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Q:
Formal institutions operate through laws and regulations. They require members to make a written commitment.
Q:
The first principle of the WTO's five basic principles is trade without:
A. negotiation.
B. economic reform.
C. discrimination.
D. competition.
Q:
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.
Q:
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.
Q:
All EU members use the euro and thus have given up part of their national sovereignty to the EU.
Q:
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.
Q:
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 United States.
Q:
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.
Q:
The EU has been unsuccessful at harmonizing customs and tax formalities within member nations' borders.
Q:
The geographical area that receives the most International Development Association (IDA) credits and grants is:
Q:
The EU is administered by the European Commission, a group composed of 27 commissioners elected at the EU level.
Q:
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.
Q:
The EU is a supranational body that has become, essentially, a regional government.
Q:
That 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.
Q:
ASEAN, whose initial goal was political, to foster peaceful relations among members, includes China as its core member.
Q:
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, New Hampshire.
Q:
Trading blocs always bring cost savings to international firms.
Q:
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.
Q:
Among trading blocs, the EU has the largest GDP per capita.
Q:
All UN member-countries belong to the UN's:
A. Peace Jurga.
B. General Assembly.
C. Internal Court of Justice.
D. Committee on Intelligence.
Q:
In a customs union, common external tariffs are added to an existing FTA, as found in the Southern African Customs Union and Mercosur.
Q:
The United Nations is probably the best known among:
A. for-profit organizations.
B. social service organizations.
C. international organizations.
D. military organizations.
Q:
Economic cooperation often begins with a common market, as in the case of the EU.
Q:
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.
Q:
Recently, regional trade agreements have grown, a trend that may be seen to strengthen the WTO, according to the text.
Q:
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 written and taken for granted.
D. voluntary agreements.
Q:
The WTO has negotiated a TRIPS agreement whereby property rights do not take precedence over public health.
Q:
This type of institution operates through laws and regulations, with coercion as the regulative mechanism.
A. formal
B. informal
C. normative
D. cognitive
Q:
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.
Q:
In developing economies, informal institutions tend to play a greater role than in developed economies, possibly because
A. the developing economies have more ambiguity and lack formal institutions by definition, so informal institutions step into the breach.
B. developing economies show cultural preference for informality.
C. informal institutions emerge to give order to the unstructured, chaotic environment.
D. A and C.
Q:
The Doha Development Agenda is an extended development plan for Doha, Qatar.
Q:
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.
Q:
The WTO supports trade with discrimination as a basic right of trading nations.
Q:
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.
Q:
The International Finance Corporation (IFC) acts as an investment banker, arranging private risk ventures in developing countries.
Q:
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 nonmember 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.
Q:
The World Bank is made up of one large institution, IBRD.
Q:
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 represent the specific area being discussed.
C. elected members from across Europe, elected by country.
D. appointed representatives from each member-state.
Q:
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.
Q:
The EMU (European Monetary Union or 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.
Q:
The World Bank funds infrastructure projects in developed countries.
Q:
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.
Q:
The Bretton Woods Conference established the European Union currency, the euro.
Q:
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.
Q:
By and large, the UN record of facilitating business transactions has been minor.
Q:
NAFTA maintains restrictions on the movement of labor, a limitation that suggests it is:
A. a free trade area.
B. a common market.
C. not in compliance with WTO regulations.
D. B and C.
Q:
The UN International Court of Justice hears cases that involve disputes between national governments.
Q:
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.
Q:
Discuss Dunning's eclectic theory of international production as a theory to explain flows of international trade and foreign direct investment.
Q:
Discuss the keystone of international trade, the theory of comparative advantage.
Q:
Discuss the theory of absolute advantage and how it explains the basis for trade between nations.
Q:
Explain the logic of mercantilism and why it is generally viewed as a deficient theory.
Q:
Discuss the advantages in focusing attention on a nation that is already a sizable purchaser of goods coming from the exporter's home country.
Q:
Dunning's eclectic theory of international production states that if a firm is going to invest in production facilities abroad, it must have the following kinds of advantages:
A. ownership specific, location specific, and internationalization.
B. strategic, organizational, and technological.
C. political, technological, and human resource.
D. technological, financial, and human resource.
E. none of the above.
Q:
The monopolistic advantage theory states that:
A. a firm that has a monopoly has a major advantage in overseas investment.
B. FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.
C. a firm that has a monopoly domestically will have no competition making overseas investments.
D. the firm making the overseas investment first has a monopolistic advantage.
E. none of the above.
Q:
The monopolistic advantage theory suggests that firms in oligopolistic industries are likely to _______________ foreign direct investment when they have technical and other advantages over indigenous firms.
A. increase
B. reduce
C. ignore
D. not change
E. none of the above
Q:
Regarding economic and social development:
A. international trade has an important role in influencing nations' economic and social performance, with this role being even more fundamental in the case of developed countries.
B. expansion of trade guarantees improvement for a country and its people.
C. the Trade and Development Index attempts to provide a quantitative indication of a nation's social and economic development.
D. the 30 highest-ranked nations in the initial Trade and Development Index were all developed countries.
E. for the Trade and Development Index, the best regional performance among developing countries was that of the countries of the East Asia and Pacific region.
Q:
Regarding foreign direct investment and trade:
A. historically, foreign trade has followed foreign direct investment.
B. foreign trade is typically more costly and more risky than making a direct investment into foreign markets.
C. typically, a firm would hire sales representatives to live in overseas markets as a first step in developing international trade.
D. fewer government barriers to trade, increased competition from globalizing firms, and new production and communications technology are causing many international firms to disperse the activities of their production systems to locations close to available resources.
E. all of the above.
Q:
Regarding annual inflows of FDI:
A. industrialized nations primarily invest in one another.
B. an average of nearly 70 percent of annual FDI investments has been going into developed countries in recent years.
C. developed countries obtained a 70 percent increase in the level of FDI between 2000 and 2009.
D. all of the above.
E. two of A, B, and C.
Q:
Regarding the annual outflows of foreign direct investment:
A. the overall volume that came from developing nations in 2009 was nearly five times the level from those nations in 1990.
B. the proportion that came from the United States and Europe was nearly 50 percent in 2009.
C. much of the recent increase has been associated with mergers, acquisitions, and other international investments made by companies in industries facing increased competition and global consolidation.
D. nearly half went to China and its territories from 2007 to 2009.
E. all of the above.
Q:
At the beginning of 2010, the value of the outstanding stock of foreign direct investment of all nations totaled more than:
A. $500 billion.
B. $3 trillion.
C. $12 trillion
D. $19 trillion.
E. $21 trillion.
Q:
Firms from __________ had the largest total outstanding stock of direct overseas investment at the beginning of 2010.
A. Germany
B. the United States
C. the United Kingdom
D. Japan
E. China
Q:
Regarding foreign investment:
A. it can be divided into three components: international trade, portfolio investment, and direct investment.
B. portfolio investment involves investors who participate in the management of the firm in addition to receiving a return on their money.
C. deals that result in the foreign investor's obtaining at least 10 percent of the shareholdings are classified as portfolio investments.
D. two of A, B, and C.
E. none of A, B, and C.
Q:
Which of the following is explained by international trade theory?
A. Differences in production costs
B. Differences in levels of technology
C. Foreign exchange rates
D. Differences in efficiency of factor use
E. All of the above
Q:
To sum up international trade theory, we can say that the primary reason for trade is:
A. the increase in OPEC oil prices.
B. governments want to accumulate money.
C. the existence of price differentials among nations.
D. the creation of new nations from former colonies.
E. none of the above.
Q:
_______________ occurs primarily because of relative price differentials among nations.
A. Foreign direct investment
B. International trade
C. Portfolio investment
D. All of the above
E. Two of A, B, and C
Q:
Porter's Diamond Model of national advantage:
A. claims that the ability of local firms in a country to utilize the country's resources to gain a competitive advantage is based on demand conditions, factor conditions, substitute products, and firm strategy, structure, and rivalry.
B. links intraindustry trade to relative levels of per capita income.
C. is not affected by chance.
D. all of A, B, and C.
E. two of A, B, and C.
Q:
Which of the following elements are included in Porter's Diamond Model of national advantage?
A. Competitive conditions
B. Export conditions
C. Social conditions
D. Supply conditions
E. None of the above
Q:
Economies of scale and the experience curve:
A. explain how international trade in manufactured goods will be linked to gross national income.
B. state that a nation will trade goods that can be produced with the production factor that is most abundant.
C. explain why many companies will engage in international trade.
D. two of the above.
E. none of A, B, or C.
Q:
The international product life cycle:
A. explains how international trade in manufactured goods will be linked to gross national income.
B. states that a nation will trade goods that can be produced with the production factor that is most abundant.
C. is concerned with the role of innovation in trade patterns.
D. two of the above.
E. none of A, B, or C.
Q:
The theory of overlapping demand:
A. explains how international trade in manufactured goods will be linked to gross national income.
B. states that a nation will trade goods that can be produced with the production factor that is most abundant.
C. explains why companies will add excess capacity to their production systems.
D. two of the above.
E. none of A, B, or C.
Q:
The theory of resource endowment:
A. explains why France exports cosmetics, wine, commercial aircraft, and clothing.
B. states that a nation will trade goods that can be produced with the production factor that is most abundant.
C. explains why an automobile can be made either by hand or by a capital-intensive process.
D. explains why transportation costs may be ignored when calculating the costs of imports.
E. none of the above.
Q:
Theory based on ____________________ states that international and interregional differences in production costs occur because of differences in the supply of production factors.
A. comparative advantage
B. absolute advantage
C. mercantilist advantage
D. resource endowments
E. none of the above
Q:
According to trade theory:
A. traders need to know the exchange rate between their own currency and that of the nation they are considering trading with before they can decide whether it is advantageous to import, export, or buy locally.
B. if a currency's exchange rate strengthens, then its exporters will no longer be able to profitably export their products.
C. devaluation of a currency will automatically cause a nation's products to be price-competitive in international markets.
D. all of the above.
E. two of A, B, and C.
Q:
Offshoring is an application of:
A. comparative advantage.
B. differences in taste.
C. money market rates.
D. exchange rate theory.
E. none of the above.
Q:
Locating activities in another nation is:
A. outsourcing.
B. offshoring.
C. foreign direct investment.
D. all of the above.
E. two of A, B, and C.
Q:
According to the theory of comparative advantage:
A. a nation should produce those goods which it is more efficient at producing than are other nations.
B. a nation can gain from trade if it is equally inefficient in producing two goods.
C. a nation must have an absolute advantage in at least one good to gain from trade.
D. all of the above.
E. none of A, B, or C.
Q:
A nation having absolute disadvantages in the production of two goods with respect to another nation has ___________ in the production of the good in which its absolute disadvantage is less.
A. a comparative advantage
B. an absolute advantage
C. a mercantilist advantage
D. none of the above
E. two of A, B, and C
Q:
If Ecuador has an absolute advantage in coffee and Argentina in wheat, then, according to trade theory:
A. Ecuador should focus production on coffee and trade for wheat.
B. Ecuador would do well to produce its own coffee rather than import it from Bolivia.
C. Argentina should focus on producing wheat and trade for coffee.
D. all of the above.
E. two of A, B, and C.
Q:
The capability of one nation to produce more of a good with the same amount of input than another country is:
A. a comparative advantage
B. an absolute advantage
C. a mercantilist advantage
D. none of the above
E. two of A, B, and C