International Trade 4th Edition by Feenstra – Test Bank

1. The WTO is a _____, involving many countries, with an agreement to lower tariffs between all members.
A) bilateral trade organization
B) trilateral trade organization
C) multilateral trade organization
D) quasipolitical organization

2. What is COP21?
A) an agreement negotiated in Copenhagen that resulted in developed countries immediately eliminating agricultural export subsidies
B) an agreement negotiated in Paris in which countries committed to develop plans to reduce their emissions of greenhouse gases
C) an agreement negotiated in Kyoto, Japan, in which countries agreed to further reduce their trade barriers
D) an agreement negotiated in Doha, Qatar, in which countries agreed to reduce their agricultural export subsidies

3. A regional trade agreement involves:
A) most, if not all, of the nations in the world.
B) several nations, usually trading partners, with a common agenda or geographically linked.
C) nations that agree to trade only with nations in their region.
D) a region of the world with not only trade issues but also political cohesiveness.

4. The WTO is considered a _____, whereas NAFTA and the European Union are _____.
A) free-trade area; cartels
B) cartel; multilateral agreements
C) free-trade area; multilateral agreements
D) multilateral agreement; regional trade agreements

5. Which of the following is a regional trade agreement currently (2016) under consideration?
A) Mercosur—a trade agreement among Argentina, Brazil, and Uruguay
B) the Transatlantic Trade and Investment Partnership
C) the North American Free Trade Area
D) the United States–Japan Free Trade Area

6. Most proposed free-trade areas currently under consideration are a response to:
A) the failure of the Doha Round.
B) the success of the Kyoto agreement.
C) the failure of COP21.
D) the success of NAFTA.

7. Many regional trade agreements include other provisions that are not part of the treaty, but they are add-ons that might be important to trade issues. These are called:
A) addenda.
B) side agreements.
C) environmental pacts.
D) worker rights documents.

8. What is the “most favored nation” principle of the WTO?
A) Trading partners may choose a favorite nation to trade with.
B) Any nation can refuse to trade with another that is not its most favored nation.
C) The WTO has the right to choose the nation that has performed best within the WTO guidelines as its most favored nation.
D) Every nation must grant the same rights and treatment to other nations in the WTO as its “most favored nation.”

9. The “most favored nation principle” means that member countries:
A) can enter into exclusive favorable agreements with some countries.
B) are barred from forming agreements outside their geographic vicinity.
C) must apply the same low tariffs to all WTO member countries.
D) must apply differential tariffs on imports from non-WTO countries.

10. In a large-country case, an optimal tariff would be one:
A) that increases the producer surplus.
B) that raises the price of the product imported.
C) in which the terms-of-trade gain exceeds the deadweight loss.
D) that easily passes the legislative process.