Exploring the Benefits of Foreign Aid for Economic Development
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Questions and Answers

Which organization replaced GATT in 1995?

  • IMF
  • EU
  • NAFTA
  • WTO (correct)

    • What is the main purpose of GATT?

  • To negotiate free trade deals
  • To regulate international money supplies
  • To promote economic growth
  • To reduce tariffs and other trade barriers (correct)

    • Which trade agreement started as an alliance of coal and steel interests?

  • IMF
  • EU (correct)
  • WTO
  • NAFTA

    • What is the role of the WTO?

    <p>To negotiate free trade deals</p> Signup and view all the answers

    What is the main purpose of the IMF?

    <p>To regulate international money supplies</p> Signup and view all the answers

    What was the key currency after the Bretton Woods Agreement of 1944?

    <p>US Dollar</p> Signup and view all the answers

    Which of the following best describes a trade surplus?

    <p>Exports are higher than imports</p> Signup and view all the answers

    Which of the following best describes a trade deficit?

    <p>Imports are higher than exports</p> Signup and view all the answers

    What does the balance of payments measure?

    <p>Goods, services, money spent, travel, and investments</p> Signup and view all the answers

    What determines the price of a currency in the foreign exchange market?

    <p>Supply and demand</p> Signup and view all the answers

    Where are exchange rates published daily?

    <p>The Wall Street Journal</p> Signup and view all the answers

    If the exchange rate is $0.7437 and an item costs $300 in Canada, how much would it cost in US dollars?

    <p>$223.11</p> Signup and view all the answers

    Which of the following is a key factor that can affect economic growth in a country?

    <p>Availability of natural resources</p> Signup and view all the answers

    What is one way in which EDC's (economically developed countries) can benefit from the arrangement where the World Bank provides aid to LDC's (less developed countries)?

    <p>By lending money to LDC's</p> Signup and view all the answers

    Which country has experienced rapid economic growth?

    <p>China</p> Signup and view all the answers

    What does GDP stand for?

    <p>Gross Domestic Product</p> Signup and view all the answers

    What is one reason why countries engage in trade?

    <p>To take advantage of comparative advantage</p> Signup and view all the answers

    What is one common form of limiting trade?

    <p>Tariff</p> Signup and view all the answers

    Which of the following is a characteristic of Economically Developed Countries (EDCs)?

    <p>High GDP and GDP per capita</p> Signup and view all the answers

    What are the main factors that define Least Developed Countries (LDCs)?

    <p>Low GDP and GDP per capita, limited access to technology, and limited infrastructure</p> Signup and view all the answers

    What is the main impact of poverty on LDCs?

    <p>Limited access to goods and services</p> Signup and view all the answers

    What type of economy do LDCs have?

    <p>Duel economy</p> Signup and view all the answers

    What are the major barriers to development in LDCs?

    <p>Limited natural resources, low level of human capital, shortage of investment capital, rapid population growth, and unfavorable political climate</p> Signup and view all the answers

    Why do advanced countries provide foreign aid to LDCs?

    <p>Because it is moral and can promote development</p> Signup and view all the answers

    Which one of the following best describes globalization in economic terms?

    <p>The interdependence of nations around the globe fostered through free trade.</p> Signup and view all the answers

    What is the definition of supply chain?

    <p>The network between a company and its suppliers to produce and distribute a specific product to the final buyer.</p> Signup and view all the answers

    What is the practice of basing some of a company's processes or services overseas to take advantage of lower costs called?

    <p>Offshoring</p> Signup and view all the answers

    Which one of the following is an example of offshoring?

    <p>Capital One (a U.S. credit card company) moves its call centers to the Philippines.</p> Signup and view all the answers

    What is the definition of outsourcing?

    <p>Obtaining goods or a service from an outside or foreign supplier, especially in place of an internal source.</p> Signup and view all the answers

    Which one of the following is an example of outsourcing?

    <p>IBM hires an Indian company to develop software.</p> Signup and view all the answers

    Which of the following is a major barrier to development in LDCs?

    <p>Limited natural resources</p> Signup and view all the answers

    Which organization was replaced by the World Trade Organization (WTO) in 1995?

    <p>GATT</p> Signup and view all the answers

    What is the main impact of poverty on LDCs?

    <p>Lower life expectancy</p> Signup and view all the answers

    What is one reason why countries engage in trade?

    <p>To protect self interest</p> Signup and view all the answers

    What determines the price of a currency in the foreign exchange market?

    <p>The supply and demand for the currency</p> Signup and view all the answers

    What is the main purpose of the World Trade Organization (WTO)?

    <p>To reduce tariffs and trade barriers</p> Signup and view all the answers

    What level of literacy is necessary to participate in the economy?

    <p>High literacy</p> Signup and view all the answers

    What type of economy do LDCs have?

    <p>Traditional economy</p> Signup and view all the answers

    What is the main reason for the shortage of investment capital in LDCs?

    <p>Hand to mouth existence</p> Signup and view all the answers

    What is the main impact of rapid population growth in LDCs?

    <p>Potential starvation</p> Signup and view all the answers

    Which trade agreement started as an alliance of coal and steel interests?

    <p>EU</p> Signup and view all the answers

    What is the main impact of poverty on Less Developed Countries (LDCs)?

    <p>Limited access to education and healthcare</p> Signup and view all the answers

    Which of the following best describes the balance of trade?

    <p>Exports minus imports</p> Signup and view all the answers

    What is the balance of payments?

    <p>A measure of trade that includes goods, services, money spend, travel, and investments</p> Signup and view all the answers

    What is the definition of supply chain?

    <p>The process of moving goods and services from the supplier to the consumer</p> Signup and view all the answers

    Where are exchange rates published daily?

    <p>Wall Street Journal</p> Signup and view all the answers

    If an item costs $300 in Canada and the exchange rate is $0.7437, how much would it cost in US dollars?

    <p>$223.11</p> Signup and view all the answers

    What are equivalency rates used for?

    <p>Determining how much you will spend in a different currency</p> Signup and view all the answers

    Which of the following is a key factor that can affect economic growth in a country?

    <p>Investments in human and physical capital</p> Signup and view all the answers

    What determines the price of a currency in the foreign exchange market?

    <p>Demand and trade</p> Signup and view all the answers

    What is one common form of limiting trade?

    <p>Tariff</p> Signup and view all the answers

    What does GDP stand for?

    <p>Gross Domestic Product</p> Signup and view all the answers

    What are the major barriers to development in LDCs?

    <p>Limited access to capital</p> Signup and view all the answers

    Which one of the following best describes globalization in economic terms?

    <p>The process of opening markets and increasing international trade</p> Signup and view all the answers

    Which of the following best describes offshoring?

    <p>Moving a company's processes or services to another country to take advantage of lower costs.</p> Signup and view all the answers

    Which of the following best describes outsourcing?

    <p>Obtaining goods or services from a foreign supplier instead of an internal source.</p> Signup and view all the answers

    Which of the following best describes globalization in economic terms?

    <p>The interdependence of nations around the globe fostered through free trade.</p> Signup and view all the answers

    Which of the following best describes supply chain?

    <p>The network between a company and its suppliers to produce and distribute a specific product.</p> Signup and view all the answers

    Which of the following best describes trade deficit?

    <p>A situation where a country's imports exceed its exports.</p> Signup and view all the answers

    Which of the following best describes trade surplus?

    <p>A situation where a country's exports exceed its imports.</p> Signup and view all the answers

    According to the text, what is the main reason for countries to engage in trade?

    <p>To promote economic growth</p> Signup and view all the answers

    What is the main purpose of the World Bank providing aid to Less Developed Countries (LDCs)?

    <p>To promote development and reduce poverty</p> Signup and view all the answers

    What is the main impact of poverty on LDCs?

    <p>Limited access to basic needs and services</p> Signup and view all the answers

    What is the main reason for the shortage of investment capital in LDCs?

    <p>Limited natural resources</p> Signup and view all the answers

    What is the main impact of rapid population growth in LDCs?

    <p>Increased strain on resources and services</p> Signup and view all the answers

    What is one common form of limiting trade?

    <p>Tariff</p> Signup and view all the answers

    Which of the following is NOT a characteristic of Economically Developed Countries (EDCs)?

    <p>Low level of education</p> Signup and view all the answers

    What is the main impact of rapid population growth in LDCs?

    <p>Potential starvation</p> Signup and view all the answers

    What are the major barriers to development in LDCs?

    <p>Limited access to capital</p> Signup and view all the answers

    What is the main impact of poverty on LDCs?

    <p>Limited access to basic necessities</p> Signup and view all the answers

    What level of literacy is necessary to participate in the economy?

    <p>Advanced literacy</p> Signup and view all the answers

    Which of the following best describes offshoring?

    <p>Basing some of a company's processes or services overseas to take advantage of lower costs</p> Signup and view all the answers

    Which of the following is the main purpose of the World Trade Organization (WTO)?

    <p>To negotiate free trade deals and eliminate trade barriers</p> Signup and view all the answers

    Which organization was replaced by the World Trade Organization (WTO) in 1995?

    <p>The General Agreement on Tariffs and Trade (GATT)</p> Signup and view all the answers

    What is the main impact of rapid population growth in Less Developed Countries (LDCs)?

    <p>Strain on limited resources and infrastructure</p> Signup and view all the answers

    What is the practice of basing some of a company's processes or services overseas to take advantage of lower costs called?

    <p>Offshoring</p> Signup and view all the answers

    What is one way in which Economically Developed Countries (EDCs) can benefit from the arrangement where the World Bank provides aid to Less Developed Countries (LDCs)?

    <p>Access to new markets and resources</p> Signup and view all the answers

    What is the main impact of poverty on Less Developed Countries (LDCs)?

    <p>Strain on limited resources and infrastructure</p> Signup and view all the answers

    Which one of the following best describes offshoring?

    <p>The practice of basing some of a company's processes or services overseas to take advantage of lower costs.</p> Signup and view all the answers

    What is the main impact of rapid population growth in LDCs?

    <p>Increased demand for resources and services</p> Signup and view all the answers

    What is the main reason for the shortage of investment capital in LDCs?

    <p>Limited access to financial markets</p> Signup and view all the answers

    What is one reason why countries engage in trade?

    <p>To access goods and services that are not available domestically</p> Signup and view all the answers

    What is the main purpose of the World Trade Organization (WTO)?

    <p>To promote free and fair trade between nations</p> Signup and view all the answers

    Which one of the following is an example of outsourcing?

    <p>IBM hires an Indian company to develop software.</p> Signup and view all the answers

    Which of the following best describes the balance of trade?

    <p>The balance of trade is the difference between a country's exports and imports.</p> Signup and view all the answers

    What is the main purpose of the World Trade Organization (WTO)?

    <p>To promote and regulate international trade.</p> Signup and view all the answers

    Where are exchange rates published daily?

    <p>Exchange rates are published daily in the Wall Street Journal.</p> Signup and view all the answers

    What determines the price of a currency in the foreign exchange market?

    <p>The price of a currency in the foreign exchange market is determined by supply and demand.</p> Signup and view all the answers

    What are equivalency rates used for?

    <p>Equivalency rates are used to determine how much one currency is worth in another currency.</p> Signup and view all the answers

    What is the main impact of rapid population growth in LDCs?

    <p>Rapid population growth in LDCs can put strain on resources and infrastructure.</p> Signup and view all the answers

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