Deck 16: Appendix A: International Institutions From a Business Perspective

Question 1

International institutions provide nations the opportunity to build multilateral solutions,and thus make significant contributions to international stability.

Answer 1

True
Explanation: The example in the text is of China and the U.S.

Question 2

By and large,the UN record of facilitating business transactions has been minor.

Answer 2

False
Explanation: A list of UN accomplishments in the area of facilitation of business and trade transactions is in the text, and that the UN makes trade smoother is stressed in the text.

Question 3

The United Nations operates with voluntary agreements,so is essentially an informal institution.

Answer 3

True
Explanation: Voluntary agreements constitute a majority of UN activities, so it is an informal institution, given the text discussion. There are exceptions, such as peacekeeping forces which at times act as formal institutions.

Question 4

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

Question 5

The UN Environment Programme laid the groundwork for the Climate Change Convention,which led to the Kyoto Protocol.

Question 6

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

Question 7

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

Question 8

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

Question 9

The International Finance Corporation (IFC)acts as an investment banker,arranging private risk ventures in developing countries.

Question 10

The World Bank is made up of one large institution,the International Bank for Reconstruction and Development (IBRD).

Question 11

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.

Question 12

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

Question 13

Permanent members of the UN Security Council vote on Security Council measures and only the Secretary-General of the UN,Ban Ki-moon,has veto power.

Question 14

One of the significant differences between formal and informal institutions is how they gain compliance.
A.1).

Question 15

The UN International Court of Justice (ICJ)hears cases that involve disputes between national governments.

Question 16

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.

Question 17

As discussed in the module,institutions are organizations constructed to create jobs for government employment initiatives.

Question 18

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

Question 19

The World Bank funds infrastructure projects in developed countries.

Question 20

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

Question 21

The Doha Development Agenda is

A) a WTO plan to establish free trade among the emirates in the Persian Gulf.
B) the government seat of Qatar and a source of significant WTO funding through Sheik Kalifa al-Thani.
C) a UN plan to develop the Arab Emirates to ensure their independence.
D) an extended conference of the WTO initially convened in Doha.

Question 22

The EU has been unsuccessful at harmonizing customs and tax formalities within their borders.

Question 23

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

Question 24

In a customs union,common external tariffs are added to an existing free trade area (FTA),as found in the Southern African Customs Union and Mercosur.

Question 25

The WTO exists to

A) establish and help implement rules of trade among nations to increase trade flows.
B) monitor and reduce the amount of trade from developing nations to developed nations.
C) ensure that the Industrial Revolution continues to support the economies of developed nations.
D) encourage development of trade barriers.

Question 26

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

Question 27

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

A) countries whose income levels make them not creditworthy.
B) private-sector development-focused firms.
C) private individuals in developing nations whose entrepreneurial efforts support development.
D) middle-income and creditworthy poor nations.

Question 28

Regional trade agreements such as NAFTA impact the WTO

A) negatively, because they undercut the nondiscrimination principle of the WTO.
B) positively, because they extend most-favored-nation status to more nations.
C) negatively, because they compete with the WTO for membership, given that nations can belong to only one trade group.
D) negatively, because the U.S. and the EU do not have a regional trade agreement between them.

Question 29

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 U.S.

Question 30

Economic cooperation often begins with a common market as in the case of the EU.

Question 31

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

Question 32

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

A) are the nation's "dues" to the IMF.
B) limit trade among IMF members.
C) are payable in SDRs.
D) may run in arrears for five years.

Question 33

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

Question 34

The IMF initially played a central role in

A) establishing trade initiatives through GAAP measures.
B) supporting war-torn nations of Europe as they recovered from their devastation.
C) setting fixed exchange rates among nations' currencies with an established par value based on gold.
D) the monitoring of EU initiatives to restrain trade with South Africa.

Question 35

The major function of the World Bank is to serve as

A) a nonprofit banking cooperative for its members to meet development needs.
B) a central bank for the world's central bankers.
C) a nonprofit cooperative to finance the educational needs of its members.
D) an investment in funds in global businesses to create value for its shareholders.

Question 36

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

A) Yes, the WTO is in favor of free trade and only free trade under all circumstances.
B) 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.
C) Yes, the WTO stands for trade liberalization, which requires transparency, economic reform, and no protectionism, regardless of the member nation's economic situation.
D) Yes. The WTO supports free trade and the term fair competition is used to obtain buy-in from nations opposed to trade liberalization.

Question 37

Trading blocs always bring cost savings to international firms.

Question 38

In a free trade area,members drop internal tariffs.External tariffs

A) are also dropped.
B) are coordinated so there is one agreed-upon set of external tariffs.
C) are maintained independently by each member.
D) do not apply to an FTA.

Question 39

ASEAN,whose initial,political goal was to foster peaceful relations among members,includes China as its core member.

Question 40

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

A) an agreement that property rights should not take precedence over public health.
B) an agreement that copyrights are inviolate.
C) a shared recognition that private property is a basic human right.
D) an agreement that governments should hold all pharmaceutical trade secrets.

Question 41

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

A)1.
B) Informal
C) Normative
D) Cognitive

Question 42

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

A) the International Monetary Fund/IMF.
B) the Bank for International Settlements.
C) the World Central Bank.
D) the World Bank for Reconstruction and Development.

Question 43

The EU began as a common market for

A) all imported goods from beyond Europe.
B) the textile and dairy industries.
C) the transportation industries.
D) the coal and steel industries.

Question 44

The Treaty of Rome,signed in 1957,established a common market for coal and steel for

A) West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy.
B) England, Ireland, Northern Ireland, Scotland, Wales, and France.
C) Finland, Sweden, Norway, West Germany, Denmark, and Switzerland.
D) Austria, Hungary, Slovakia, Poland, Romania, and Bulgaria.

Question 45

The UN's International Court of Justice is also known as

A) the Court of Europe.
B) the Court of International Law and Regulations (CILR).
C) the International Court of Peace.
D) the World Court.

Question 46

The United Nations is probably the best known among

A) nonprofit organizations.
B) social service organizations.
C) international organizations.
D) military organizations.

Question 47

Most African nations have their main trade relationships

A) within local FTAs.
B) with other African nations due to transport costs.
C) with developed nations, often built on former colonial ties.
D) with China.

Question 48

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

A) normative and cognitive.
B) normal and abnormal.
C) informally cognitive and formally cognitive.
D) effective and ineffective.

Question 49

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

A) collateral-based Lending Agency.
B) International Bank for Reconstruction and Development.
C) International Microloan Bank.
D) International Bank for Development.

Question 50

Strictly speaking,the impact of the EU on the WTO could be said to be negative,because

A) a country could belong to only one of these organizations.
B) the favored trade relationships among EU members are not extended to nonmember countries, so the EU undercuts the WTO.
C) the euro threatens other hard currencies supported by the WTO, such as the dollar and the yen.
D) the WTO does not collect dues from EU member nations.

Question 51

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

A) all of the EU.
B) all of the EU and much of the rest of Europe.
C) some of the EU member countries.
D) the Bank for International Settlements and the IMF.

Question 52

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

A) the developing economies have more ambiguity and lack formal institutions by definition, so informal institutions step into the breach.
B) developing economies show cultural preference for informality.
C) these economies have not learned about formal institutions.
D) informal institutions are less expensive to develop.

Question 53

The Chinese concept of guanxi is an example of

A) an informal, cognitive institution.
B) a regulative, formal institution.
C) a favorite cooking method of Chairman Mao.
D) taken-for-granted approaches to friendship relations.

Question 54

Economic integration often progresses

A) in stages, from free trade area to customs union to common market.
B) in stages, totally dependent on the members' national economic strength.
C) as a result of cultural beliefs and economic strength.
D) in unpredictable ways due to unintended consequences.

Question 55

NAFTA maintains restrictions on the movement of labor,so it is

A) within the scope of a free trade area.
B) within the scope of a common market.
C) not in compliance with WTO regulations.
D) unfair to Canadians and Americans.

Question 56

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

A) convened in San Francisco.
B) held in Yalta.
C) held in Grasleben, Germany.
D) held in Bretton Woods.

Question 57

The EU's impact on international business is

A) negligible, given that the EU members tend to trade with each other.
B) not significant, because the EU members need to trade with other developed economies.
C) substantial, since EU standards, especially in the areas of ecology and sustainability, impact any firm that wants to do business in the EU.
D) substantial, because the EU is a major exporter into developing nations.

Question 58

ASEAN began as a defensive alliance of 10 Asian nations concerned about

A) trade barriers in the West.
B) translation issues for their export products.
C) the spread of communism in their region.
D) Japan's influence in the region.

Question 59

All member countries belong to the UN's

A) Peace Jurga, the main deliberative body.
B) General Assembly.
C) Security Council.
D) Central Bank.

Question 60

Informal institutions are composed of sets of

A) mandatory agreements, a bit like the mind's software.
B) orthodox accords whose goal is to establish rigor.
C) agreements that are for the most part taken for granted.
D) voluntary agreements.

Question 61

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

A) efforts at peace between nations.
B) rules of trade among nations.
C) security measures between nations.
D) strategic planning for developing nations.

Question 62

The main difference between a free trade area and a customs union is that in a customs union,there is

A) no need for passport controls.
B) a shared border patrol.
C) shared currency.
D) a common external tariff.

Question 63

The Doha Development Agenda is

A) a WTO conference on trade.
B) an agreement on climate control and greenhouse gases.
C) a decision-making approach to development.
D) a development rules list.

Question 64

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

A) negotiation.
B) economic reform.
C) discrimination.
D) competition.

Question 65

IDA's purpose is to loan to

A) the poorest nations.
B) middle-income-level nations needing infrastructure.
C) developed nations for use in trade stimulus efforts.
D) any nation with collateral.

Question 66

A common markets is a customs union with the addition of

A) free movement of services, people, and capital among the members.
B) shared pricing legislation.
C) shared economic goals.
D) shared movement of capital.

Question 67

Economic integration

A) involves a common market and a high degree of political integration.
B) is essentially a marketing program whose goal is to increase market penetration.
C) has not been attempted since the dissolution of the Soviet Union.
D) depends on the cultural similarities of its members.

Question 68

Any kind of economic integration agreement

A) brings reduced costs to members.
B) results in increased costs for members.
C) leads to increased costs for those outside the trading bloc.
D) demands loyalty of the nation's traders to respect the trade rules.

Question 69

The oldest customs union is

A) the Southern African Customs Union.
B) the EU.
C) Mercosur.
D) the Canadian-U.S. Customs Union.

Question 70

The benefits of liberalized trade so far have been

A) beneficial for developing economies.
B) harmful for developing economies.
C) unclear for developed economies.
D) uneven for developing and developed economies.

Question 71

The last area to drop tariffs in NAFTA was

A) corn exports into Mexico.
B) milk products into Canada.
C) lumber into the U.S.
D) agricultural products into Panama.

Question 72

WTO agreement on TRIPS had led to member agreement to

A) enforce 20-year patents and 50-year copyrights.
B) reduce trade barriers.
C) ensure immediate availability of generic drugs in developing economies.
D) repatriate foreign citizens convicted of property rights violations.

Question 73

Regional trade agreements have been growing

A) to compensate for slow progress at the WTO's Doha Round.
B) because it is natural for neighbors to made trade agreements.
C) at the behest of the WTO.
D) largely influenced by the U.S. and EU.

Question 74

When FTA members add shared external tariffs to their agreement,they have formed a

A) customs union.
B) free trade association, such as NAFTA.
C) duties agreement.
D) trade conglomerate.

Question 75

In a free trade area,members drop their tariffs with one another,

A) but each retains external tariffs.
B) and they also combine their tariffs with other nations.
C) but their duties with one another remain in force.
D) and labor can move freely among the members.

Question 76

The UN Millennium Development goals drawn on

A) business models and business participation to accomplish their goals.
B) not-for-profit models to achieve their goals.
C) UN members to contribute added amounts to hit these goals.
D) charity of the member nations to achieve these goals.

Question 77

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

A) the transparency principle.
B) the fairness principle.
C) the equity and equality principle.
D) the MFN/most favored nation principle.

Question 78

The purpose of the International Financial Corporation (IFC)is to invest in companies and financial institutions in developing countries to build

A) infrastructure.
B) trade routes.
C) domestic logistics.
D) domestic capital markets.

Question 79

The Doha Round's discussions are contentious on several major issues,including

A) agriculture and intellectual property rights.
B) industrial goods and agriculture.
C) trade barriers and duties.
D) nontariff barriers and agriculture.

Question 80

NAFTA is an agreement among

A) Mexico, Canada, and the U.S.
B) Mexico, Panama, Canada, and the U.S.
C) Canada and the U.S.
D) Mexico and the U.S.