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CHAPTER 2 : DISCUSSION QUESTION

1)  What does a nation's balance-of-payments statement indicate?


2)  A nation's balance-of-payments statement includes three accounts. Describe each of
     those three (3) accounts.


3)  Using three examples, describe how nontariff barriers are used to restrict imports.


4)  Briefly describe the history and impact of the General Agreement on Tariffs and Trade
     (GATT).


5)  Briefly describe how the World Trade Organization (WTO) functions.



Fill in the Blank Questions


1)  The ______________ and the ________________ are two global institutions created to
     assist nations in becoming and remaining economically viable.


2)  The ___________ is an institution, not an agreement as was GATT.


3)  A __________ is a specific unit or dollar limit applied to a particular type of good.


4)  A _________ is a tax imposed by a government on goods entering at its borders.


5)  A _________ is a tax imposed by a government on goods entering at its borders.


6)  A nation's ________________ statement records all financial transactions between
     its residents and those of the rest of the world during a given period of time--usually 
     one year.

Please pick the best answer1)  The World Bank provides all of the following to reduce poverty and improve standards
     of living EXCEPT:
     A. provides loans.
     B. provides technical assistance.
     C. provides policy guidance to developing-country members.
     D. starter governments for a period of five years.
     E. provides investors with investment guarantees.


2)  Which of the following is one of the primary objectives of the International Monetary
     Fund (IMF)?
     A. The abolishment of unfavorable exchange rates for any nation.
     B. The abolishment of debt for impoverished nations.
     C. The stabilization of foreign exchange rates.
     D. The waiver of all debts from World War II.
     E. The establishment of global nondiscrimatory prices.


3) Shortly after World War II, the United States and 22 other nations signed ____________
    to pave the way for the first effective worldwide tariff agreement.
     A. the General Agreement on Tariffs and Trade (GATT)
     B. the Trade Related Investment Measures (TRIM)
     C. the World Trade Organization (WTO) agreement
     D. the International Monetary Fund (IMF) agreement
     E. the World Bank act


4)  Tall Pine Plywood Company has just received notice that a shipment of plywood         
     (2 metric tons) has been rejected by Japanese customs because the knotholes
     commonly found on a plywood sheet are too large. This would be an illustration of
     which of the following nontariff barriers to trade?
      A. quota
      B. predatory pricing
      C. embargo
      D. boycott
      E. standards


5)  The function of an exchange permit is to:
      A. regulate the supply of money.
      B. cut-off all exchange.
      C. require that importers gain permission to exchange an amount of local currency
          for foreign currency.
      D. protect monopolies.
      E. limit pornographic or harmful merchandise from the domestic market.


6)  The practice of ______________ is a particularly ingenious method of controlling
     imports as it encourages the importation of goods the government deems desirable and
     discourages importation of goods the government does not want.
      A. a differential exchange rate
      B. blocked currency
      C. boycott
      D. embargo
      E. import price limit


7)  ____________ is accomplished by refusing to allow importers to exchange its national
     currency for the seller's currency.
     A. Boycotted money
     B. Embargoed capital
     C. Blocked currency
     D. Anti-banking
     E. Cartel dissolution


8)  An agreement between the importing country and the exporting country for a
     restriction on the volume of exports is called a(n):
     A. tariff.
     B. standards option.
     C. voluntary export option (VER).
     D. fee.
     E. documentation requirement.


9)  All of the following would be considered to be nontariff barriers that could be
     erected to restrict trade EXCEPT:
     A. quotas.
     B. taxes
     C. packaging requirements
     D. border taxes.
     E. embargoes.


10) A specific unit or dollar limit applied to a particular type of good is called a(n):
     A. tariff.
     B. quota.
     C. standard.
     D. embargo.
     E. boycott.


11) In general, __________ are arbitrary, discriminatory, and require constant
     administration and supervision.
     A. tariffs
     B. standards
     C. quotas
     D. boycotts
     E. embargoes

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