Question 1

The national deficit is the amount of borrowing that a country does from either the private sector or other countries.

Accepted Answer

The national deficit refers to the amount of money that a government has to borrow in order to cover its expenses, and this borrowing can come from sources like the private sector or other countries.

Question 2

Current account deficit refers to imports being greater than exports.

Accepted Answer

Current account deficit is when a country's imports of goods, services and investments are greater than its exports.

Question 3

A country may resort to reducing the tax rates on its citizens in order to stimulate its economy.

Accepted Answer

By reducing tax rates, citizens have more money to spend or invest, which can lead to increased economic activity and growth. This can also encourage businesses to expand and create more jobs, further stimulating the economy.

Question 4

A country is not allowed to borrow money for investing in domestic projects such as investing in the public sector or building infrastructure.

Accepted Answer

Countries are allowed to borrow money for investing in domestic projects such as investing in the public sector or building infrastructure, but there may be restrictions and conditions imposed by the lenders.

Question 5

One of GATT's key provisions stated that if the most-favored-nation clause status was granted by a country to another country, then it was automatically extended to all other member countries.

Accepted Answer

This provision is true and is known as the "MFN principle" under GATT.

Question 6

The General Agreement on Trade in Services (GATS) requires member nations to treat foreign service companies as they would domestic ones.

Accepted Answer

This is true. The General Agreement on Trade in Services (GATS) aims to promote fair and open trade in services among its member nations by requiring them to grant equal treatment to foreign service providers as they would to their own domestic providers.

Question 7

The Andean Community is a free trade agreement signed in 1969 between Bolivia, Chile, Colombia, Ecuador, and Peru.

Accepted Answer

The statement correctly describes the Andean Community as a free trade agreement between Bolivia, Chile, Colombia, Ecuador, and Peru that was signed in 1969.

Question 8

Tariffs refer to taxes, which are placed on imports or exports.

Accepted Answer

Tariffs are taxes imposed on imports or exports.

Question 9

WTO functions as a trade facilitator for the member countries but it has no power to hear disputes or suggest a solution.

Accepted Answer

WTO does have a dispute settlement mechanism to hear and suggest solutions for trade disputes between member countries.

Question 10

Government procurement and bidding, industrial standards, and subsidies are examples of tariff trade barriers.

Accepted Answer

Government procurement and bidding, industrial standards, and subsidies are not examples of tariff trade barriers. They are non-tariff trade barriers. Tariff trade barriers refer to taxes or duties imposed on imported goods, which increase their cost and make them less competitive in the domestic market.

Question 11

MERCOSUR is committed to the consolidation of democracy and the maintenance of peace throughout the Asian continent.

Accepted Answer

This statement is false. MERCOSUR is a regional economic bloc in South America and has no jurisdiction or involvement in maintaining peace in Asia. Its main objectives are economic integration, cooperation, and development among its member countries (Argentina, Brazil, Paraguay, and Uruguay).

Question 12

The European Union (EU) consists of the same countries as the continent of Europe.

Accepted Answer

The European Union consists of 27 countries in Europe, while the continent of Europe consists of 44 countries.

Question 13

Intellectual property rights (IPR) law does not deal with the financial aspect of a creation of an individual.

Accepted Answer

Intellectual property rights (IPR) law deals with the financial aspect of a creation of an individual. It provides legal protection to the creators of intellectual property, such as patents, trademarks, copyrights, etc., and allows them to profit from their creations.

Question 14

A country borrows money during a recession in order to keep its basic public services operating until the economy improves.

Accepted Answer

It is common for a country to borrow money during a recession in order to maintain its basic public services such as healthcare, education, and infrastructure. This is done to prevent further economic decline and to provide stability until the economy is able to recover.

Question 15

The primary difference of the customs union from the free trade area is that members agree to treat trade with nonmember countries in a similar manner.

Accepted Answer

In a customs union, members agree to not only eliminate trade barriers between themselves but also to impose common external tariffs on nonmember countries, thereby treating trade with nonmembers in a similar manner. This is the main distinguishing factor between a customs union and a free trade area.

Question 16

Dumping occurs when a company exports to a foreign market at a price that is either lower than the domestic prices in that country or less than the cost of production.

Accepted Answer

Dumping refers to exporting at a price lower than the domestic market price or the cost of production.

Question 17

Global businesses often have teams of in-house professionals monitoring the WTO as well as the regional trade alliances.

Accepted Answer

Global businesses often have teams of in-house professionals to monitor the World Trade Organization (WTO) and regional trade alliances to ensure they are aware of changes in trade regulations and policies that may impact their operations.

Question 18

GATT's initial focus was on non-tariff barriers of trade.

Accepted Answer

GATT's initial focus was on the reduction of tariffs on goods traded among member nations. However, in later rounds of negotiations, non-tariff barriers such as import quotas and regulations were also addressed.

Question 19

There are more EU member countries than there are countries using the euro.

Accepted Answer

The European Union currently has 27 member countries, while only 19 of those countries use the euro as their official currency.

Question 20

The goal of NAFTA has been to encourage trade between the South American countries.

Accepted Answer

The goal of NAFTA is to encourage trade between the United States, Canada, and Mexico, not South American countries.

Quiz 5: Global and Regional Economic Cooperation and Integration