International Trade

1. International Trade

2. 1. Currently, what percentage of global GDP comes from wealthier countries? • 80% • 50% • 60% • 40% • 70%

3. 2. Developing countries have a per capita GDP between • $5,000 and $15,000 • $4,000 and $20,000 • $10,000 and $20,000 • $3,000 and $10,000 • $1,000 and $5,000

4. 3. Which of the following countries was NOT one of the East Asian Tigers along with Hong Kong, Taiwan, and Singapore? a. Thailand b. Indonesia c. South Korea d. Japan e. Malaysia

5. 4. Less developed countries are characterized by all of the following EXCEPT • subsistence agriculture • little investment in education • black market activity • per capita GDP between $3,000 and $5,000 • poor public health

6. 5. The World Bank and the International Monetary Fund have their origins in the • Arcadia Conference • Dumbarton Oaks Conference • BrettonWoods Conference • Atlantic Conference • Potsdam Conference

7. 6. The predecessor of the WORLD BANK was the • Multilateral Investment Guarantee Agency • International Finance Corporation • International Bank for Reconstruction and Development • International Centre for Settlement of Investment Disputes • International Development Association

8. 7. The World Bank's Main purpose today is to • coordinate the monetary policies of central banks. • coordinate the fiscal policies of the world's richest nations. • act as a mediator in international trade disputes. • raise and allocate funds for the reconstruction of Europe. • provide low-cost loans for development where private capital is unavailable.

9. 8. Who is currently the President of the World Bank? (The World Bank is always headed by an American. ) a. Henry Paulson b. Alan Greenspan c. Paul Wolfowitz d. Robert Zoellick e. Ben Bernanke

10. 9. In what year did the Bretton Woods System of Exchange Rates end? a. 1952 b. 1964 c. 1949 d. 1972 e. 1981

11. 10. Which country has the greatest say in the International Monetary Fund? (The voting weight accorded each member of the International Monetary Fund is based upon the size of its monetary contribution. ) a. the United Kingdom b. France c. the United States d. Germany e. China

12. 11. The Millennium Challenge Account provides aid to countries that have significantly • reduced corruption. It was created by the U.S. to promote good governance. • reduce poverty. It was created by the U.N. to eradicate poverty. • increased educational standards. It was created by the U.S. to promote education throughout the world. • increased literacy. It was created by the U.N. to promote literacy in lesser developed countries. • e. increased life expectancy. It was created by the U.N. to promote longevity.

13. 12. Which of the following is true regard trends in increasing income inequality?  THINK about the emailed PPT:  Lorenz Curve = more bowed;  Gini Coefficient closer to1 (or 100 as in percent) = absolute inequality! a. Western nations have experienced larger population growth than the rest of the world. b. Non-western nations have experienced large population growth. c. Non-western nations have focused on providing technology and services. d. Non-western nations have developed faster than western nations. e. Western nations have developed much slower than the rest of the world.

14. 13. India and China account for approximately what fraction of the world's population? a. 1/5 b. 1/3 c. 3/4 d. 1/4 e. 2/3

15. 14. Due to low wages and poor quality of life, people in less-developed countries who are educated abroad are reluctant to return to their home country.  This problem is known as a. the free-rider problem. b. the law of diminishing returns. c. the principal-agent problem. d. capital exodus. e. brain drain.

16. 15. Which of the following is NOT a limitation or problem of per capita GDP? a. It does not consider indicators of development like health and education. b. It does not account for goods which are traded on the black market. c. It required lots of technical and bureaucratic resources to calculate. d. It does not account for good which are not traded (like the fruits of subsistence agriculture or the clothes your mother washed for you to wear today.) e. It is difficult to calculate for large populations.

17. 16. The NOMINAL exchange rate is the rate at which a. one good is traded for another. b. the government trades silver for currency. c. one currency is traded for another. d. factors of production are paid. e. a good is one country is traded for currency in another.

18. 17.If the exchange rate goes from $1 per euro to $2 per euro, economists say that the • Circle Answera. dollar is pegged to the euro. b. euro has appreciated against the dollar. c. euro is pegged to the dollar. d. dollar has appreciated against the euro. e. euro has depreciated against the dollar.

19. 18. Until recently, the Chinese yuan (renminbi) was pegged to the a. pound. b. euro. c. deutschmark. d. dollar. e. yen.

20. 19. Most countries would prefer their currencies to depreciate because a. their imports will rise. b. net capital outflows will decrease. c. domestic goods will be more expensive. d. their exports will rise. e foreign goods will be cheaper.

21. 20. Currently, the world's most dominant currency is the a. United States' dollar. b. British pound. c. Swiss franc. d. Japanese yen. e. euro.

22. 21. The net total of all money and assets going in and out of a nation is the a. balance of trade. b. balance of payments. c. current account. d. balance of services. e. capital account.

23. 22. If there is a trade surplus, all of the following statements are true EXCEPT a. Imports are expensive. b. Exports are cheap. c. Exports are greater than imports. d. The terms of trade index is greater than 100. e. There is a greater demand for domestic currency in the foreign exchange market

24. 23. The United States entered full protectionism following the passage of the a. Smoot-Hawley Act. b. Celler-Kefauver Act. c. Wheeler-Lea Act. d. Taft-Hartley Act. e. Humphrey-Hawkins Act.

25. 24. The main goal of the GATT was the a. creation of an institution to resolve trade disputes. b. gradual elimination of export tariffs. c. gradual elimination of all tariffs and barriers to trade. d. creation of an institution to manage levels of trade. e. gradual progression towards sustainable levels of tariffs among member nations.

26. 25. It was created to replace GATT at the 1986 Uruguay round of trade talks. • a. the IMF • b. the World Bank • c. the WTO • d. the IBRD • e. none of these

27. 26. What was the chief innovation of the World Trade Organization? a. It focused on reciprocity and non-discrimination. b. It eliminated all tariffs. c. It eliminated all trade barriers. d. It created an independent dispute resolution body. e. It established a code of conduct for trade relations.

28. 27. The WTO is headquartered in • a. New York. • b. Geneva. • c. Munich. • d. London. • e. Toronto.

29. 28. Which of the following countries, along with Croatia and Macedonia, is currently negotiating entry into the European Union? a. Malta. b. Estonia. c. Cyprus. d. Turkey. e. Slovenia.

30. 29. The European Union has how many member states? a. 18 b. 21 c. 24 d. 30 e. 27

31. 30. The original organization which eventually evolved into the European Union was the a. European Atomic Energy Community. b. European Defense Community. c. European Coal and Steel Community. d. European Economic Community. e. European Political Community.

32. 31. Which f the following was NOT a founding member of the European Union? • a. Italy • b. the United Kingdom • c. the Netherlands • d. France • e. Germany

33. 32. The final treaty that officially created the European Union was the • a. Maastricht Treaty • b. Treaty of Lisbon • c. Rome Treaty • d. Paris Treaty • e. Treaty of Lagos

34. 33. Which of the following countries, along with Sweden and the U.K., does NOT use the euro? • a. Germany • b. Denmark • c. France • d. Belgium • e. Ireland

35. 34. Which of the following, though NOT a member, has a special relationship with ASEAN? • a. Thailand • b. the Philippines • c. Malaysia • d. Singapore • e. China

36. 35. Mercosur is a customs union of countries in • a. South Asia. • b. South America. • c. Central America. • d. Eastern Europe. • e. North Africa.

37. 36. The most powerful economies in the world communicate through a forum known as the • a. G4. • b. G7. • c. G8 • d. G6. • d. G5.

38. 37. What occurs when a country's imports exceed its exports? • a. trade surplus • b. trade debt • c. trade deficit • d. trade wealth • e. trade offset

39. 38. Import tariffs result in • a. lower prices for foreign consumers. • b. greater profits for foreign companies. • c. higher prices for domestic consumers. • d. lower profits for domestic companies. • e. higher prices for foreign consumers.

40. 39. Which artificial trade barrier is most restrictive? • a. regulation • b. tariff • c. embargo • d. quota • e. license

41. 40. OPEC (cartel of oil producing & exporting countries) imposed an oil embargo on the United States in the • a. 1970s. • b. 1950s. • c. 1980s. • d. 1960s. • e. 1940s.

42. 41. Relative to another producer, a producer with a comparative advantage can produce a good • a. with fewer resources. • b. at a lower price. • c at a higher quality. • d. at a lower opportunity cost. • e. in less time.

43. 42. Most international trade is • a. non-commercial • b. based on absolute advantage. • c. managed by the World Trade Organization. • d. limited by distance. • e. intra-industry.

44. 43. All of the following arguments support protectionism EXCEPT a. lowering unemployment due to specialization. b. minimizing dependence on other nations. c. improving national security. d. fostering infant industries. e. achieving lower prices.

45. 44. The practice of a foreign firm selling a good in another country at a price below its average total cost is known as • a. shorting. • b. covering. • c. shelving. • d. stocking. • e. dumping.

46. 45. Which country is the world's largest exporter of goods and services, according to the CIA Factbook? • a. Mexico • b. the United States • c. Germany • d. China • e. France

47. 46. Which country is the world's largest importer of goods and services, according to the CIA Factbook? • a. Mexico • b. Germany • c. the United States • d. France • e. China

48. 47. The United States imports the greatest value in goods and services from • a. Canada • b. Mexico • c. Japan • d. Germany • e. China

49. 48. The United States trade deficit reflects • a. the new strength of demand for goods and services by the European Union. • b. the excess production of domestic companies. • c. the weakness of export sectors in East Asia. • d. the lack of demand for American equities. • e. the continuing strength of American demand for goods and services.

50. 49. China maintained its fixed exchange rate with the United States by • a. lobbying the United States Congress. • b. negotiating with the Federal Reserve. • c. working with the World Trade Organization. • d. buying American Treasury Bills. • e. threatening to switch its reserves to the euro.