Deck 3: International Institutions From an International Business Perspective

Question 1

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.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

The World Bank funds infrastructure projects in developed countries.

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

The following is an area in which the UN plays a significant role for international business: loaning seed money for entrepreneurial start-ups in developed nations.

Question 26

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

Question 27

Trading blocs always bring cost savings to international firms.

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

The UN General Assembly is the main staff organization responsible for the UN administration.

Question 34

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 35

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

Question 36

The International Court of Justice (ICJ)handles all cases brought forward by any person or organization.

Question 37

Cognitive institutions are important to the international manager because these institutions help the manager understand the schema operating in their international environments and are easily missed or misunderstood by the non-native,so can easily lead to misunderstandings.

Question 38

Kofi Annan,former Secretary General of the UN,observed that we can master our common destiny only if we face it together,and that is why we have the UN.

Question 39

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

Question 40

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.

Question 41

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 42

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 43

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 44

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

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

Question 45

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 46

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

A)the member states' prime ministers or presidents.
B)the member states' ministers who represents the specific area being discussed.
C)elected members from across Europe,elected by country.
D)appointed representatives from each member state.

Question 47

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

A)Non-profit banking cooperative for its members to meet development needs.
B)Central bank for the world's central bankers.
C)Non-profit cooperative to finance the educational needs of its members.
D)Invest funds in global businesses in order to create value for its shareholders.

Question 48

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 49

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

A)formal
B)informal
C)normative
D)cognitive

Question 50

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 51

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

A)a country could belong to only one of these organizations.
B)the favored trade relationships among EU members are not extended to non-member 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 52

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 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 53

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)16 of the EU member-countries.
D)the Bank for International Settlements and the IMF.

Question 54

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 vale based on gold.
D)the monitoring of EU initiatives to restrain trade with South Africa.

Question 55

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 56

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

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.
D)all of the above.

Question 57

Regional trade agreements such as NAFTA impact the WTO

A)negatively,because they undercut the non-discrimination 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,since 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 58

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 59

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 60

The EU's impact on international business is

A)negligible,since the EU members tend to trade with each other.
B)not significant,since 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,since the EU is a major exporter into developing nations.

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 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 (IBRD).
C)International Microloan Bank.
D)International Bank for Development.

Question 63

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 at Yalta.
C)held at Grasleben,Germany.
D)held at Bretton Woods.

Question 64

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 65

Given what you have read about institutional theory,comment on the quote from William Inge,Former Dean of St.Paul's,London: "Every institution not only carries with it the seeds of its own dissolution,but prepares the way for its most hated rival."

Question 66

The geographical area that receives the most World Bank lending is

A)East Asia.
B)Latin America and the Caribbean.
C)Africa.
D)Middle East.

Question 67

The United Nations is probably the best-known among

A)non-profit organizations.
B)social service organizations.
C)international organizations.
D)military organizations.

Question 68

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

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

Question 69

The main difference between a free trade area (FTA)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 70

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 71

IDA's purpose is to loan to

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

Question 72

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 73

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 74

The five principles of the WTO (trade without discrimination,freer trade,predictability,fair competition,and encouraging development and economic reform)if followed,would provide developing nations a boost in their development.Agree or disagree.

Question 75

Discuss the observation made recently by an undergraduate philosophy major that "the major international institutions are concerned with keeping the rich countries rich,at the expense of the poorer ones."

Question 76

The UN's International Court of Justice (ICJ)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 77

The main deliberative body of the UN is the:

A)Peace Jurga.
B)General Assembly.
C)Security Council.
D)International Court of Justice.

Question 78

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

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

Question 79

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 80

The Doha Development Agenda is

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