Question 1

Which of the following statements about the IMF is true?

Accepted Answer

The IMF's main goals include providing international liquidity to member countries in need and facilitating international trade through monetary cooperation.

Question 2

How much funding was required from members during the creation of the International Monetary Fund?

Accepted Answer

The International Monetary Fund (IMF) required members to pay their quotas with 25% in gold or US dollars, and the remaining 75% could be paid in the member's own currency. This structure was designed to provide the IMF with a reserve of currencies for its operations while also allowing for a degree of flexibility in the types of assets members could use to fulfill their financial obligations.

Question 3

Which of the following measures by the Roman Empire contributed to the functioning of the international marketplace and to the reduction of business uncertainty?

Accepted Answer

An excellent communication system allowed for faster and more efficient trade routes, communication between traders, and dissemination of information about business opportunities and risks. The other options would not contribute positively to the international marketplace or the reduction of business uncertainty.

Question 4

Which of the following began in 1947 as a set of rules for nondiscrimination,transparent procedures,and settlement of disputes in international trade?

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) began in 1947 as a set of rules for nondiscrimination, transparent procedures, and settlement of disputes in international trade.

Question 5

Which of the following statements about the GATT is true?

Accepted Answer

GATT (General Agreement on Tariffs and Trade) was indeed designed to operate by consensus, meaning that decisions were made with the agreement of all member countries, rather than by majority vote. This approach aimed to ensure that all countries, regardless of their economic power, had a say in the formulation of international trade rules.

Question 6

The _____ has its origins in the GATT,to which it became the successor organization in January of 1995.

Accepted Answer

The World Trade Organization (WTO) has its origins in the General Agreement on Tariffs and Trade (GATT), which was formed in 1947. The WTO became the successor organization to GATT in January 1995. The International Monetary Fund (IMF) and the World Bank are separate entities that were formed at the Bretton Woods Conference in 1944. MERCOSUR is a regional trade bloc in South America.

Question 7

Which of the following statements about the WTO is true?

Accepted Answer

Provisions are indeed made at the WTO for decisions to be made by majority vote if a consensus cannot be achieved. Consensus is always the preferred way of decision-making, but if it cannot be reached, the organization operates on the basis of 'most favoured nation' or non-discrimination principles.

Question 8

What is the core mission of the WTO?

Accepted Answer

The core mission of the WTO, as stated on their official website, is to facilitate international trade and investment by promoting free trade and lowering barriers to trade between member countries. This includes negotiating and implementing trade agreements, providing a forum for trade negotiations and disputes, and offering technical assistance and training to developing countries. Therefore, choice C is the best option. Choices A, B, and D do not accurately represent the core mission of the WTO.

Question 9

The WTO is responsible for all of the following except _____.

Accepted Answer

The IMF (International Monetary Fund) is not a responsibility of the WTO. GATS (General Agreement on Trade in Services), TRIPS (Trade-Related Aspects of Intellectual Property Rights), and TRIMS (Trade-Related Investment Measures) are agreements under the jurisdiction of the WTO.

Question 10

The evolution of European feudalism was due to a function of _____.

Accepted Answer

The answer of The evolution of European feudalism was due...

Question 11

Which of the following integrates the economic and political activities of nations?

Accepted Answer

Economic blocs, such as the European Union or NAFTA, integrate economic and political activities of nations by promoting free trade, reducing barriers to entry, and establishing common goals and regulations. Political reforms, export consortia, and born globals may have an impact on international business, but they do not integrate the economic and political activities of nations at the same level as economic blocs.

Question 12

What is the term used for a firm founded with a global scope in mind from the very beginning?

Accepted Answer

Born global refers to a company that is founded with a global strategy in mind right from its inception. These firms typically have a global vision, a global product or service offering, and an international customer base. The other options (A, B, and C) do not accurately describe a firm founded with a global scope in mind from the very beginning.

Question 13

_____ are special because they can affect currency values and the fiscal and monetary policies of governments,shape public perception of competitiveness,and determine the level of imports a country can afford.

Accepted Answer

Exports are special because they have a significant impact on currency values, fiscal and monetary policies of governments, public perception of competitiveness, and the level of imports a country can sustain. A country's exports determine its economic well-being and help to generate foreign exchange. As a result, countries often rely on exports to grow their economies and sustain their development.

Question 14

Which act raised duties to reduce the volume of imports into the United States,in the hopes that this would restore domestic employment?

Accepted Answer

The Smoot-Hawley Act, passed in 1930, raised tariffs on thousands of imported goods with the intention of protecting American industries from foreign competition and to stimulate domestic employment. However, it ultimately failed to achieve its intended goals and instead worsened the Great Depression by reducing international trade and causing retaliation from other countries.

Question 15

The Soviet Union,as the leader of the Eastern bloc,developed the _____,which focused on developing strong linkages among the members of the Soviet bloc and discouraged relations with the West.

Accepted Answer

The Council for Mutual Economic Assistance, also known as Comecon, was an economic organization established in 1949 by the Soviet Union to promote economic cooperation and trade among its communist allies. Comecon's focus was on creating strong economic ties between its member states in Eastern Europe and discouraging relations with the West. The other options mentioned (Gulf Cooperation Council, Transatlantic Business Dialogue, and MERCOSUR) are regional organizations that have no direct link to the Soviet Union or its policies.

Question 16

The International Bank for Reconstruction and Development is also known as the _____.

Accepted Answer

The International Bank for Reconstruction and Development (IBRD) is commonly known as the World Bank. A is incorrect since the Export-Import Bank is a different institution that focuses on financing and facilitating exports and imports. B is incorrect since the United Nations Development Programme (UNDP) is a separate organization that focuses on promoting sustainable development. D is incorrect since the International Monetary Fund (IMF) is another international organization that focuses on promoting global monetary cooperation and exchange rate stability.

Question 17

Which currency is most accepted worldwide?

Accepted Answer

The U.S. dollar is the most accepted currency worldwide. It is widely used for international trade and is the currency of choice for many countries as a reserve currency. Additionally, many tourist destinations around the world also accept dollars as a form of payment.

Question 18

Which of the following statements is true about foreign direct investment?

Accepted Answer

Foreign direct investment can lead to concerns about dependence on foreign owners, particularly in key industries or sectors. However, this is not always the case and depends on various factors such as the type of investment and the host country's policies.

Answer: None of the other choices are true or accurate. B is false as many countries engage in foreign direct investment, and the US is not the only one. C is false as foreign affiliates are engaged in trade with their host countries and may also trade with other countries. D is false as foreign direct investment tends to be concentrated in specific industries, such as manufacturing and services, depending on the host country's comparative advantage.

Question 19

When a company expands its market by offering its products to international customers,it can produce more of its products efficiently,thus reducing the overall cost of each individual unit.This is known as _____.

Accepted Answer

Economies of scale refers to the cost advantage a company experiences when it produces more of its product, which results in a lower cost per unit. When a company expands its market and produces more, it benefits from economies of scale. Product diversification (A) refers to a company offering different products to appeal to different markets or customers. Product differentiation (B) refers to making a product different from competitors' products to appeal to customers. Monopolistic competition (D) refers to a market structure in which there are many competitors offering similar but not identical products.

Question 20

The European Union is an example of a(n)_____.

Accepted Answer

The European Union is primarily an economic bloc, which is a group of countries that work together to promote trade and economic cooperation, often through the removal of trade barriers such as tariffs and quotas. While the EU does engage in multilateral negotiations with other countries and regions, and has implemented some nontariff barriers, these are secondary aspects of its overall purpose and function. The term "export consortium" does not accurately describe the EU, as it implies a focus on exporting goods rather than promoting domestic trade and economic cooperation.

Quiz 2: International Trade Frameworks and Policy