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Questions and Answers
Market Integration refers to the degree to which systems in different geographical areas are connected to each other.
True
The financial crises experienced by stronger economies have a lesser effect on weaker economies.
False
The U.S. dollar is considered the global currency.
True
The General Agreement on Tariffs and Trade (GATT) aims to increase barriers to international trade.
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A central bank is the official monetary authority of a country and is responsible for currency exchange rates.
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Argentina's financial crisis in the late 1990s had a significant impact on the global economy.
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The International Monetary Fund (IMF) was established to oversee exchange rates among member states.
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Eliminating restrictions on currencies for member states is one of the key elements of global economic integration.
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Gold is not related to the establishment of par value in currency exchanges.
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The GATT agreement was signed in 1947 by 23 countries to focus solely on agricultural trade.
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Study Notes
Market Integration
- Refers to the interconnection of market systems across different geographic areas
- Involves expansion of firms through consolidation of marketing functionalities under single management
- Can be influenced by global financial events, with stronger economies having a greater impact on others
- Examples include the impact of Russian and Asian financial crises on the world economy
- Argentina's financial crisis in the late 1990s and early 2000s had a comparatively small impact on the global economy.
Global Financial Stability
- Driven by reducing trade barriers and facilitating free flow of capital among nations
- Key elements include:
- Establishing currency par values based on gold or gold value
- Agreement by central banks or their equivalents to exchange currencies at established rates with a one percent margin
- The establishment of the International Monetary Fund (IMF) as an overseer of exchange rates
- Elimination of restrictions on currencies participating in international trade
- Establishment of the US dollar as the global currency
General Agreement on Tariffs and Trade (GATT)
- A legal agreement signed in 1947 by 23 countries to minimize barriers to international trade
- Aimed at eliminating or reducing quotas, tariffs, and subsidies while maintaining significant regulations
- Served as a forum for representatives from member countries to meet and discuss trade goods
- Progress was made through multilateral trade agreements in "rounds" of negotiation
- The Uruguay Round (1986-1993) led to the creation of the World Trade Organization (WTO)
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Description
This quiz explores the concepts of market integration and global financial stability. It examines the interconnections between different market systems and the effects of financial crises on the global economy. Additionally, it discusses the principles driving trade and capital flow, alongside the role of international institutions like the IMF.
