Question 1

Which section of the Omnibus Trade and Competitiveness Act recognizes that foreign penetration of U.S. markets can cause serious competitive pressure, loss of market share, and possibly severe financial harm?

Accepted Answer

The import relief section of the Omnibus Trade and Competitiveness Act is designed to address the issues arising from foreign penetration of U.S. markets, including competitive pressure, loss of market share, and potential severe financial harm. This section provides mechanisms for temporary relief to industries and workers adversely affected by increased imports.

Question 2

What does GATT use as the primary method to solve global trade problems?

Accepted Answer

GATT primarily uses consultation among its member countries to solve global trade problems, promoting negotiation and cooperation.

Question 3

The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the ________ section of the Omnibus Trade and Competitiveness Act.

Accepted Answer

The Foreign Corrupt Practices Act (FCPA) was specifically addressed in the "export expansion" section of the Omnibus Trade and Competitiveness Act, aiming to promote American businesses abroad by making it illegal to bribe foreign officials.

Question 4

The Uruguay Round resulted in which institution becoming the successor to the GATT?

Accepted Answer

The Uruguay Round, a series of negotiations under the General Agreement on Tariffs and Trade (GATT), led to the establishment of the World Trade Organization (WTO) as its successor. The WTO was created to provide a framework for negotiating and formalizing trade agreements and to serve as a forum for resolving trade disputes.

Question 5

While unintended, what is an adverse consequence of globalization?

Accepted Answer

Globalization can lead to worker exploitation and domestic job losses as companies move production to countries with lower labor costs to increase profits, often at the expense of workers' rights and job security in their home countries.

Question 6

The special drawing rights (SDRs) developed by the IMF can be thought of as

Accepted Answer

SDRs are referred to as "paper gold" because they are an international reserve asset created by the IMF to supplement its member countries' official reserves, thus providing liquidity in the global economic system without being tied to any physical commodity like gold.

Question 7

Several nations that have become frustrated with the slow progress of the most recent round of WTO trade negotiations are

Accepted Answer

Nations frustrated with slow WTO negotiations often turn to negotiating bilateral trade agreements as a more direct and potentially faster way to secure trade deals and benefits.

Question 8

What agreement makes it possible to challenge the restrictions in Indonesia that prohibit foreign firms from opening their own wholesale or retail distribution channels?

Accepted Answer

The Trade-Related Investment Measures (TRIMs) agreement addresses investment measures that affect trade in goods, including restrictions on foreign firms, making it relevant for challenging such restrictions in Indonesia.

Question 9

What market barriers led to the creation of the International Monetary Fund?

Accepted Answer

The International Monetary Fund (IMF) was created to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries to transact with each other. Inadequate monetary reserves and unstable currencies were key issues that led to its creation, as these factors contributed to economic instability and hindered international trade and recovery post-World War II.

Question 10

_________ and the World Bank Group are two global institutions created primarily to assist nations in becoming and remaining economically viable.

Accepted Answer

The International Monetary Fund (IMF) and the World Bank Group were both created at the Bretton Woods Conference in 1944, primarily to assist nations in economic development and stability. The IMF focuses on monetary cooperation and financial stability, while the World Bank provides financial and technical assistance to developing countries for development programs (e.g., bridges, roads, schools) that are meant to improve economic prospects and quality of life.

Question 11

Which statements accurately describes the General Agreement on Tariffs and Trade (GATT)?

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) aimed to promote international trade by reducing trade barriers and tariffs. It did not create an enforcement body but rather established a framework for negotiations and a forum for resolving disputes, leading to the creation of the World Trade Organization (WTO) in 1995, which acts as a watchdog over world trade.

Question 12

What was the impetus for the Omnibus Trade and Competitiveness Act?

Accepted Answer

The Omnibus Trade and Competitiveness Act was motivated by the recognition that while the U.S. market was broadly open to international trade, markets in Europe and many Asian countries were comparatively closed to U.S. goods and services. This imbalance was seen as a disadvantage to U.S. businesses and workers, prompting legislative action to address trade barriers and promote American competitiveness.

Question 13

__________ are becoming a popular way to circumvent WTO guidelines and impose new duties.

Accepted Answer

Antidumping duties are increasingly used by countries to protect their domestic industries from foreign competition by imposing additional tariffs on foreign imports believed to be priced below fair market value, thereby circumventing World Trade Organization (WTO) guidelines on tariffs and trade.

Question 14

What legislative decision was designed to primarily deal with trade deficits, protectionism, and the overall fairness of U.S. trading partners?

Accepted Answer

The Omnibus Trade and Competitiveness Act of 1988 was designed to address trade deficits, protectionism, and the fairness of trade practices of U.S. trading partners, aiming to make U.S. businesses more competitive in the global market.

Question 15

What steps did the United States take following World War II to minimize the spread of communism around the world? Name at least one specific piece of legislation that was created.

Accepted Answer

The answer of What steps did the United States take...

Question 16

What is one of the four ongoing activities that support the growth of international trade?

Accepted Answer

The International Monetary Fund (IMF) supports international trade by providing financial stability, facilitating international monetary cooperation, and offering economic advice and assistance to its member countries, thereby promoting global economic growth and trade.

Question 17

How are WTO decisions enforced?

Accepted Answer

WTO decisions are not enforced by a specific legal body or through mandatory financial contributions. Instead, compliance is generally achieved through international pressure and the mutual benefits of adhering to the agreements made under the WTO framework. Member countries are expected to comply with the decisions to maintain good trade relations and avoid disputes.

Question 18

Which statement accurately explains the status of protests against global financial institutions?

Accepted Answer

The "antisweatshop" campaigns by students in America have led to changes in policy, indicating that some protests have been effective.

Question 19

Developed by the International Monetary Fund to cope with universally floating exchange rates, ________ represent an average base of value derived from the value of a group of major currencies.

Accepted Answer

Special Drawing Rights (SDRs) were developed by the International Monetary Fund (IMF) as an international type of monetary reserve currency. SDRs are designed to supplement the existing reserves of member countries and are based on a basket of major international currencies, thus providing a stable base of value in the context of floating exchange rates.

Question 20

What is a basic criticism of global financial institutions?

Accepted Answer

The answer of What is a basic criticism of global...

Quiz 2: The Dynamic Environment of International Trade