NOT a creation of the Bretton Woods conference? A) World Bank B) IMF C) IBRD D) WTO Answer: D Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 3) One of the strongest motivations for holding the Bretton Woods Conference was to design new international institutions that would A) contain communism. B) help countries avoid the mistakes of the 1920s and 1930s. C) provide a collective defense security for Western Europe and North America. D) ensure that world prices were not rising too rapidly. Answer: B Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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4) One of the most important and most visible roles of the IMF is to A) hold regular negotiations over tariff reductions. B) investigate countries that are charged with being unfair traders. C) provide loans to countries that need capital to develop their economies. D) intercede by invitation when countries cannot pay their international debts. Answer: D Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 5) The original mission of the World Bank was to A) provide capital to underdeveloped countries. B) provide capital to firms around the world. C) provide financial assistance for the reconstruction of war-damaged nations. D) help countries manage their exchange rates. Answer: C Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 6) The primary mission of the World Bank today is to A) provide capital to underdeveloped countries. B) provide capital to firms around the world. C) provide financial assistance for the reconstruction of war-damaged nations. D) help countries manage their exchange rates. Answer: A Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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7) 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) World Bank. B) IMF. C) United Nations. D) GATT. Answer: D Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 8) Until the Uruguay Round of trade negotiations, which of the following sectors were NOT included in the rules for international trade? A) Steel and agriculture B) Agriculture and apparel C) Steel and textiles D) Automobiles and agriculture Answer: B Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 9) Most favored nation (MFN) status means that a country treats another country A) better than its other trading partners. B) the same as its other trading partners. C) worse than its other trading partners. D) any way it chooses since it is the "most favored nation." Answer: B Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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10) When the United States gives MFN status to China, it means that A) China is treated better than other U.S. trading partners. B) China is treated the same as other U.S. trading partners. C) China is treated worse than other U.S. trading partners. D) China is legally bound to reciprocate. Answer: B Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 11) The Tokyo Round of the GATT negotiations was notable because it was the first round A) that included Japan. B) that included textiles and apparel. C) to begin establishing rules on subsidies. D) to begin discussions of exchange rates. Answer: C Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 12) IMF conditionality refers to the A) technical assistance the IMF gives. B) minimum-sized loan the IMF will make. C) maximum-sized loan the IMF will make. D) changes a country must make in order to receive IMF financial assistance. Answer: D Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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13) Which of the following is true? A) A country experiencing a debt or currency crisis would contact the World Trade Organization. B) The World Trade Organization was formed at the Bretton Woods conference. C) The General Agreement on Tariffs and Trade created the World Trade Organization in the negotiations and treaty known as the Uruguay Round. D) The World Trade Organization has no power to resolve trade disputes and to enforce their resolution. Answer: C Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 14) A country's foreign exchange reserves refers to A) the currency of the nation itself. B) the country's holdings of gold and internationally accepted currencies. C) the total amount of a country's currency held by other nations. D) the country's Special Drawing Rights (SDRs) at the IMF. Answer: B Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 15) Having MFN status means that the country is getting the most favorable trade terms possible with a trading partner. Answer: FALSE Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 16) A country experiencing a debt or currency crisis would contact the World Bank. Answer: FALSE Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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17) 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. Answer: TRUE Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 18) 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. Answer: FALSE Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 19) The World Bank formed the World Trade Organization when it became clear that to alleviate poverty in developing nations, agricultural trade barriers were going to have to be reduced. Answer: FALSE Topic: The IMF, the World Bank, and the WTO Difficulty: Moderate Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 20) A nation's votes at the IMF are proportional to its population. Answer: FALSE Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 21) MFN status means that a trading partner is getting the best trade deal possible given current national trade policies. Answer: FALSE Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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22) WTO talks in the late 1990s led to openings in both financial services and telecommunications. Answer: TRUE Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 23) Trade policies in which industries have been the most contentious in the Doha Round? Answer: Agriculture and services Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 24) Which round of GATT first addressed subsidies? Answer: The Tokyo Round Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 25) What result of the Uruguay Round was the most significant for global trade? Answer: The creation of the WTO Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge 26) How is the IMF funded? Answer: It collects fees called quotas from it members. Topic: The IMF, the World Bank, and the WTO Difficulty: Easy Objective: LO 2.2 Identify economic circumstances in which the IMF, the World Bank, and the WTO are active. AACSB: Application of knowledge
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