Question 1

The GATT panels were formed to resolve bilateral trade disputes and have both advisory and enforcement powers.

Accepted Answer

GATT panels were formed to resolve trade disputes but only had advisory powers; enforcement was up to the countries involved.

Question 2

What was the outcome for GATT after the ratification of the Uruguay Round agreements?
A) GATT allowed the United States to increase its import tax.
B) GATT became part of the World Trade Organization.
C) GATT directly led to the uneven distribution of economic power and potential.
D) The European Union decided to stay away from the treaty.
E) The original purpose was sidelined in favor of political and military intervention between member states.

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) became part of the World Trade Organization (WTO) after the ratification of the Uruguay Round agreements, which concluded in 1994. This transition marked a significant evolution in global trade regulation, expanding the scope beyond tariffs to include trade in services and intellectual property rights.

Question 3

The Omnibus Trade and Competitiveness Act of 1988 focuses on assisting businesses to be more competitive in world markets, but does not get involved in trade practices.

Accepted Answer

The Omnibus Trade and Competitiveness Act of 1988 not only focuses on assisting businesses to be more competitive in world markets but also addresses trade practices by seeking to reduce trade deficits and improve the overall trade environment through various measures, including the enforcement of trade laws and the protection of intellectual property rights.

Question 4

As both special drawing rights (SDRs) and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold and silver rather than dollars.

Accepted Answer

Special Drawing Rights (SDRs) and the U.S. dollar have not lost their utility as the basic medium of financial exchange. The U.S. dollar remains the world's primary reserve currency, and SDRs are used by the International Monetary Fund (IMF) and its member countries for international transactions. Monetary statistics still widely relate to the U.S. dollar, alongside other currencies, rather than primarily to gold and silver.

Question 5

The decisions taken by the World Trade Organization in solving trade disputes among members are binding ones.

Accepted Answer

The decisions made by the World Trade Organization (WTO) in resolving trade disputes among its members are indeed binding. If a country is found to have breached WTO agreements and does not comply with the ruling, it may face trade sanctions from other members.

Question 6

The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II, led to
A) the rise of new global marketing opportunities.
B) the decrease in demand for American goods worldwide.
C) the dissolution of GATT.
D) the spread of communism by the United States.
E) the sharp reduction in the production capacity of the United States.

Accepted Answer

The post-World War II era saw significant economic growth and recovery, especially in war-torn and underdeveloped countries. This period was marked by extensive economic cooperation and assistance, such as the Marshall Plan, which helped rebuild economies. This reconstruction and growth created new global marketing opportunities as countries became more interconnected and the global demand for goods and services increased.

Question 7

After World War II, the United States led efforts to provide financial and industrial development assistance to rebuild Japan and channeled funds to foster economic growth in the underdeveloped world. These efforts were primarily aimed at
A) halting the growth of Nazi Germany.
B) dampening the spread of communism.
C) dampening the spread of capitalism.
D) building a stronger defense force.
E) creating a worldwide trade bloc to counter the OPEC countries' clout.

Accepted Answer

The primary aim of the United States in providing financial and industrial development assistance to rebuild Japan and other underdeveloped countries after World War II was to dampen the spread of communism. This was part of the broader strategy of containment, which sought to limit the expansion of Soviet influence during the Cold War era.

Question 8

The United States and other countries require some products to contain a percentage of "local content" to gain admission to their markets.

Accepted Answer

Many countries, including the United States, have local content requirements (LCRs) for certain products, meaning these products must contain a minimum percentage of locally sourced materials or components to be eligible for sale within their markets. These requirements are often implemented to support domestic industries and employment.

Question 9

Antidumping laws encourage foreign producers to sell their products at a higher cost than the cost of production and create more opportunities for free trade.

Accepted Answer

Antidumping laws are designed to prevent foreign producers from selling products at below the cost of production to gain market share, which can lead to higher prices once competition is eliminated, and they often result in trade barriers rather than encouraging free trade.

Question 10

What was the most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II?
A) European countries formed an alliance to counter the OPEC countries' clout.
B) Outflow of labor to the recipient countries increased dramatically.
C) All recipient countries appointed Americans to manage their central banks.
D) Purchases of U.S. agricultural products, manufactured goods, and services by the recipient countries increased.
E) Distribution of economic power and potential became more uneven.

Accepted Answer

The most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II, such as the Marshall Plan, was to stimulate economic recovery in war-torn Europe and elsewhere, which in turn increased the demand for U.S. agricultural products, manufactured goods, and services. This helped to boost the U.S. economy by opening up markets for its exports.

Question 11

Under the Omnibus Trade and Competitiveness Act, the U.S. president has the authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products.

Accepted Answer

The Omnibus Trade and Competitiveness Act of 1988 allows the U.S. president to take action, including restricting sales of a country's products in the U.S., if that country is found to have unfair trade practices that harm U.S. commerce.

Question 12

One advantage of the Omnibus Trade and Competitiveness Act is a more flexible process to obtain export licenses.

Accepted Answer

The Omnibus Trade and Competitiveness Act of 1988 aimed to make U.S. businesses more competitive in the global market, including provisions to streamline and simplify the process for obtaining export licenses, thus making it more flexible for companies looking to export goods.

Question 13

The International Monetary Fund was created before World War II to help individual states regain economic profitability.

Accepted Answer

The International Monetary Fund (IMF) was created in 1944 at the Bretton Woods Conference, primarily to ensure the stability of the international monetary system after World War II, not before it.

Question 14

What factor was primarily responsible for the excess in production capacity in the United States after World War II?
A) The United States government raised the tariffs on most imports by 60%.
B) Many firms from other nations shifted their production facilities to the United States.
C) Domestic demand was at a historic low and resulted in excess capacity.
D) The returning military after World War II increased the labor supply in the United States.
E) The implementation of the Marshall Plan dampened the overseas demand.

Accepted Answer

The returning military personnel after World War II significantly increased the labor supply in the United States, contributing to the country's ability to ramp up production across various industries. This surge in labor, combined with advancements in technology and manufacturing techniques developed during the war, led to a period of excess production capacity as industries expanded and the economy adjusted to peacetime conditions.

Question 15

An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government.

Accepted Answer

Governments can indeed set unfavorable exchange rates through permits or regulations as a means to control currency flow, stabilize their economy, or achieve specific economic objectives.

Question 16

Post-World War II, worldwide economic growth was in strong evidence and countries that were once classified as less developed were reclassified as
A) communist countries.
B) free trade economies.
C) tier-II countries.
D) developed countries.
E) newly industrialized countries.

Accepted Answer

Post-World War II, countries that were once considered less developed began to experience significant economic growth and were reclassified as "newly industrialized countries." This term reflects their transition from primarily agricultural economies to more industrial and manufacturing-based economies, marking a significant step in their development process.

Question 17

After World War II, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. As a result, most of the noncommunist economies in the world
A) stagnated.
B) grew significantly.
C) failed.
D) quickly matched the U.S. economy.
E) faced high inflation rates.

Accepted Answer

Most noncommunist economies experienced significant growth after World War II, partly due to the spread of capitalism and the economic policies and aid provided by the United States, such as the Marshall Plan in Europe.

Question 18

Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s?
A) the creation of the Soviet Union and the higher tariffs on imports
B) growing jingoistic nationalism and a negative population growth rate in major international markets
C) resistance to direct investment and increasing competition in export markets
D) increasing Chinese domination in the manufacturing sector and the falling dollar in global markets
E) the decreased demand for U.S. goods in the global market and the growing influence of consumer rights advocacy in the home market

Accepted Answer

The two major challenges faced by U.S. multinational corporations at the close of the 1960s were resistance to direct investment and increasing competition in export markets. This period marked a shift in global economic dynamics, with countries becoming more protective of their domestic industries and the global market becoming more competitive for American companies.

Question 19

How did GATT prevent the repeat of the economic disaster that occurred after World War I?
A) It provided short-term loans to struggling nations.
B) It promoted dumping policies to allow stronger ties between member nations.
C) It fostered isolationism for nations that were market leaders.
D) It provided for a third party, the United Nations, to negotiate peace treaties.
E) It provided a forum for member countries to negotiate a reduction of tariffs and other barriers to trade.

Accepted Answer

GATT (General Agreement on Tariffs and Trade) aimed to prevent economic disasters similar to those after World War I by creating a platform where member countries could negotiate the reduction of tariffs and other trade barriers, thus promoting international trade and economic stability.

Question 20

Why did the Smoot-Hawley Act play a role in sending the world's economies into the Great Depression?
A) It encouraged the majority of world economies to lower tariffs to imported goods.
B) It raised U.S. tariffs on thousands of imported goods by more than 60 percent.
C) It created an embargo on all agricultural products.
D) It divided the United States into factions based on race.
E) It forced independent countries to band together to stay economically viable.

Accepted Answer

The Smoot-Hawley Act significantly raised U.S. tariffs on thousands of imported goods, which led to retaliatory tariffs from other countries. This reduction in international trade exacerbated the economic downturn, contributing to the global reach of the Great Depression.

Quiz 2: The Dynamic Environment of International Trade

The GATT panels were formed to resolve bilateral trade disputes and have both advisory and enforcement powers.

What was the outcome for GATT after the ratification of the Uruguay Round agreements?

The Omnibus Trade and Competitiveness Act of 1988 focuses on assisting businesses to be more competitive in world markets, but does not get involved in trade practices.

As both special drawing rights (SDRs) and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold and silver rather than dollars.

The decisions taken by the World Trade Organization in solving trade disputes among members are binding ones.

The rapid growth of war-torn economies and previously underdeveloped countries, coupled with large-scale economic cooperation and assistance that followed World War II, led to

After World War II, the United States led efforts to provide financial and industrial development assistance to rebuild Japan and channeled funds to foster economic growth in the underdeveloped world. These efforts were primarily aimed at

The United States and other countries require some products to contain a percentage of "local content" to gain admission to their markets.

Antidumping laws encourage foreign producers to sell their products at a higher cost than the cost of production and create more opportunities for free trade.

What was the most apparent reciprocal impact of the foreign economic assistance given by the United States following World War II?

Under the Omnibus Trade and Competitiveness Act, the U.S. president has the authority to restrict sales of a country's products in the U.S. market if that country imposes unfair restrictions on U.S. products.

One advantage of the Omnibus Trade and Competitiveness Act is a more flexible process to obtain export licenses.

The International Monetary Fund was created before World War II to help individual states regain economic profitability.

What factor was primarily responsible for the excess in production capacity in the United States after World War II?

An exchange permit issued by a government can stipulate an unfavorable rate of exchange depending on the desires of the government.

Post-World War II, worldwide economic growth was in strong evidence and countries that were once classified as less developed were reclassified as

After World War II, the United States set out to infuse the ideal of capitalism throughout as much of the world as possible. As a result, most of the noncommunist economies in the world

Which were the two major challenges faced by U.S. multinational corporations at the close of the 1960s?

How did GATT prevent the repeat of the economic disaster that occurred after World War I?

Why did the Smoot-Hawley Act play a role in sending the world's economies into the Great Depression?