32.4 International Trade Organizations
1) The World Trade Organization is a successor organization to the
A) United Nations.
B) World Bank.
C) International Court of Justice.
D) GATT.
2) According to the text, approximately how many countries are members of the WTO?
A) 100
B) 135
C) 160
D) 180
3) Which of the following is NOT an example of a regional trade bloc?
A) the North American Free Trade Agreement
B) the European Union
C) the Asian-Pacific Trade Agreement
D) Mercosur
4) The most important international trade organization is
A) the World Bank.
B) the World Trade Organization.
C) the International Monetary Fund.
D) the European Union.
5) The North American Free Trade Agreement and the European Union are examples of
A) defense treaties.
B) regional trade blocs.
C) labor agreements designed only for industrialized countries.
D) agriculturally based economies.
6) A significant advantage to being a member of a trade bloc is
A) higher tariff collections from member countries.
B) reduced or eliminated tariffs among member countries.
C) reduced tariff rates only for the largest member countries.
D) None of the above; there is no economic advantage to a trade bloc.
7) Which of the following is the situation in which a nation shifts its international trade from
nations outside a regional trade bloc to nations within the bloc?
A) trade diversion
B) trade deflection
C) trade retention
D) protectionism
8) Which of the following is the situation in which firms outside a trade bloc shift the final
assembling process of partially assembled products into a member nation of the bloc and then
export the finished products to other nations within the bloc?
A) trade diversion
B) trade deflection
C) trade retention
D) rules of origin
9) Which of the following would increase the total amount of trade in the world?
A) trade diversion
B) trade deflection
C) trade retention
D) rules of origin
10) Trade diversion results in
A) an increase in the total amount of trade in the world.
B) a decrease in the total amount of trade in the world.
C) no change in the total amount of trade in the world.
D) either an increase or decrease in the amount of trade in the world, depending on where trade
takes place.
11) The net effect of regional trade agreements has been
A) an increase in the total amount of trade in the world.
B) a decrease in the total amount of trade in the world.
C) no change in the total amount of trade in the world.
D) either an increase or decrease in the amount of trade in the world, depending on where trade
takes place.
12) Which of the following are regulations that nations in regional trade blocs establish to
delineate product categories eligible for trading preferences?
A) trade quotas
B) trade tariffs
C) rules of law
D) rules of origin
13) The World Trade Organization
A) was set up to increase tariffs among nations.
B) was set up to negotiate exchange rates between countries.
C) was set up to decrease tariffs among nations.
D) handles trade disputes among its member nations.
14) The successor organization to GATT that handles trade disputes among its member nations is
the
A) World Trade Organization.
B) European Union.
C) General Agreement on Tariffs and Trade.
D) North American Free Trade Agreement.
15) A group of nations that grants member special trade privileges is
A) World Trade Organization.
B) European Union.
C) General Agreement on Tariffs and Trade.
D) North American Free Trade Agreement.
16) The European Union started out as a
A) regional trade agreement.
B) union of nations with identical currency.
C) union of nations where the same language was spoken.
D) union of nations with identical tariffs.
17) Because of NAFTA, the U.S. shifts some of its imports from Europe to Mexico (a member of
NAFTA). This is an example of
A) trade deflection.
B) trade diversion.
C) protectionism.
D) rules of origin.
18) To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the
final products to Canada. This is an example of
A) trade deflection.
B) trade diversion.
C) protectionism.
D) rules of origin.
19) To avoid trade restrictions, a U.S. firm moves its final production process to Ireland and then
ships the final products to Germany. This is an example of
A) trade deflection.
B) trade diversion.
C) protectionism.
D) rules of origin.
20) Some nations avoid the effects of trade deflection in a trade bloc by enforcing
A) trade deflection.
B) trade diversion.
C) quotas.
D) rules of origin.
21) U.S. automakers have an interest to make it more difficult for European competitors to locate
assembly plants in Canada or Mexico and thereby ship finished automobiles to the United States
duty-free. This is an example of
A) trade deflection.
B) trade diversion.
C) quotas.
D) rules of origin.
22) The international agreement signed in 1947 to promote world trade by reducing tariffs and
other barriers to international trade was called
A) GATT.
B) NAFTA.
C) WTO.
D) Bretton-Woods agreement.
23) The successor organization to GATT, created in 1995, is the
A) WTO.
B) EU.
C) NAFTA.
D) FDIC.
24) The WTO replaced the GATT in
A) 1900.
B) 1945.
C) 1960.
D) 1995.
25) An international agreement from 1947 designed to lower tariffs was
A) the General Agreement on Tariffs and Trade.
B) the World Trade Organization.
C) the World Agreement on Tariffs and Trade.
D) the Trade and Tariff Agreement.
26) The successor to GATT in 1995 is
A) the World Agreement on Tariff and Trade.
B) the World Trade Organization.
C) the World Trade Agreement.
D) the World Trade and Tariff Organization.
27) The organization that settles trade disputes between countries is the
A) World Bank.
B) World Trade Organization.
C) International Monetary Fund.
D) United Nations.
28) The WTO
A) is an affiliate of the World Bank.
B) is an organization created to oversee NAFTA.
C) was established to resolve trade disputes among member nations.
D) provides low interest loans to member nations to help develop their export industries.
29) The World Trade Organization
A) was established to settle trade disputes within the European Union.
B) is another name for the IMF.
C) was established to resolve disputes arising under world trade rules.
D) increases world trade by providing interest rate subsidies to foreign borrowers who buy U.S.
exports on credit.
30) Groups of nations that grants members trade privileges are called
A) local trade protectionists.
B) trade settlements.
C) regional trade blocs.
D) allies.
31) Mercosur is a trade agreement between nations
A) in Southeast Asia.
B) in South America.
C) in South Africa.
D) in Southern Europe.
32) In 1990, there were 50 bilateral agreements and regional trade agreements between countries.
Today there are
A) more than 230 of these agreements.
B) 30 of these agreements.
C) none of these agreements remaining.
D) more than 10,000 of these agreements.
33) Suppose a new EU member begins substituting its imports from non-EU members to other
EU members. This is an example of
A) trade diversion.
B) trade deflection.
C) free trade.
D) trade detection.
34) Suppose a Chinese firm moves its final assembly line to France and then ships the final
products to other members of the EU trading bloc. This is an example of
A) trade diversion.
B) trade deflection.
C) trade restriction.
D) trade detection.
35) Trade deflection is an act that
A) decreases the amount of international trade in the world.
B) increases the amount of international trade in the world.
C) has no impact on the amount of international trade in the world.
D) is illegal among all countries in the world.
36) Why do free trade proponents applaud successful trade deflection?
A) It circumvents trade restrictions within regional trade blocs.
B) It increases trade restrictions within regional trade blocs.
C) It promotes more rules of origin laws.
D) It decreases incentives for trade diversion.
37) Why do free trade proponents dislike rules of origin in trade agreements?
A) It decreases the amount of international trade in the world.
B) It increases the amount of international trade in the world.
C) It decreases incentives for trade diversion.
D) It increases incentives for trade deflection.