Contemporary American Foreign Policy Influences

Challenges and Opportunities 1st Edition Mansbach

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Chapter 5

Multiple Choice Questions

1. Which of the following was not established as a global economic institution

shortly after World War II?
a. The General Agreement on Tariff sand Trade (GATT)
*b. The World Trade Organization (WTO)
c. The International Monetary Fund (IMF)
d. The World Bank

2. What does neoliberal economic theory emphasize?

a. State regulation of trade
b. Protection of home industries
*c. Free markets
d. Subsidizing domestic industries

3. What region of the United States tends to support export-oriented policies that
favor manufacturing?
*a. The Northeast
b. The Midwest
c. The South
d. The Southwest

4. Which of the following is like to oppose international free-trade trade

agreements?
a. The Chamber of Commerce
b. The Department of Commerce
c. IBM
*d. The AFL-CIO
5. Which of the following describes “fast track” authority?
a. It gives Congress the authority to revise trade treaties
b. It gives the president the power to impose trade treaties without the advice and
consent of the Senate
*c. It requires the Congress to vote up or down on trade agreements without be able
to amend them
d. It allows the U.S. Trade Representative to veto international trade agreements

6. What agency decides how much money should be in circulation in the United
States?
*a. The Federal Reserve Board
b. The International Monetary Fund
c. The Department of the Treasury
d. The Congress

7. What U.S. Secretary of State was instrumental in getting Congress to pass the
Reciprocal Trade Agreements Act?
a. Henry Kissinger
b. Hillary Clinton
*c. Cordell Hull
d. Dean Acheson

8. What Chair of the Federal Reserve was blamed for irresponsible lending practices
and poor oversight of financial institutions after the onset of the financial crisis of
2008?
*a. Alan Greenspan
b. Ben Bernanke
c. Paul Volcker
d. Janet Yellen

9. What was the thrust of America’s foreign economic policy before World War I?
a. Strongly neo-mercantilist
b. Strongly opposed to tariffs
c. Favored the acquisition of natural resources from overseas
*d. There was no coherent foreign economic policy

10. Which of the following was a cause of the establishment of new industries in
America to provide previously imported goods like cotton, textiles, and iron?
a. The Bessemer process
b. The Irish famine
*c. The War of 1812
d. The Louisiana Purchase

11. With westward expansion, what U.S. export grew dramatically?

*a. Grain
b. Ships
c. Chemicals
d. Timber

12. Which of the following founding fathers strongly advocated establishing a

national bank in the U.S.?
a. Thomas Jefferson
b. John Adams
*c. Alexander Hamilton
d. Aaron Burr

13. What is one of the objectives of the monetary policy of the Federal Reserve?
a. Determine tariff rates
*b. Maintain high employment
c. Regulate the stock market
d. Oversee the quality of corporate bonds

14. Which of the following best describes the U.S. immediately after World War I?
a. A young creditor
*b. A mature creditor
c. A young debtor
d. A mature debtor

15. What was the result of America’s Smoot-Hawley tariff in 1930

*a. Overall U.S. trade fell dramatically
b. The Great Depression came to an end
c. American exports markedly increased
d. American imports markedly increased

16. Which of the following was a virtue of the gold standard?

a. Stable currency exchange rates
b. Limited inflation
c. Facilitated trade
*d. All of the above

17. What is the effect of currency devaluation?

a. Decrease exports
b. Increase imports
*c. Increase exports
d. None of the above

18. What was the purpose of the Reciprocal Trade Agreements Act?
a. To increase tariffs on foreign imports
*b. To facilitate tariff reductions that were matched by similar concessions by others
c. To provide loans and subsidies to U.S. export industries
d. To protect America’s growing automobile industry
19. What agency oversaw the gold-exchange standard?
a. The Federal Reserve
b. The World Bank
*c. The International Monetary Fund
d. The Department of the Treasury

20. What institution was established to facilitate reconstruction after World War II?
a. The Group of 7 (G-7)
*b. The World Bank
c. The World Economic Forum
d. The Export-Import Bank

21. What does the “Washington Consensus” refer to?

*a. A belief in the superiority of economic reforms that reduced government
economic intervention
b. A belief in the utility of trade quotas
c. A belief in the importance of the welfare state
d. A belief in economic benefit of low global interest rates

22. Which of the following is a common condition for international loans in most
Structural Adjustment Programs?
a. Increased government welfare expenditures
b. Higher state pensions
*c. Budget deficit reduction
d. Nationalizing private industries

23. Which of the following was among the first events in the onset of the 2008
financial crisis?
a. The failure of Greece to meet its debt obligations
*b. The failure of a major U.S. investment bank
c. The refusal of the IMF to lend money to Mexico
d. A significant decline in Chinese imports

24. Which post-World War II U.S. president dismantled government regulations in

key economic sectors?
a. George H. W. Bush
b. Richard M. Nixon
c. Lyndon Johnson
*d. Ronald Reagan

25. What trend preceded the 2008 global financial crisis?

*a. Rapidly rising U.S. housing prices
b. A decline in the value of the U.S. dollar
c. A decline in mortgage lending in the U.S.
d. The collapse of Japan’s currency
26. Which of the following policies did the Federal Reserve adopt in response to the
2008 global financial crisis?
a. It announced the actions it would take in the future
b. It reduced interest rates
c. It printed money electronically, which it used to purchase mortgages from banks
*d. All of the above

27. What is the Group of 20 (G-20)?

a. A group of wealthy North American and European countries plus Japan
*b. A group of wealthy countries and middle-income emerging economies
c. A group of poor less-developed countries
d. A group of the world’s leading agrarian societies

28. What was one of the major objectives of the BRICS?

*a. Acquiring greater authority in international economic institutions
b. Decreasing international lending by the IMF
c. Providing greater foreign aid to countries in Africa
d. Closing down the World Trade Organization

29. What was the aim of Basle III?

a. Adding additional conditions to international loans
b. Forcing the United States to end quantitative easing
*c. Enhancing the global banking regulatory framework
d. Allowing the European Central Bank to adopt quantitative easing

30. According to liberal trade theory, what is the effect of free trade?
a. It increases global unemployment
*b. It reduces prices for consumers
c. It reduces global competition
d. It favors economically advanced societies

31. Which of the following is a non-tariff barrier to trade?

a. Quotas
b. Subsidies
c. Local content requirements
*d. All of the above

32. Why are trade agreements difficult to achieve?

a. Some countries import more than they export
b. International trade has global consequences
c. International trade drives up global debt
*d. International trade has domestic consequences

33. Which of the following is a criticism of free-trade agreements?

*a. It involves a loss of domestic jobs as firms locate elsewhere to reduce costs
b. It encourages the growth of global monopolies
c. It increases the economic power of a few great powers
d. All of the above

34. What was the first significant regional trade pact in which the U.S. was a
member?
a. The U.S. –EU Transatlantic Trade Investment Partnership
*b. The Free Trade Agreement of the Americas
c. The North American Free Trade Agreement
d. The Trans-Pacific Economic Partnership

35. What institution did the Uruguay Round of trade negotiations establish?
*a. The World Trade Organization
b. The World Trade Forum.
c. The Bank for International Settlements.
d. The Asian Development Bank.

36. What is the “most favored nation” norm in international trade”?

a. Countries should not import products from authoritarian states
b. Countries should eliminate all tariffs
*c. Countries should not discriminate among trade partners
d. Countries should only participate in trade talks sponsored by the GATT

37. What was a key reason for the initial failure of the Doha Round of trade
negotiations?
a. The sale of genetically modified American grain to Europe
*b. The use of subsidies in the developing world to protect domestic agricultural
producers
c. The high tariff on manufactured goods in the developed world
d. The presence of pesticides in agricultural exports from Africa

38. Which of the following countries refused to ratify a 2013 global trade agreement
without an arrangement to allow developing countries to maintain food-subsidy
programs that provide food security for their populations?
a. China
b. Egypt
*c. India
d. Brazil

39. What corporation is America’s largest exporter by value of exports?

a. Microsoft
*b. Boeing
c. Google
d. Walmart
40. What trade agreement was strongly opposed by Venezuela President Hugo
Chávez?
a. The U.S.-Chile Free Trade Agreement.
*b. The Free Trade Agreement of the Americas.
c. The North American Free Trade Agreement.
d. The Bolivarian Alliance for the Americas.

Essay Questions

41. What countries constitutes the BRICS?

*a. Answers vary; Brazil, Russia, India, China, South Africa

42. What was the 1988 Omnibus Trade and Competitiveness Act?
*a. Answers vary; Legislation that defined trade agreements as congressional-
executive agreements requiring approval of both the House and the Senate.

43. What was the gold standard?

*a. Answers vary; A monetary system in which currencies were convertible into
gold.

44. What is a managed float system?

*a. Answers vary; A monetary system in which central banks undertake some
monetary policy coordination and buy and sell currencies to promote exchange-rate
stability

45. What was the gold-exchange standard?

*a. Answers vary; A monetary system in which participants agreed to tie the value of
their currencies to the U.S. dollar, which had a fixed value of $35 per ounce of gold.

46. What is “quantitative easing”?

*a. Answers vary; It is a policy of “creating” money electronically, which is used to
purchase assets like mortgages from banks.

47. What was “embedded liberalism”?

*a. Answers vary; An economic system that emphasized both multilateralism and
domestic intervention to achieve economic growth and full employment.

48. What do critics refer to as “Boeing’s bank”?

*a. Answers vary; It is America’s Export-Import Bank.

49. What is “intellectual property”?

*a. Answers vary; A work or invention that is the result of creativity and is protected
by patents, trademarks, or copyrights
50. What did the United States-European Union High Level Working Group on Jobs
and Growth foster?
*a. Answers vary; It fostered the opening of U.S.-EU trade negotiations for The
Transatlantic Trade and Investment Partnership.