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InternationalMarketing,18e(Cateora)

Chapter2TheDynamicEnvironmentofInternationalTrade

1)TheMarshallPlanwasdevelopedbytheUnitedStatesasamethodtoassistEuropeinrebuildingafterWorldWarII.

Answer:TRUE

Explanation:TheUnitedStateswantedtoinfusecapitalismthroughouttheworldtodampenthespreadofcommunism.TheMarshallPlanwasameanstoassistEuropeinrebuildingafterWorldWarII.

Difficulty:2Medium

Topic:WesternEurope'sMarketplaceintheWorldEconomy

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

2)TheGATTbecamepartoftheWorldTradeOrganizationin1995withtheratificationoftheUruguayRoundagreements.

Answer:TRUE

Explanation:WiththeratificationoftheUruguayRoundagreements,theGATTbecamepartoftheWorldTradeOrganization(WTO)in1995,andits117originalmembersmovedintoaneweraoffreetrade.

Difficulty:1Easy

Topic:TheWorldTradingSystem,GATT,andtheWTO

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

3)TheUnitedStatesfaceddecreasingcompetitioninexportmarketsbeginningin1970withtheendingoftheVietnamWar.

Answer:FALSE

Explanation:Atthecloseofthe1960s,U.S.MNCswerefacingresistancetodirectinvestmentsandincreasingcompetitioninexportmarkets.

Difficulty:1Easy

Topic:HowFormalInstitutionsAffectDomesticandInternationalCompetition

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

4)Bytheyear1971,theUnitedStateswassellinglesstoothercountriesthanitboughtfromthem;thatis,theUnitedStateshadatradedeficit.

Answer:TRUE

Explanation:Before1971,theUnitedStatessoldmoretoothercountriesthanitboughtfromthem,sotheUnitedStateshadafavorablebalanceoftrade.By1971,however,theUnitedStateshadatradedeficitof$2billionthatgrewsteadilyuntilitpeakedat$160billionin1987.

Difficulty:1Easy

Topic:OverviewofTrade

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

5)TheOrganizationforEconomicCooperationandDevelopment(OECD)estimatesthattheeconomiesofthedevelopedworldwillexpandatmuchfasterrateswhencomparedtothedevelopingeconomies.

Answer:FALSE

Explanation:TheOrganizationforEconomicCooperationandDevelopment(OECD)estimatesthattheeconomiesofdevelopedcountrieswillexpandanaverageof3percentannuallyforthenext25years,thesamerateasinthepast25years.Conversely,theeconomiesofdevelopingcountrieswillexpandanaverageof6percentannuallyforthenext25years,higherthanthe4percentrateinthepast25years.

Difficulty:1Easy

Topic:EconomicDevelopment

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

6)Anation'sbalance-of-paymentsstatementrecordsallfinancialtransactionsbetweenitsresidentsandthoseoftherestoftheworldduringagivenperiodoftime.

Answer:TRUE

Explanation:Anation'sbalance-of-paymentsstatementrecordsallfinancialtransactionsbetweenitsresidentsandthoseoftherestoftheworldduringagivenperiodoftime—usuallyoneyear.

Difficulty:1Easy

Topic:BalanceofPayments

LearningObjective:02-02Theimportanceofbalance-of-paymentfigurestoacountry'seconomy.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

7)Inabalance-of-paymentsrecord,thecurrentaccountisarecordofdirectinvestment,portfolioinvestment,andshort-termcapitalmovementstoandfromcountries.

Answer:FALSE

Explanation:Inabalance-of-paymentsstatement,thecurrentaccountisarecordofallmerchandiseexports,imports,andserviceplusunilateraltransfersoffunds.

Difficulty:2Medium

Topic:BalanceofPayments

LearningObjective:02-02Theimportanceofbalance-of-paymentfigurestoacountry'seconomy.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

8)Whenreviewingabalance-of-paymentsstatement,youwouldcheckthereservesaccounttoviewexportsandimportsofgold.

Answer:TRUE

Explanation:Thereservesaccountisarecordofexportsandimportsofgold,increasesordecreasesinforeignexchange,andincreasesordecreasesinliabilitiestoforeigncentralbanks.

Difficulty:2Medium

Topic:BalanceofPayments

LearningObjective:02-02Theimportanceofbalance-of-paymentfigurestoacountry'seconomy.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

9)Whenforeigncurrenciescanbetradedformoredollars,U.S.productsandcompaniesaremoreexpensivefortheforeigncustomerandexportsdecrease.

Answer:FALSE

Explanation:Whenforeigncurrenciescanbetradedformoredollars,U.S.products(andcompanies)arelessexpensivefortheforeigncustomerandexportsincrease,andforeignproductsaremoreexpensivefortheU.S.customerandthedemandforimportedgoodsisdampened.

Difficulty:2Medium

Topic:BalanceofPayments

LearningObjective:02-02Theimportanceofbalance-of-paymentfigurestoacountry'seconomy.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

10)EstablishingatariffonfabricsimportedfromUruguaysothatU.S.manufacturerssellmorefabricsisanexampleofaprotectionistmeasure.

Answer:TRUE

Explanation:Protectionismoccurswhennationsutilizelegalbarriers,exchangebarriers,andpsychologicalbarrierstorestraintheentryofunwantedgoods.

Difficulty:2Medium

Topic:OverviewofImportingandExporting

LearningObjective:02-03Theeffectsofprotectionismonworldtrade.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

11)Ingeneral,economistsdonotrecognize"protectionofthehomemarket"asavalidargumentforprotectionistmeasures.

Answer:TRUE

Explanation:Ingeneral,economistsrecognizeargumentsregardingprotectionofaninfantindustry,nationaldefense,andtheindustrializationofunderdevelopedcountriesasvalid.

Difficulty:1Easy

Topic:TheChangingNatureoftheGlobalEconomy

LearningObjective:02-03Theeffectsofprotectionismonworldtrade.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

12)Quotas,boycotts,monetarybarriers,andmarketbarriersareexamplesoftariffbarriers.

Answer:FALSE

Explanation:Atariffisataximposedbyagovernmentongoodsenteringatitsborders.Itisusedtoencouragedevelopmentofdomesticindustryandprotectexistingindustry.Governmentsmayestablishsuchbarrierstotradeastariffsandavarietyofnontariffbarriersincludingquotas,boycotts,monetarybarriers,andmarketbarriers.

Difficulty:2Medium

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

13)Ingeneral,atariffwilldecreaseinflationarypressures.

Answer:FALSE

Explanation:Ingeneral,tariffsincreaseinflationarypressures,specialinterests'privileges,governmentcontrolandpoliticalconsiderationsineconomicmatters,andthenumberoftariffs(theybegetothertariffsviareciprocity).

Difficulty:1Easy

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

14)Tariffsareoftenusedasreprisalsagainstprotectionistmovesoftradingpartners.

Answer:TRUE

Explanation:Tariffscanbearbitrary,discriminatory,andrequireconstantadministrationandsupervision.Inaddition,tariffsareoftenusedasreprisalsagainstprotectionistmovesoftradingpartners.

Difficulty:1Easy

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

15)TheUnitedStateshasplacedalimitonthetonsofsugarthatcanbeimportedintothecountry.Thisisanexampleofatariff.

Answer:FALSE

Explanation:Aquotaisaspecificunitordollarlimitappliedtoaparticulartypeofgood.TheUnitedStateshasspecificguidelinesrestrictinghowmanytonsofsugarcanbeimported.

Difficulty:2Medium

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Apply

AACSB:KnowledgeApplication

Accessibility:KeyboardNavigation

16)Animportlicenselimitsthequantitiesthatcanbeimportedonacase-by-casebasis.

Answer:TRUE

Explanation:Thefundamentaldifferencebetweenquotasandimportlicensesasameansofcontrollingimportsisthegreaterflexibilityofimportlicensesoverquotas.Quotaspermitimportinguntilthequotaisfilledwhileimportlicenseslimitquantitiesonacase-by-casebasis.

Difficulty:1Easy

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

17)Voluntaryexportrestraintsarecommonintheagriculturalindustrywhenanagreementismadebetweentheimportingandexportingcountriesforarestrictiononthevolumeofexports.

Answer:TRUE

Explanation:Avoluntaryexportrestraint(VER)iscalledvoluntarybecausetheexportingcountrysetsthelimits;however,itisgenerallyimposedunderthethreatofstifferquotasandtariffsbeingsetbytheimportingcountryifaVERisnotestablished.Itiscommoninthetextiles,clothing,steel,agriculture,andautomobileindustries.

Difficulty:2Medium

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

18)Anembargosetsalimitonthequantityofgoodsonecountrycanselltoanother.

Answer:FALSE

Explanation:Anembargoisarefusaltoselltoaspecificcountry.

Difficulty:2Medium

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

19)Inthecontextofblockedcurrency,blockageisaccomplishedbyrefusingtoallowanimportertoexchangeitsnationalcurrencyforthecurrencyoftheseller.

Answer:TRUE

Explanation:Blockageisaccomplishedbyrefusingtoallowanimportertoexchangeitsnationalcurrencyforthecurrencyoftheseller.

Difficulty:1Easy

Topic:CurrencyManagementandBusinessStrategyintheGlobalMonetarySystem

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

20)Itismandatoryforimporterswhowanttobuyaforeigngoodfromaforeigncountrytoapplyforabusinesspermitinthatcountry.

Answer:FALSE

Explanation:Importerswhowanttobuyaforeigngoodmustapplyforanexchangepermit,thatis,permissiontoexchangeanamountoflocalcurrencyforforeigncurrency.

Difficulty:1Easy

Topic:BasicDecisionsforEnteringForeignMarkets

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

21)Anexchangepermitissuedbyagovernmentcanstipulateanunfavorablerateofexchangedependingonthedesiresofthegovernment.

Answer:TRUE

Explanation:Anexchangepermitissuedbyagovernmentcanstipulateanunfavorablerateofexchangedependingonthedesiresofthegovernment.

Difficulty:1Easy

Topic:TheMainInstrumentsandInstitutionsoftheForeignExchangeMarket

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

22)TheUnitedStatesandothercountriesrequiresomeproductstocontainapercentageof"localcontent"togainadmissiontotheirmarkets.

Answer:TRUE

Explanation:TheUnitedStatesandothercountriesrequiresomeproducts(automobilesinparticular)tocontainapercentageof"localcontent"togainadmissiontotheirmarkets.Thisisanexampleofhowcountriesusestandardstoprotecttheirdomesticindustry.

Difficulty:1Easy

Topic:BasicDecisionsforEnteringForeignMarkets

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

23)Antidumpinglawsencourageforeignproducerstoselltheirproductsatahighercostthanthecostofproductionandcreatemoreopportunitiesforfreetrade.

Answer:FALSE

Explanation:Antidumpinglawsweredesignedtopreventforeignproducersfrom"predatorypricing,"apracticewherebyaforeignproducerintentionallysellsitsproductsintheUnitedStatesforlessthanthecostofproductiontounderminethecompetitionandtakecontrolofthemarket.

Difficulty:2Medium

Topic:BasicDecisionsforEnteringForeignMarkets

LearningObjective:02-04Theseveraltypesoftradebarriers.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

24)TheOmnibusTradeandCompetitivenessActof1988focusesonassistingbusinessestobemorecompetitiveinworldmarkets,butdoesnotgetinvolvedintradepractices.

Answer:FALSE

Explanation:TheOmnibusTradeandCompetitivenessActof1988ismanyfaceted,focusingonassistingbusinessestobemorecompetitiveinworldmarketsaswellasoncorrectingperceivedinjusticeintradepractices.

Difficulty:1Easy

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-05TheprovisionsoftheOmnibusTradeandCompetitivenessAct.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

25)UndertheOmnibusTradeandCompetitivenessAct,theU.S.presidenthastheauthoritytorestrictsalesofacountry'sproductsintheU.S.marketifthatcountryimposesunfairrestrictionsonU.S.products.

Answer:TRUE

Explanation:TheOmnibusTradeandCompetitivenessActgivestheU.S.presidentauthoritytorestrictsalesofacountry'sproductsintheU.S.marketifthatcountryimposesunfairrestrictionsonU.S.products.

Difficulty:2Medium

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-05TheprovisionsoftheOmnibusTradeandCompetitivenessAct.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

26)OneadvantageoftheOmnibusTradeandCompetitivenessActisamoreflexibleprocesstoobtainexportlicenses.

Answer:TRUE

Explanation:Theacthasresultedinamuchmoreflexibleprocessforobtainingexportlicenses,infewerproductsontheexportcontrollistandingreateraccesstoinformation.

Difficulty:1Easy

Topic:GovernmentPoliciesAffectingTrade

LearningObjective:02-05TheprovisionsoftheOmnibusTradeandCompetitivenessAct.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

27)TheGATTpanelswereformedtoresolvebilateraltradedisputesandhavebothadvisoryandenforcementpowers.

Answer:FALSE

Explanation:GATTmembernationsseektoresolvetheirtradedisputesbilaterally;ifthatfails,specialGATTpanelsaresetuptorecommendaction.Thepanelsareonlyadvisoryandhavenoenforcementpowers.

Difficulty:1Easy

Topic:TheWorldTradingSystem,GATT,andtheWTO

LearningObjective:02-06TheimportanceofGATTandtheWorldTradeOrganization.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

28)ThedecisionstakenbytheWorldTradeOrganizationinsolvingtradedisputesamongmembersarebindingones.

Answer:TRUE

Explanation:TheWorldTradeOrganizationsetsmanyrulesgoverningtradeamongits160members,providesapanelofexpertstohearandruleontradedisputesamongmembers,and,unlikeGATT,issuesbindingdecisions.

Difficulty:1Easy

Topic:TheWorldTradingSystem,GATT,andtheWTO

LearningObjective:02-06TheimportanceofGATTandtheWorldTradeOrganization.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

29)TheInternationalMonetaryFundwascreatedbeforeWorldWarIItohelpindividualstatesregaineconomicprofitability.

Answer:FALSE

Explanation:TheInternationalMonetaryFund(IMF)wasformedtoovercomeinternationalmarketbarrierssuchasinadequatemonetaryreservesandunstablecurrencieswhichareparticularlyvexingproblemsinglobaltrade.

Difficulty:2Medium

Topic:TheRoleoftheWorldBankandtheInternationalMonetaryFundintheInternationalMonetarySystem

LearningObjective:02-07TheemergenceoftheInternationalMonetaryFundandtheWorldBankGroup.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

30)Asbothspecialdrawingrights(SDRs)andtheU.S.dollarhavelosttheirutilityasthebasicmediumoffinancialexchange,mostmonetarystatisticsrelatetogoldandsilverratherthandollars.

Answer:FALSE

Explanation:AsbothgoldandtheU.S.dollarhavelosttheirutilityasthebasicmediumoffinancialexchange,mostmonetarystatisticsrelatetoSDRsratherthandollars.TheSDRisineffect"papergold"andrepresentsanaveragebaseofvaluederivedfromthevalueofagroupofmajorcurrencies.

Difficulty:1Easy

Topic:TheRoleoftheWorldBankandtheInternationalMonetaryFundintheInternationalMonetarySystem

LearningObjective:02-07TheemergenceoftheInternationalMonetaryFundandtheWorldBankGroup.

Bloom's:Remember

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

31)AfterWorldWarII,theUnitedStatesledeffortstoprovidefinancialandindustrialdevelopmentassistancetorebuildJapanandchanneledfundstofostereconomicgrowthintheunderdevelopedworld.Theseeffortswereprimarilyaimedat

A)haltingthegrowthofNaziGermany.

B)dampeningthespreadofcommunism.

C)dampeningthespreadofcapitalism.

D)buildingastrongerdefenseforce.

E)creatingaworldwidetradebloctocountertheOPECcountries'clout.

Answer:B

Explanation:AfterWorldWarII,asameanstodampenthespreadofcommunism,theUnitedStatessetouttoinfusetheidealofcapitalismthroughoutasmuchoftheworldaspossible.

Difficulty:2Medium

Topic:EconomicDevelopment

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

32)AfterWorldWarII,theUnitedStatessetouttoinfusetheidealofcapitalismthroughoutasmuchoftheworldaspossible.Asaresult,mostofthenoncommunisteconomiesintheworld

A)stagnated.

B)grewsignificantly.

C)failed.

D)quicklymatchedtheU.S.economy.

E)facedhighinflationrates.

Answer:B

Explanation:Asthesecountriesworkedtogaineconomicindependence,thefinancialassistanceprovidedbytheUnitedStatesallowedtheeconomiesofmostofthenoncommunistworldtogrowandnewmarketswerecreated.

Difficulty:2Medium

Topic:EconomicDevelopment

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

33)WhatwasthemostapparentreciprocalimpactoftheforeigneconomicassistancegivenbytheUnitedStatesfollowingWorldWarII?

A)EuropeancountriesformedanalliancetocountertheOPECcountries'clout.

B)Outflowoflabortotherecipientcountriesincreaseddramatically.

C)AllrecipientcountriesappointedAmericanstomanagetheircentralbanks.

D)PurchasesofU.S.agriculturalproducts,manufacturedgoods,andservicesbytherecipientcountriesincreased.

E)Distributionofeconomicpowerandpotentialbecamemoreuneven.

Answer:D

Explanation:ForeverydollartheUnitedStatesinvestedintheeconomicdevelopmentandrebuildingofothercountriesafterWorldWarII,hundredsofdollarsmorereturnedintheformofpurchasesofU.S.agriculturalproducts,manufacturedgoods,andservices.

Difficulty:2Medium

Topic:EconomicDevelopment

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

34)WhatfactorwasprimarilyresponsiblefortheexcessinproductioncapacityintheUnitedStatesafterWorldWarII?

A)TheUnitedStatesgovernmentraisedthetariffsonmostimportsby60%.

B)ManyfirmsfromothernationsshiftedtheirproductionfacilitiestotheUnitedStates.

C)Domesticdemandwasatahistoriclowandresultedinexcesscapacity.

D)ThereturningmilitaryafterWorldWarIIincreasedthelaborsupplyintheUnitedStates.

E)TheimplementationoftheMarshallPlandampenedtheoverseasdemand.

Answer:D

Explanation:TheoverseasdemandcreatedbytheMarshallPlanandotherprogramswasimportanttotheU.S.economybecausethevastmanufacturingbasebuilttosupplyWorldWarIIandtheswellinglaborsupplyofreturningmilitarycreatedaproductioncapacitywellbeyonddomesticneeds.

Difficulty:2Medium

Topic:EconomicDevelopment

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

35)HowdidGATTpreventtherepeatoftheeconomicdisasterthatoccurredafterWorldWarI?

A)Itprovidedshort-termloanstostrugglingnations.

B)Itpromoteddumpingpoliciestoallowstrongertiesbetweenmembernations.

C)Itfosteredisolationismfornationsthatweremarketleaders.

D)Itprovidedforathirdparty,theUnitedNations,tonegotiatepeacetreaties.

E)Itprovidedaforumformembercountriestonegotiateareductionoftariffsandotherbarrierstotrade.

Answer:E

Explanation:DeterminednottorepeattheeconomicdisasterthatfollowedWorldWarI,worldleaderscreatedtheGeneralAgreementonTariffsandTrade(GATT),aforumformembercountriestonegotiateareductionoftariffsandotherbarrierstotrade.

Difficulty:2Medium

Topic:TheWorldTradingSystem,GATT,andtheWTO

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

36)WhydidtheSmoot-HawleyActplayaroleinsendingtheworld'seconomiesintotheGreatDepression?

A)Itencouragedthemajorityofworldeconomiestolowertariffstoimportedgoods.

B)ItraisedU.S.tariffsonthousandsofimportedgoodsbymorethan60percent.

C)Itcreatedanembargoonallagriculturalproducts.

D)ItdividedtheUnitedStatesintofactionsbasedonrace.

E)Itforcedindependentcountriestobandtogethertostayeconomicallyviable.

Answer:B

Explanation:TheSmoot-HawleyActraisedaverageU.S.tariffsonmorethan20,000importedgoodstolevelsinexcessof60percentandinretaliation60countrieserectedhightariffwalls,andinternationaltradestalled.Amajorworldwiderecessioncatapultedtheworld'seconomiesintotheGreatDepression.

Difficulty:2Medium

Topic:TheWorldTradingSystem,GATT,andtheWTO

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

37)WhatwastheoutcomeforGATTaftertheratificationoftheUruguayRoundagreements?

A)GATTallowedtheUnitedStatestoincreaseitsimporttax.

B)GATTbecamepartoftheWorldTradeOrganization.

C)GATTdirectlyledtotheunevendistributionofeconomicpowerandpotential.

D)TheEuropeanUniondecidedtostayawayfromthetreaty.

E)Theoriginalpurposewassidelinedinfavorofpoliticalandmilitaryinterventionbetweenmemberstates.

Answer:B

Explanation:WiththeratificationoftheUruguayRoundagreements,theGATTbecamepartoftheWorldTradeOrganization(WTO)in1995,andits117originalmembersmovedintoaneweraoffreetrade.

Difficulty:2Medium

Topic:TheWorldTradingSystem,GATT,andtheWTO

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

38)Therapidgrowthofwar-torneconomiesandpreviouslyunderdevelopedcountries,coupledwithlarge-scaleeconomiccooperationandassistancethatfollowedWorldWarII,ledto

A)theriseofnewglobalmarketingopportunities.

B)thedecreaseindemandforAmericangoodsworldwide.

C)thedissolutionofGATT.

D)thespreadofcommunismbytheUnitedStates.

E)thesharpreductionintheproductioncapacityoftheUnitedStates.

Answer:A

Explanation:Therapidgrowthofwar-torneconomiesandpreviouslyunderdevelopedcountries,coupledwithlarge-scaleeconomiccooperationandassistance,ledtonewglobalmarketingopportunities.

Difficulty:2Medium

Topic:ChallengesandOpportunitiesCreatedbyGlobalization

LearningObjective:02-01ThebasisforthereestablishmentofworldtradefollowingWorldWarII.

Bloom's:Understand

AACSB:AnalyticalThinking

Accessibility:KeyboardNavigation

39)WhichwerethetwomajorchallengesfacedbyU.S.multinationalcorporationsatthecloseofthe1960s?

A)thecreationoftheSovietUnionandthehighertariffsonimports

B)growingjingoisticnationalismandanegativepopulationgrowthrateinmajorinternationalmarkets

C)resistancetodirectinvestmentandincreasingcompetitioninexportmarkets

D)increasingChinesedominationinthemanufacturingsectorandthefallingdollaringlobalmarkets

E)thedecreaseddemandforU.S.goodsintheglobalmarketandthegrowinginfluenceofconsumerrightsadvocacyinthehomemarket

Answer:C

Explanation:Atthecloseofthe1960s,U.S.multinationalcorporations(MNCs)werefacingmajorchallengesontwofronts:resista