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Student name:__________
TRUE/FALSE – Write ‘T’ if the statement is true and ‘F’ if the statement is false.
1) International institutions provide nations the opportunity to build multilateral solutions
through collaborative communication.
⊚ true
⊚ false
2) One of the significant differences between formal and informal institutions is how they
gain compliance.
⊚ true
⊚ false
3) New institutional theory suggests that institutions be understood as collections of rules
and codes of conduct that limit behavior.
⊚ true
⊚ false
4) By and large, the UN record of facilitating business transactions has been limited.
⊚ true
⊚ false
5) The United Nations operates with voluntary agreements, so it is essentially an informal
institution.
⊚ true
⊚ false
6) The UN Environment Programme laid the groundwork for the Climate Change
Convention, which in turn led to the Kyoto Protocol.
⊚ true
⊚ false
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7) Permanent members of the UN Security Council vote on Security Council measures and
only the Secretary-General of the UN has veto power.
⊚ true
⊚ false
8) The UN International Court of Justice (ICJ) hears cases that involve disputes between
national governments.
⊚ true
⊚ false
9) The Bretton Woods Conference established the European Union currency, the euro.
⊚ true
⊚ false
10) The World Bank funds infrastructure projects in developed countries.
⊚ true
⊚ false
11) Some think that renewed focus on exchange rates would be a good path forward for the
IMF, which is struggling with core issues related to its purpose.
⊚ true
⊚ false
12) The World Bank is made up of one large institution, the International Development
Association, and three smaller institutions.
⊚ true
⊚ false
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13) The International Finance Corporation (IFC) invests in companies and financial
institutions in developing countries.
⊚ true
⊚ false
14) The WTO supports trade with discrimination as a basic right of trading nations.
⊚ true
⊚ false
15) The WTO has negotiated a TRIPS agreement whereby property rights do not take
precedence over public health.
⊚ true
⊚ false
16) Economic cooperation often begins with a common market as in the case of the EU.
⊚ true
⊚ false
17) In a customs union, common external tariffs are added to an existing free trade area
(FTA), as found in the Southern African Customs Union and Mercosur.
⊚ true
⊚ false
18) Trading blocs are designed to bring cost savings to international firms, whether inside or
outside the trading bloc.
⊚ true
⊚ false
19) ASEAN, whose initial, political goal was to foster peaceful relations among members,
includes China as its core member.
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⊚ true
⊚ false
20) The EU is administered by the European Commission, a group composed of six
commissioners, elected at the EU level.
⊚ true
⊚ false
MULTIPLE CHOICE – Choose the one alternative that best completes the statement or
answers the question.
21) With respect to the current state of global problems, Mark Malloch Brown, former deputy
secretary-general of the United Nations, suggests that
A) as the world becomes more closely connected, it becomes less governable at the
national level.
B) the UN is the only institution that can help us deal with complexity.
C) complexity can be addressed with trade organizations such as the EU and NAFTA.
D) military alliances are needed for increased peace in an increasingly complex world.
22) Strong institutions are vitally important to international business decision makers because
they
A) provide ways to avoid or settle conflicts.
B) provide methods for moving trade forward.
C) are the foundation for our interactions.
D) hold power of trade processes.
23) Which type of institution operates through laws and regulations, with coercion as the
regulative mechanism?
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A) Formal
B) Informal
C) Normative
D) Cognitive
24) Under new institutional theory, institutions can be categorized as formal and informal,
and the informal institutions can be further categorized as
A) normative and cognitive.
B) normal and abnormal.
C) developed or developing.
D) effective and ineffective.
25) The Chinese concept of guanxi is an example of
A) an informal, cognitive institution.
B) a regulative, formal institution.
C) a face-saving tactic in a business setting.
D) taken-for-granted approaches to friendship relations.
26) New institutional theory suggests that institutions provide
A) the rules of the game, reducing uncertainty.
B) conflict-free approaches to problem solving.
C) an instrument of change.
D) ways to reduce trade tariffs.
27) A government or the police are formal institutions that gain compliance through
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A) the threat of force.
B) social conformity.
C) the need to know.
D) shared norms and values.
28) Informal institutions work on the principle of
A) shared norms and values.
B) group consensus.
C) what goes round comes round.
D) social guilt.
29) The World Trade Organization is an example of an institution that “propagate(s)
principles, and broadly represent(s) ‘humanity.'” As such, the WTO is a (n)
A) normative institution.
B) cognitive institution.
C) formal institution.
D) cultural institution.
30) Informal normative institutions
A) establish standards and propagate humanitarian principles.
B) are recognized for their charity work.
C) use class hierarchy to establish values.
D) are found in few industrial economies.
31) An informal cognitive institution is
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A) a collection of shared ideas that define reality.
B) a culturally determined way of thinking, such as inductive.
C) an approach to exploring ideas, such as Aristotelian dialogue.
D) a way to approach thinking challenges, such as brainstorming or tree diagrams.
32) Which scenario demonstrates the concept of guanxi?
A) A Chinese company sought the advice of an elder to determine the best office layout
for the optimum flow of energy.
B) A Chinese businessman would not commit to a project with an American company
until he established a relationship with the local representative.
C) A Chinese businessman refused to do business with a foreigner who did not bow to
him.
D) An American businesswoman started a business meeting without first taking time for
casual conversation.
33) A manager from a U.S. company is negotiating with a Japanese company for goods.
What is most likely to be the American’s most important criteria in the purchasing decision?
A) the relationship
B) the follow-up
C) price
D) logistics
34) The United Nations is a worldwide organization that is
A) a forum for the promotion of peace and global stability.
B) established to encourage economic equality among nations.
C) a critical member of the WTO.
D) a formal institution with strict regulations.
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35) The UN’s International Court of Justice is also known as
A) the Court of Europe.
B) the Court of International Law and Regulations (CILR).
C) the International Court of Peace.
D) the World Court.
36) The UN addresses global environment problems by
A) developing initiatives that support sustainable business practices.
B) partnering with businesses to address health and education issues.
C) promoting social justice and human rights in all countries.
D) working to stop terrorism and drug trafficking.
37) The purpose of the International Financial Corporation (IFC) is to invest in companies
and financial institutions in developing countries to build
A) infrastructure.
B) trade agreements.
C) domestic logistics.
D) domestic capital markets.
38) At the end of World War II, the UN called for the conference that set up the World Bank
and the IMF. This conference was held in
A) San Francisco, California.
B) Yalta, Soviet Union.
C) Grasleben, Germany.
D) Bretton Woods, New Hampshire.
39) The World Bank Group’s two major institutions are the International Development
Association and the
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A) collateral-based Lending Agency.
B) International Bank for Reconstruction and Development.
C) International Microloan Bank.
D) International Bank for Development.
40) International Development Association’s purpose is to loan to
A) the poorest nations.
B) developing nations needing capital.
C) developed nations for use in trade stimulus efforts.
D) any nation with collateral.
41) The common interest of all nations in a workable international exchange rate system
transcends their conflicting international interests is the premise of
A) the International Monetary Fund (IMF).
B) the Bank for International Settlements.
C) the World Central Bank.
D) the World Bank for Reconstruction and Development.
42) IMF quotas are determined by the relative size of a nation in the global economy and
A) are the nation’s “dues” to the IMF.
B) limit trade among IMF members.
C) are paid by the countries’ largest corporations.
D) are currently based on the gold standard.
43) The IMF initially played a central role in
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A) establishing trade initiatives through GAAP measures.
B) supporting war-torn nations of Europe as they recovered from their devastation.
C) setting fixed exchange rates among nations’ currencies with an established par value
based on gold.
D) the monitoring of EU initiatives to restrain trade with South Africa.
44) The major function of the World Bank is to serve as
A) a nonprofit banking cooperative for its members to meet development needs.
B) a central bank for the world’s central bankers.
C) a nonprofit cooperative to finance the educational needs of its members.
D) an investor in funds in global businesses to create value for its shareholders.
45) When did the dollar-based gold exchange standard in which the U.S. dollar became both
a means of international payment and a reserve currency cease?
A) after the meeting at Bretton Woods
B) after WWI ended
C) in 1971 under President Nixon
D) in 1983 under Reagan
46) The IBRD is a major institution of the World Bank whose function is to loan to
A) countries whose income levels make them not creditworthy.
B) private-sector development-focused firms.
C) private individuals in developing nations whose entrepreneurial efforts support
development.
D) middle-income and creditworthy poor nations.
47) Does the IMF lend money?
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A) yes, on a regular basis
B) yes, but as a last resort
C) yes, with few conditions
D) no, that is left up to the World Bank
48) The New Development Bank, headquartered in Shanghai, China, was formed by
A) ASEAN+3.
B) Mercosur.
C) the EU.
D) the BRICS group.
49) The WTO is the only international organization designed to establish and help implement
A) efforts at peace between nations.
B) rules of trade between nations.
C) security measures between nations.
D) strategic planning for developing nations.
50) The first principle of the WTO’s five basic principles is trade without
A) negotiation.
B) economic reform.
C) discrimination.
D) competition.
51) The idea that WTO members treat all members equally is known as
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A) the transparency principle.
B) the fairness principle.
C) the equity and equality principle.
D) the most favored nation (MFN) principle.
52) Is the WTO’s idea of “fair competition” really a code phrase for free trade?
A) Yes, the WTO is in favor of free trade and only free trade under all circumstances.
B) Not really. Trade relationships among nations can be exceedingly complex, and the
WTO supports fair competition, which may mean freer trade rather than free trade.
C) Yes, the WTO stands for trade liberalization, which requires transparency, economic
reform, and no protectionism, regardless of the member nation’s economic situation.
D) Yes. The WTO supports free trade and the term fair competition is used to obtain
buy-in from nations opposed to trade liberalization.
53) The WTO has made progress on trade-related intellectual property rights (TRIPS). An
example of this progress is
A) an agreement that property rights should not take precedence over public health.
B) an agreement that copyrights are inviolate.
C) a shared recognition that private property is a basic human right.
D) an agreement that governments should hold all pharmaceutical trade secrets.
54) The Doha Development Agenda is
A) a WTO plan to establish free trade among the emirates in the Persian Gulf.
B) the government seat of Qatar and a source of significant WTO funding through Sheik
Kalifa al-Thani.
C) a UN plan to develop the Arab Emirates to ensure their independence.
D) an extended conference of the WTO that initially convened in Doha.
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55) What global membership institution provides information on economic and other
activities within its member-nations and serves as a forum for discussion of shared economic and
social policy issues, including publishing research on international business?
A) the World Trade Organization (WTO)
B) the Organisation for Economic Co-operation and Development (OECD)
C) the United Nations (UN)
D) the World Bank
56) The Doha Round began in 2001 to work on what agenda?
A) protecting the environment
B) infrastructure in developing countries
C) trade-related issues between developed and developing countries
D) a way to work with the expanding European Union
57) The WTO exists to
A) establish and help implement rules of trade among nations to increase trade flows.
B) monitor and reduce the amount of trade from developing nations to developed
nations.
C) ensure that the Industrial Revolution continues to support the economies of
developed nations.
D) encourage development of trade barriers.
58) WTO agreement on TRIPS had led to member agreement to
A) enforce 20-year patents and 50-year copyrights.
B) reduce trade barriers.
C) ensure immediate availability of generic drugs in developing economies.
D) repatriate foreign citizens convicted of property rights violations.
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59) The Doha Round’s discussions are contentious on several major issues, including
A) agriculture and intellectual property rights.
B) industrial goods and agriculture.
C) trade barriers and duties.
D) nontariff barriers and agriculture.
60) The Bali Package, proposed in 2013, focuses in part on
A) subsidies for food supplies.
B) security and technology.
C) infrastructure in developing countries.
D) market access for goods from the least-developed countries.
61) Which two countries together account for one-third of the global population and have
increased trade and reduced absolute poverty?
A) China and India
B) Japan and China
C) India and Russia
D) Russia and Brazil
62) In a free trade area, members drop internal tariffs. External tariffs
A) are also dropped.
B) are coordinated so there is one agreed-upon set of external tariffs.
C) are maintained independently by each member.
D) do not apply to an FTA.
63) Economic integration often progresses
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A) in stages, from free trade area to customs union to common market.
B) in stages, totally dependent on the members’ national economic strength.
C) as a result of cultural beliefs and economic strength.
D) in unpredictable ways due to unintended consequences.
64) Most African nations have their main trade relationships
A) within local FTAs.
B) with other African nations due to transport costs.
C) with developed nations, often built on former colonial ties.
D) with China.
65) NAFTA maintains restrictions on the movement of labor. This is
A) within the scope of a free trade area.
B) within the scope of a common market.
C) not in compliance with WTO regulations.
D) unfair to Canadians and Americans.
66) The free trade area that was created in 1994 between Canada, Mexico and the United
States is called
A) NAFTA.
B) CAFTA.
C) CMUS.
D) Association of the Americas
67) The EU began as a common market for
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A) all imported goods from beyond Europe.
B) the textile and dairy industries.
C) the transportation industries.
D) the coal and steel industries.
68) The Treaty of Rome, signed in 1957, established a common market for coal and steel for
A) West Germany, Belgium, the Netherlands, France, Luxembourg, and Italy.
B) England, Ireland, Northern Ireland, Scotland, Wales, and France.
C) Finland, Sweden, Norway, West Germany, Denmark, and Switzerland.
D) Austria, Hungary, Slovakia, Poland, Romania, and Bulgaria.
69) Which nonmember country of the EU uses the euro as its official currency?
A) Bosnia
B) Albania
C) Belgium
D) the Vatican
70) The EU’s impact on international business is
A) negligible, given that the EU members tend to trade with each other.
B) not significant, because the EU members need to trade with other developed
economies.
C) significant, since EU standards, especially in the areas of the environment and
sustainability, impact any firm that wants to do business in the EU.
D) significant, because the EU is a major exporter into developing nations.
71) The main difference between a free trade area and a customs union is that in a customs
union, there is
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A) no need for passport controls.
B) a shared border patrol.
C) shared currency.
D) a common external tariff.
72) The oldest customs union is
A) the Southern African Customs Union.
B) the EU.
C) Mercosur.
D) the Canadian-U.S. Customs Union.
73) The Eurasian Economic Union, consisting of Russia, Belarus, Kazakhstan, Armenia, and
Kyrgyzstan, is an example of a
A) common market.
B) customs union.
C) free trade area.
D) multilateral free trade area.
74) Economic integration
A) involves a common market and a high degree of political integration.
B) is essentially a marketing program whose goal is to increase market penetration.
C) has not been attempted since the dissolution of the Soviet Union.
D) depends on the cultural similarities of its members.
75) This country has dramatically increased trade with Africa, especially in extraction
sectors.
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A) China
B) the United States
C) Cuba
D) Russia
76) The two major developed African economies are
A) South Africa and Nigeria.
B) Nigeria and Kenya.
C) South Africa and Kenya.
D) South Africa and the Central African Republic.
77) The regional economic integration agreement that includes Argentina, Brazil, Paraguay,
and Uruguay is known as
A) ASEAN+3
B) The Dominican Republic-Central American Free Trade Agreement (DR-CAFTA)
C) Mercosur
D) the South American Free Trade Zone
78) The Association of Southeast Asian Nations (ASEAN) was originally formed as
A) a cooperative military and security arrangement.
B) a political integration.
C) an economic integration.
D) a development resource.
79) ASEAN +3 is
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A) the 10 ASEAN nations plus China, Japan, and South Korea.
B) the 10 ASEAN nations plus Australia, India, and the state of Hawaii.
C) ASEAN’s commitment to economic, political, and social prosperity.
D) ASEAN’s commitment to trade, collaboration, and economic independence.
80) The EU developed from a postwar (WWII)
A) coal and steel common market for the two commodities, the European Coal and Steel
Community.
B) IMF and World Bank meeting charged to work out a settlement with Germany.
C) effort to allocate U.S. relief (the Marshall Plan) throughout Europe.
D) attempt to reduce the threat of the Soviet Union in Europe.
81) The economic integration of the EU is based on
A) national willingness to forego sovereignty in some areas.
B) self-interest and market common sense.
C) a delicate balance of political will and authoritarianism.
D) a commitment to build a trading bloc larger than the United States.
82) The European Union is organized into nine institutions with functions similar to those
performed by a national government. These institutions
A) represent the people of Europe and member-states.
B) are based on difference expertise areas, such as trade, politics, and governing.
C) are organized to work differently (consensus, plurality, simple majority) so that many
approaches are included.
D) all share one concern: free trade among the member-states.
83) Daily operations of the EU are conducted by the
A) European Commission.
B) European Parliament.
C) Council of the European Union.
D) European Administrative Coalition.
84) Which country is currently being considered as a candidate to join the EU?
A) the Czech Republic
B) Iceland
C) Portugal
D) Slovenia
85) In 1993, the EC members signed the Maastricht Treaty, which established the European
Union (EU), with three areas of integration: economic, foreign policy, and
A) domestic affairs.
B) trade policy.
C) environmental policy.
D) a common banking system.
86) Which nation voted in 2016 to terminate its membership in the European Union?
A) the United Kingdom
B) Germany
C) Switzerland
D) Norway
87) The euro was established by