Question 1

When the International Monetary Fund was created, how did member nations pay their dues?

Accepted Answer

When the International Monetary Fund was created, member nations were required to pay 25% of their quota in gold or U.S. dollars, with the remaining 75% paid in their own currency. This system was known as the gold exchange standard. It was later replaced by the Special Drawing Rights system, which uses a basket of major currencies as the unit of account.

Question 2

____________ is considered "special" because of its affect on currency values, the fiscal and monetary policies of governments, the shaping of public perception on competitiveness, and the level of imports a country can afford?

Accepted Answer

The exportation of goods and services can have a significant impact on currency values, government policies, competitiveness, and imports. A country with strong exports can see their currency appreciate, leading to changes in government monetary and fiscal policies. Additionally, the ability to export goods and services can shape public perception on a country's competitiveness and determine the level of imports they can afford. Political upheaval and regime change can also have an impact on these factors, but they are not considered "special" in the same way that exports are. The legalization of previously banned products may have economic implications, but it is not as broad-reaching as the impact of exports.

Question 3

The Roman Empire became one of the greatest world powers through which of the following means?

Accepted Answer

The Roman Empire became powerful through international trade and commerce. They established trade routes, facilitated commerce, and encouraged trade with other regions. This led to economic prosperity, which in turn fueled their military expansion and eventual domination of the Mediterranean world. Asking other countries to join them in their empire (A) was not the primary means of their expansion, and sending out feudal lords to marry into neighboring lands (B) was not a Roman practice. Taxing the poor (D) was a means of revenue collection, but it was not the primary factor in the growth of the Roman Empire.

Question 4

In the 1960s and 1970s, why were domestic firms at a disadvantage when compared to firms in emerging nations?

Accepted Answer

The U.S. policy during this time aimed to support foreign economies, believing that American innovation and the free market would naturally drive domestic growth.

Question 5

_________ is a non-governmental organization composed of business leaders from Europe and the United States.

Accepted Answer

The Transatlantic Business Dialogue (TABD) is a non-governmental organization that facilitates a dialogue between European and American business leaders. Therefore, option A is the correct answer. Neither option B nor option C exist, and option D refers to a different organization that focuses on promoting trade and investment between the United States and the Asia-Pacific region.

Question 6

In which region is the Mercosur trade union located?

Accepted Answer

Mercosur, also known as the Southern Common Market, is a trade bloc in Latin America that includes Argentina, Brazil, Paraguay, and Uruguay as full members, with Bolivia as a member in the process of becoming full.

Question 7

As of 2002, what is true about the trade status of the United States?

Accepted Answer

As of 2002, the United States was importing more goods than it was exporting, making choice A the correct answer.

Question 8

Which currency is most accepted worldwide?

Accepted Answer

The U.S. Dollar is the most accepted currency worldwide as it is widely recognized and used as a reserve currency by many countries. It is also commonly accepted by merchants and businesses in various parts of the world.

Question 9

What is the core mission of the WTO?

Accepted Answer

The core mission of the WTO is to facilitate international trade and investment by promoting transparent, predictable and non-discriminatory trade policies, providing a forum for trade negotiations, and resolving disputes between member countries. It is not tasked with enforcing trade tariffs, maintaining stable prices for specific products, or brokering agricultural products.

Question 10

In German history, a customs union was established to eliminate tariff barriers. The ultimate goal envision was the completely free movement of capital, services, and people across national borders and the joint development of common international policies. What is the name of this regional integration union?

Accepted Answer

The Zollverien, also known as the German Customs Union, was established in 1834 to eliminate tariff barriers and promote economic unity among German states. The ultimate goal was the free movement of capital, people, and services across national borders, as well as the development of common international policies. Options A and D are not relevant to the question, and option B is not a recognizable term for a regional integration union in German history.

Question 11

When was the World Trade Organization founded?

Accepted Answer

The World Trade Organization (WTO) was founded in 1995 during President Clinton's first term of office.

Question 12

When a company expands its market by offering its products to international customers, it can produce more of its products and do so more efficiently, thus reducing the overall cost of each individual unit. What is this called?

Accepted Answer

This is called economy of scale, which is the cost advantage that arises with increased output of a product.

Question 13

In light of persistent trade deficits, growing foreign direct investment, and the tendency of some firms and industries to seek legislative redress for marketing failures, the U.S. Congress in the past two decades has:

Accepted Answer

Given the persistence of trade deficits and the growth of foreign direct investment, the U.S. Congress has shifted towards giving more power to the President to improve trade opportunities. This is evident in legislation such as the Trade Act of 2002, which granted the President "fast-track" authority to negotiate new trade agreements and made it easier for the U.S. to conduct trade negotiations with other countries. Additionally, the Congress has also established specific agencies such as the United States Trade Representative (USTR) which negotiates directly with foreign countries on behalf of the President.

Question 14

Another name for the International Bank for Reconstruction and Development is:

Accepted Answer

The International Bank for Reconstruction and Development is commonly known as the World Bank, which is an international financial institution that provides loans and financial assistance to developing countries for sustainable economic development. Options A and B are incorrect as they refer to other entities, and option D does not exist.

Question 15

When a firm is founded with global scope in mind from the very beginning, what do marketers call that type of company?

Accepted Answer

The term used to describe a company that is founded with global scope in mind from the very beginning is "born global."

Question 16

Which organization has been called "a remarkable success story of postwar international organization that was never intended to become one"?

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) was initially intended as a temporary measure to reduce tariffs and trade barriers, but it became a significant and lasting framework for international trade until it was replaced by the World Trade Organization (WTO) in 1995.

Question 17

When the charter for the International Trade Organization was signed in 1948, it set forth a series of agreements to include international commercial policies, domestic business practices, and what other agreements?

Accepted Answer

The charter for the International Trade Organization established agreements on commodity, economic development, and international investment, in addition to international commercial policies and domestic business practices. Options A and C are not accurate and Option B is not a specific agreement mentioned in the charter.

Question 18

The WTO, IMF, and World Bank operate on a global level. Which of the following is an example of a trade alliance that operates under this same concept on a regional basis?

Accepted Answer

The Economic Bloc, also known as a regional trade bloc or regional integration group, is a group of countries within a specific geographic area that agree to reduce or eliminate trade barriers among themselves. Examples include the European Union, ASEAN, and Mercosur. Unlike the other options listed, the Economic Bloc operates on a regional basis, similar to how the WTO, IMF, and World Bank operate on a global level.

Question 19

NAFTA, Mercosur, and GCC represent:

Accepted Answer

NAFTA (North American Free Trade Agreement), Mercosur (Southern Common Market), and GCC (Gulf Cooperation Council) are examples of regional trade alliances between nations.

Question 20

Which of the following is true about the trade deficit in the United States?

Accepted Answer

Since 1975, the U.S. trade deficit has been continuous, meaning that the value of imports has consistently exceeded the value of exports.

Quiz 2: Trade Institutions and Trade Policy