Deck 17: The United States and Globalization

Question 1

Governments around the world that attempted to balance their budgets during the Great Depression generally worsened their economies.

Answer 1

True

Question 2

A too-strong dollar can hurt the U.S. economy by exporting jobs and building debt.

Answer 2

True

Question 3

Recessions and depressions are dangerous because they can allow radical leaders, such as Hitler, to come to power in the face of public discontent.

Answer 3

True

Question 4

The dollar is the world's largest reserve currency but there has been recent debate as to whether it should be the yen.

Question 5

The Bretton Woods agreement that fixed exchange rates to the dollar is still in place because the dollar has been backed by gold since the agreement.

Question 6

The International Monetary Fund (IMF) was established to keep exchange rates stable and help countries pay their international debts.

Question 7

The phenomenal growth of developing nations has led to the conclusion that the "three Rs"-the currencies of China, India, and Brazil-will soon replace the dollar as the world's reserve currency.

Question 8

The World Bank has found that countries that are increasing their trade with other countries (thus globalizing) have seen a decrease in their economic growth, thus pointing to the fact that globalization is bad for economic development.

Question 9

American corporations investing in Western Europe after WWII opened up the door for the latest round of globalization.

Question 10

The best way to understand the level of development in a given country is to look at its raw Gross Domestic Product rather than GDP Purchasing Power Parity.

Question 11

One major factor underlying the U.S. economic crisis of 2008 was that too many Americans had been issued subprime mortgages that they did not have the ability to repay.

Question 12

Protesters turned to violence during the 1999 Seattle meeting of the World Trade Organization because they believed the WTO was not doing enough to encourage globalization.

Question 13

Trade blocs such as the EU and NAFTA engage in a form of protectionism and prevent the formation of a truly free market.

Question 14

What type of action does a Keynesian approach to economics prescribe to solve an economic depression?

A) balancing the budget
B) implementing austerity measures
C) cutting government spending and raising tariffs
D) increasing government spending and lowering interest rates
E) not intervening in the free market

Question 15

A recession is defined by ________.

A) a declining GDP for at least 2 quarters in a given year
B) an unchanging GDP for at least 2 quarters in a given year
C) a declining GDP for at least 2 consecutive quarters
D) an unchanging GDP for at least 4 consecutive quarters
E) a declining GDP for at least 4 consecutive quarters

Question 16

The Great Depression was made worse and longer than necessary because of ________.

A) the domestic debt states had incurred
B) the foreign debt states had incurred
C) increased trade between countries
D) the Hawley-Smoot tariff and states continuing to run up foreign debt
E) the Hawley-Smoot tariff and the retaliatory tariffs from other countries

Question 17

Lessons gained by comparing the Great Depression and the Great Recession would seem to tell us that ________ is the best possible response in the face of a recession.

A) cutting off international trade
B) increasing protectionist trade measures to protect domestic products
C) doing nothing and letting the economy take its own course
D) decreasing personal loans
E) increasing government spending

Question 18

A strong dollar means that Americans ________.

A) can buy more foreign goods
B) can buy fewer foreign goods and more domestic goods
C) can buy more foreign and domestic goods
D) will have an increased chance of employment because more companies will stay in the United States
E) will have to pay a larger amount when repaying loans

Question 19

There are two types of exchange rates, ________ and________, each of which has a different effect on currency and international trade.

A) fixed; moving
B) fixed; floating
C) floating; stable
D) fixed; stable
E) stable; moving

Question 20

China intentionally undervalues its currency in order to ________.

A) look weak
B) seemingly pose less of a threat to the United States
C) increase its imports
D) increase its exports
E) produce better goods

Question 21

In an effort to prevent another global depression, world leaders at the Bretton Woods conference in 1944 agreed to a ________.

A) floating exchange rate based on the pound sterling
B) stable exchange rate and establishment of the WTO
C) floating exchange rate based on the dollar backed by silver
D) fixed exchange rate based on the dollar backed by gold
E) floating exchange rate and establishment of the IMF

Question 22

The United States is the world's biggest debtor nation because Americans ________.

A) buy foreign currencies and put them in U.S. Treasury notes as a "safe haven"
B) consume more than they produce and import more than they export
C) live within their means and pay for foreign products with undervalued dollars
D) invest all of their savings and speculate on foreign currencies
E) export more than they import and produce more than they consume

Question 23

What organization provides loans to all countries in order to keep exchange rates stable and even help them pay their international debts?

A) the International Monetary Fund
B) the World Bank
C) the World Trade Organization
D) the United Nations
E) the Group of Eight (G8)

Question 24

Both the World Bank and the IMF require that countries agree to practice ________ and hold down inflation.

A) mercantilism
B) budget monitoring
C) Keynesian economics
D) austerity
E) "airport economics"

Question 25

What is the artificial currency that is based on the basket price of multiple currencies that the IMF uses to make loans?

A) IMF dollar
B) renminbi
C) Eurodollar
D) Special Drawing Rights
E) Reserve Drawing Notes

Question 26

Which of the following statements regarding globalization is true?

A) Globalization has conquered the world and is growing stronger.
B) Most of the world's poor countries are benefiting from globalization.
C) Globalization totally depends on world markets staying open.
D) Countries that participate in globalization enjoy an average 20 percent annual growth rate.
E) Globalization is stable and not susceptible to banking and currency crises.

Question 27

Which of the following is a cause of the latest round of globalization?

A)decrease in tariff barriers as a result of GATT and WTO
B) increase in tariff barriers as a result of GATT and WTO
C) British imperial expansion in the nineteenth century
D) creation of trade blocs
E) wage equality between the Global South and industrialized countries

Question 28

Which of the following is NOT a cause of the latest round of globalization?

A) expansion of international banking
B) low wages in the Global South
C) improvements and expansion of communication
D) decreased cost of transportation
E) farm subsidies in rich countries

Question 29

The World Trade Organization was preceded by the ________ and both have worked to ________.

A) International Monetary Fund; increase tariffs and encourage free trade
B) General Agreement on Tariffs and Trade; decrease tariffs to encourage free trade
C) General Agreement on Tariffs and Trade; increase tariffs and encourage free trade
D) International Monetary Fund; decrease quotas and discourage free trade
E) World Bank; fix exchange rates and increase tariffs

Question 30

Which of the following is an effect of globalization, according to leftists?

A) erosion of state sovereignty
B) exploitation of workers in industrialized countries
C) exploitation of workers in developing countries
D) improvement of environmental conditions
E) improved working conditions for workers

Question 31

NAFTA and the EU are both examples of a ________.

A) trade organization
B) trade bloc
C) mercantilism bloc
D) intergovernmental organization
E) international trade organization

Question 32

Which of the following is true regarding NAFTA?

A) It is a highly developed and integrated bloc.
B) It aims at a single market and European federation.
C) It cuts tariffs between members.
D) It has free flow of labor and capital.
E) It has a complex governing body.

Question 33

Some countries like Japan and China practice neo-mercantilism by minimizing ________.

A) exports
B) consumption
C) trade surpluses
D) production of goods
E) industrialization

Question 34

People and nations will start to practice ________ if they come to believe that they are in an economic war.

A) protectionism
B) free trade
C) mercantilism
D) neo-mercantilism
E) liberalism

Question 35

If you chaired the Federal Reserve, would you prefer a strong dollar or a weak dollar? Discuss the causes and consequences (good and bad) of each in your answer.

Question 36

How does the Great Recession of 2008-2009 compare to the Great Depression of the 1930s? How are the causes of each similar? How are they different? What other similarities or differences exist concerning the actual nature (duration, intensity, etc.) of these economic crises?

Question 37

Compare the different roles and functions of the World Trade Organization, the International Monetary Fund, and the World Bank. Are all of these institutions working toward the same goal? What economic theory underlies each of them? In your opinion, which, if any, have been the most effective?

Question 38

What is globalization? Is it a new phenomenon? If not, how is the latest form of globalization different from others, and what world events have permitted this?

Question 39

Globalization has been hailed as both savior and villain. What arguments are presented on each side of the argument? Which side do you agree with most? Why? Is the effect the same in developed and developing countries?

Question 40

How does the North American Free Trade Agreement compare to the European Union? Discuss the role of trade blocs in general in your answer as well as the level of integration and functions of NAFTA and the EU. Will NAFTA ever become a North American version of the EU?

Question 41

What could be the consequence of the perception that the United States is in an economic war with the rest of the world? What is neo-mercantilism? Does massive exporting really help countries strengthen their economy?