Week 5: Part 1, The Evolution of Financial Institutions

Question 1

What is a unilateral trade agreement?
A) An agreement between two countries to reduce tariffs
B) A one-sided, non-reciprocal agreement that helps developing countries
C) A trade agreement that involves three or more countries
D) An agreement that benefits only developed countries

Answer 1

B) A one-sided, non-reciprocal agreement that helps developing countries

Question 1

What is a primary goal of a unilateral trade agreement?
A) To create a balanced trade relationship between two countries
B) To enhance economic development in developing countries
C) To impose tariffs on imports
D) To regulate trade among several nations

Answer 1

B) To enhance economic development in developing countries

Question 2

Which of the following best describes a bilateral trade agreement?
A) A trade agreement involving multiple countries
B) A one-sided agreement benefiting only one country
C) A mutually beneficial agreement between two countries
D) An agreement that imposes tariffs on imports

Answer 2

C) A mutually beneficial agreement between two countries

Question 3

Which statement is true about bilateral trade agreements?
A) They are designed to benefit only developing nations.
B) They do not reduce trade barriers.
C) The agreement is between two or more countries.
D) They aim to foster trade between two specific nations.

Answer 3

D) They aim to foster trade between two specific nations.

Question 4

What is one potential benefit of bilateral trade agreements?
A) They can lead to trade imbalances.
B) They foster cooperation and mutual benefit between two nations.
C) They make trade more complicated for participating countries.
D) They eliminate the need for tariffs entirely.

Answer 4

B) They foster cooperation and mutual benefit between two nations.

Question 5

What distinguishes a multilateral trade agreement from other types of trade agreements?
A) It involves only two countries
B) It includes three or more countries
C) It is focused on reducing tariffs only
D) It is always non-reciprocal

Answer 5

B) It includes three or more countries

Question 6

Which two of the following are examples of a multilateral trade agreement?
A) USMCA
B) The Generalized System of Preferences
C) The European Union
D) A trade agreement between the US and Canada

Answer 6

A) USMCA
C) The European Union

Question 7

What is FALSE about multilateral trade agreements?
A) It is exclusively designed to benefit developed countries
B) It is referred to as a regional trade agreement
C) It works similarly to a free trade agreement
D) It involves three or more countries

Answer 7

A) It is exclusively designed to benefit developed countries

Question 8

What is a common feature of multilateral trade agreements like the USMCA and the European Union?
A) They only involve developed nations.
B) They provide benefits exclusively to one country.
C) They aim to reduce trade barriers among member countries.
D) They are unilateral in nature.

Answer 8

C) They aim to reduce trade barriers among member countries.

Question 9

What motivated the establishment of international trade measures after World War II?
A) The desire for free trade among all nations
B) The fear of economic and trade chaos similar to the post-World War I period and the Great Depression
C) The need for colonial expansion
D) The belief in unrestricted capitalism

Answer 9

B) The fear of economic and trade chaos similar to the post-World War I period and the Great Depression

Question 10

Which policy did the United States adopt in the post-1919/World War 1 world?
A) Global cooperation
B) America First policy
C) Open trade policy
D) Internationalism

Answer 10

B) America First policy

Question 11

What was one of the consequences of the “America First” policy?
A) Decreased tariffs on imports
B) Increased tariffs on goods entering the United States
C) A stronger focus on international alliances
D) Improved relations with European nations

Answer 11

B) Increased tariffs on goods entering the United States

Question 12

During the 1920s and 1930s, the rise of nationalism in the U.S. was largely driven by:
A) The desire for global trade
B) Economic stability and prosperity
C) Fear and uncertainty regarding European politics
D) The pursuit of new colonies

Answer 12

C) Fear and uncertainty regarding European politics

Question 13

What was a significant impact of the tariffs imposed on foreign goods in the U.S.?
A) They made foreign goods cheaper for consumers.
B) They eliminated the need for domestic production.
C) They increased the cost of foreign goods for American consumers.
D) They encouraged more foreign investment in the U.S.

Answer 13

C) They increased the cost of foreign goods for American consumers.

Question 14

What was the primary goal of the Smoot-Hawley Tariff Act when it was introduced in 1930?
A) To reduce tariffs and encourage free trade
B) To protect American industry by imposing higher tariffs on foreign goods
C) To promote international trade cooperation
D) To eliminate all tariffs on imported goods

Answer 14

B) To protect American industry by imposing higher tariffs on foreign goods

Question 15

What was a significant consequence of the Smoot-Hawley Tariff Act?
A) An increase in American exports
B) Improved relations with foreign countries
C) Retaliatory tariffs from other countries, leading to a decline in global trade
D) A decrease in American consumer prices

Answer 15

C) Retaliatory tariffs from other countries, leading to a decline in global trade

Question 16

Why did over 1,000 economists petition the U.S. president to veto the Smoot-Hawley Tariff Act?
A) They believed it would lower tariffs too much
B) They thought it would strengthen global economic relations
C) They predicted it would harm the U.S. economy and reduce international trade
D) They wanted the bill to impose stricter tariffs

Answer 16

C) They predicted it would harm the U.S. economy and reduce international trade

Question 17

What was the main goal of European imperial powers under mercantilism?
A) To promote free trade with rival nations
B) To maximize their own trade while restricting their rivals’ trade
C) To encourage cooperation between colonial and rival powers
D) To eliminate all tariffs and sanctions

Answer 17

B) To maximize their own trade while restricting their rivals’ trade

Question 18

What replaced colonialism after it began to die after World War II?
A) Complete free trade
B) New global alliances with no influence from colonial structures
C) Structures heavily influenced by the colonial systems
D) The elimination of all economic sanctions and tariffs

Answer 18

C) Structures heavily influenced by the colonial systems

Question 19

What was one of the primary goals of the Bretton Woods agreement?
A) To eliminate all tariffs worldwide
B) To create a unified global currency system
C) To promote isolationism among nations
D) To impose order on monetary policy, tariffs, and trade to avoid future economic crises

Answer 19

D) To impose order on monetary policy, tariffs, and trade to avoid future economic crises

Question 20

Where was the Bretton Woods conference held?
A) The White House, Washington, D.C.
B) The United Nations headquarters in New York
C) The Mount Washington Hotel in Bretton Woods, New Hampshire
D) The European Parliament in Brussels

Answer 20

C) The Mount Washington Hotel in Bretton Woods, New Hampshire

Question 21

Why were monetary policy, tariffs, and other levers of trade to be restricted post-WWII?
A) To increase trade restrictions and create economic rivalries
B) To ensure there were no catastrophic surprises in global markets
C) To make sure tariffs were as high as possible
D) To encourage countries to trade without rules

Answer 21

B) To ensure there were no catastrophic surprises in global markets

Question 22

Which trade agreement was designed to regulate agricultural trade among African countries?
A) USMCA
B) Trans-Pacific Partnership
C) A regional agricultural trade agreement in Africa
D) European Union’s Common Market

Answer 22

C) A regional agricultural trade agreement in Africa

Question 23

What was the primary goal of the regional agricultural trade agreement among African countries?
A) To keep as much economic activity within Africa as possible
B) To increase trade between Africa and Europe
C) To prevent agricultural imports from other continents
D) To align African trade with China’s influence

Answer 23

A) To keep as much economic activity within Africa as possible

Question 24

The European Union’s regional trans-pacific trade agreement was largely constructed to:
A) Promote free trade across the Pacific
B) Balance China’s growing influence in the region
C) Exclude China from global trade agreements
D) Strengthen Africa’s agricultural sector

Answer 24

B) Balance China’s growing influence in the region

Question 25

In August 1971 President ______imposed price and wage controls, closed the gold window to foreign central banks, and imposed a surcharge on imports. (bretton woods supp article)

Answer 25

(Nixon)

Question 26

What ultimately caused the end of the Bretton Woods system in 1973?
a) Speculative attacks on the dollar and foreign governments allowing their currencies to float
b) The U.S. increasing its gold reserves
c) Increased international trade competition
d) New gold discoveries that flooded the market

Answer 26

a) Speculative attacks on the dollar and foreign governments allowing their currencies to float

Question 27

What did the Bretton Woods system initially rely on to maintain stability?

a) Floating exchange rates
b) Fixed exchange rates pegged to the U.S. dollar and gold
c) Free trade agreements
d) Foreign investment

Answer 27

b) Fixed exchange rates pegged to the U.S. dollar and gold

Question 28

Why did European countries devalue their currencies after World War II?
a) To increase inflation
b) To boost their net exports and earn more dollars
c) To reduce their gold reserves
d) To reduce international trade

Answer 28

b) To boost their net exports and earn more dollars

Question 29

Which administration introduced the national policy to achieve full employment with a 4% unemployment rate?

a) Johnson administration
b) Kennedy administration
c) Nixon administration
d) Truman administration

Answer 29

b) Kennedy administration

Question 30

Unilateral Trade Agreements

Answer 30

One-sided, non reciprocal agreements that helps developing countries improve economic development. A more developed and a less developed countries.

Question 31

Bilateral Trade Agreements

Answer 31

A mutually beneficial agreement between two countries to reduce trade barriers. Two equal developed countries.

Question 32

Multilateral Trade Agreements

Answer 32

Referred to as a regional trade agreement, it acts in the same way as a bilateral or free trade agreement but with three or more countries . Examples are the USMCA or European Union

Question 33

Smoot Hawley

Answer 33

In 1930 a republican led bill imposed sweeping new tariffs to try to protect American industry. As most economists predicted, this set off rounds of retaliatory tariffs which further stifled already weakened international trade. Hoover was the person

Question 34

“America First” Policy

Answer 34

Made in 1919, imposed ever increasing tariffs on goods entering the USA.