Question 1

Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm?
A) the market access section
B) the export expansion section
C) the import relief section
D) the foreign exchange regulation section
E) the trade deficit section

Accepted Answer

The import relief section of the Omnibus Trade and Competitiveness Act is designed to address the issues arising from foreign penetration of U.S. markets, including competitive pressure, loss of market share, and potential severe financial harm. This section provides mechanisms for temporary relief to industries and workers adversely affected by increased imports.

Question 2

What does GATT use as the primary method to solve global trade problems?
A) GATT works with government agencies of trade members.
B) GATT uses coercion.
C) GATT uses consultation.
D) GATT implements the legislative agenda of trade members.
E) GATT creates binding agreements between member nations.

Accepted Answer

GATT primarily uses consultation among its member countries to solve global trade problems, promoting negotiation and cooperation.

Question 3

The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act.
A) market access
B) export expansion
C) import relief
D) foreign exchange regulation
E) trade deficit

Accepted Answer

The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the "export expansion" section of the Omnibus Trade and Competitiveness Act, aiming to promote American businesses abroad by making it illegal to bribe foreign officials.

Question 4

The Uruguay Round resulted in which institution becoming the successor to the GATT?
A) International Monetary Fund
B) World Bank
C) European Services Forum
D) World Trade Organization
E) Association of Southeast Asian Nations

Accepted Answer

The Uruguay Round, a series of negotiations under the General Agreement on Tariffs and Trade (GATT), led to the establishment of the World Trade Organization (WTO) as its successor. The WTO was created to provide a framework for negotiating and formalizing trade agreements and to serve as a forum for resolving trade disputes.

Question 5

While unintended, what is an adverse consequence of globalization?
A) nationalization of private sector holdings
B) lower and more competitive oil prices
C) reduced variety and quality of goods and services
D) worker exploitation and domestic job losses
E) provision of loans from the World Bank

Accepted Answer

Globalization can lead to worker exploitation and domestic job losses as companies move production to countries with lower labor costs to increase profits, often at the expense of workers' rights and job security in their home countries.

Question 6

The special drawing rights (SDRs) developed by the IMF can be thought of as
A) black gold.
B) exchange permits.
C) floating currencies.
D) paper gold.
E) virtual dollars.

Accepted Answer

SDRs are referred to as "paper gold" because they are an international reserve asset created by the IMF to supplement its member countries' official reserves, thus providing liquidity in the global economic system without being tied to any physical commodity like gold.

Question 7

Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are
A) negotiating bilateral trade agreements.
B) forming a rival organization.
C) refusing to accept all the rules and regulations imposed by the WTO.
D) using legal means to sue the WTO.
E) opting out of membership in the WTO.

Accepted Answer

Nations frustrated with slow WTO negotiations often turn to negotiating bilateral trade agreements as a more direct and potentially faster way to secure trade deals and benefits.

Question 8

What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels?
A) Trade-Related Aspects of Intellectual Property Rights (TRIPs)
B) Trade-Related Investment Measures (TRIMs)
C) General Agreement on Trade in Services (GATS)
D) Marrakesh Agreement
E) Stockholm Agreement

Accepted Answer

The Trade-Related Investment Measures (TRIMs) agreement addresses investment measures that affect trade in goods, including restrictions on foreign firms, making it relevant for challenging such restrictions in Indonesia.

Question 9

What market barriers led to the creation of the International Monetary Fund?
A) trade embargoes
B) inflation and recession in Europe
C) new taxing bodies governing trade
D) inadequate monetary reserves and unstable currencies
E) export quotas and higher tariffs

Accepted Answer

The International Monetary Fund (IMF) was created to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries to transact with each other. Inadequate monetary reserves and unstable currencies were key issues that led to its creation, as these factors contributed to economic instability and hindered international trade and recovery post-World War II.

Question 10

_________ and the World Bank Group are two global institutions created primarily to assist nations in becoming and remaining economically viable.
A) Amnesty International
B) The World Court
C) The International Monetary Fund
D) The International Red Cross
E) The International Federation of Blue Cross

Accepted Answer

The International Monetary Fund (IMF) and the World Bank Group were both created at the Bretton Woods Conference in 1944, primarily to assist nations in economic development and stability. The IMF focuses on monetary cooperation and financial stability, while the World Bank provides financial and technical assistance to developing countries for development programs (e.g., bridges, roads, schools) that are meant to improve economic prospects and quality of life.

Question 11

Which statements accurately describes the General Agreement on Tariffs and Trade (GATT)?
A) The United States, the United Kingdom, and Germany were the only signatories of the original GATT.
B) The original agreement provided a process to increase the tariffs on trade goods.
C) GATT member nations seek to resolve their trade disputes unilaterally.
D) The GATT panels have enforcement powers apart from advisory powers.
E) It created an agency to serve as watchdog over world trade.

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) aimed to promote international trade by reducing trade barriers and tariffs. It did not create an enforcement body but rather established a framework for negotiations and a forum for resolving disputes, leading to the creation of the World Trade Organization (WTO) in 1995, which acts as a watchdog over world trade.

Question 12

What was the impetus for the Omnibus Trade and Competitiveness Act?
A) Markets in the U.S. were open to most of the world but markets in Europe and many Asian countries were relatively closed.
B) The U.S. market was relatively closed to the rest of the world.
C) Markets in the U.S. were being driven by foreign demand.
D) The trade volume in the U.S. was declining.
E) Markets in the U.S. were trading with partners based on how they hoped they would respond rather than how they actually operated.

Accepted Answer

The Omnibus Trade and Competitiveness Act was motivated by the recognition that while the U.S. market was broadly open to international trade, markets in Europe and many Asian countries were comparatively closed to U.S. goods and services. This imbalance was seen as a disadvantage to U.S. businesses and workers, prompting legislative action to address trade barriers and promote American competitiveness.

Question 13

__________ are becoming a popular way to circumvent WTO guidelines and impose new duties.
A) Antidumping duties
B) Basic excise duties
C) Special excise duties
D) Production taxes
E) Manufacturing taxes

Accepted Answer

Antidumping duties are increasingly used by countries to protect their domestic industries from foreign competition by imposing additional tariffs on foreign imports believed to be priced below fair market value, thereby circumventing World Trade Organization (WTO) guidelines on tariffs and trade.

Question 14

What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners?
A) the Neutrality Pact of 1941
B) the Omnibus Trade and Competitiveness Act of 1988
C) the League of Nations Act of 1920
D) the Hawley-Smoot Tariff Act of 1930
E) the International Monetary Fund and Bank Act of 1945

Accepted Answer

The Omnibus Trade and Competitiveness Act of 1988 was designed to address trade deficits, protectionism, and the fairness of trade practices of U.S. trading partners, aiming to make U.S. businesses more competitive in the global market.

Question 15

What steps did the United States take following World War II to minimize the spread of communism around the world? Name at least one specific piece of legislation that was created.

Accepted Answer

The answer of What steps did the United States take...

Question 16

What is one of the four ongoing activities that support the growth of international trade?
A) Warsaw Pact
B) Kyoto Protocol
C) International Monetary Fund
D) World Summit on Sustainable Development
E) Treaty of Waitangi

Accepted Answer

The International Monetary Fund (IMF) supports international trade by providing financial stability, facilitating international monetary cooperation, and offering economic advice and assistance to its member countries, thereby promoting global economic growth and trade.

Question 17

How are WTO decisions enforced?
A) All WTO decisions are enforceable under law.
B) Member nations pay a duty to join WTO and this creates natural compliance.
C) The World Court reviews and enforces all WTO decisions.
D) International pressure to comply with WTO decisions is expected to force compliance.
E) Decisions must pass through both houses of Congress to be enforced.

Accepted Answer

WTO decisions are not enforced by a specific legal body or through mandatory financial contributions. Instead, compliance is generally achieved through international pressure and the mutual benefits of adhering to the agreements made under the WTO framework. Member countries are expected to comply with the decisions to maintain good trade relations and avoid disputes.

Question 18

Which statement accurately explains the status of protests against global financial institutions?
A) Organized protests against global financial institutions have been catching the attention of the world since the establishment of the IMF in 1945.
B) The sole focus of the anticapitalist protestors has been the environmental impact of globalization and the need for stability.
C) The "antisweatshop" campaigns by students in America have translated into changes in policy.
D) The entire gamut of anticapitalist protests have been weak and ineffectual in the face of the tremendous power of global financial institutions.
E) The protests against global financial institutions have been organized yet nonviolent as a rule.

Accepted Answer

The "antisweatshop" campaigns by students in America have led to changes in policy, indicating that some protests have been effective.

Question 19

Developed by the International Monetary Fund to cope with universally floating exchange rates, ________ represent an average base of value derived from the value of a group of major currencies.
A) exchange permits
B) special drawing rights
C) floating currencies
D) gold rates
E) dollar parities

Accepted Answer

Special Drawing Rights (SDRs) were developed by the International Monetary Fund (IMF) as an international type of monetary reserve currency. SDRs are designed to supplement the existing reserves of member countries and are based on a basket of major international currencies, thus providing a stable base of value in the context of floating exchange rates.

Question 20

What is a basic criticism of global financial institutions?
A) They failed to focus on the aim of reducing inequalities between rich and poor countries.
B) They failed to help the Asian countries substantially when they underwent a major financial crisis in the 1990s.
C) They failed to respect the autonomy of member nations by deeming any bilateral agreements between members as illegal if made without their approval.
D) They failed to foresee and counter the unintended effects of globalization like pollution, exploitation, and cultural extinction.
E) They failed to suppress the terrorists who were responsible for the attack in London that coincided with the G8 summit.

Accepted Answer

The answer of What is a basic criticism of global...

Quiz 2: The Dynamic Environment of International Trade

Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm?

What does GATT use as the primary method to solve global trade problems?

The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act.

The Uruguay Round resulted in which institution becoming the successor to the GATT?

While unintended, what is an adverse consequence of globalization?

The special drawing rights (SDRs) developed by the IMF can be thought of as

Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are

What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels?

What market barriers led to the creation of the International Monetary Fund?

_________ and the World Bank Group are two global institutions created primarily to assist nations in becoming and remaining economically viable.

Which statements accurately describes the General Agreement on Tariffs and Trade (GATT) ?

What was the impetus for the Omnibus Trade and Competitiveness Act?

__________ are becoming a popular way to circumvent WTO guidelines and impose new duties.

What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners?

What steps did the United States take following World War II to minimize the spread of communism around the world? Name at least one specific piece of legislation that was created.

What is one of the four ongoing activities that support the growth of international trade?

How are WTO decisions enforced?

Which statement accurately explains the status of protests against global financial institutions?

Developed by the International Monetary Fund to cope with universally floating exchange rates, ________ represent an average base of value derived from the value of a group of major currencies.

What is a basic criticism of global financial institutions?