The Business of Alcohol: Gin and Rum
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Questions and Answers

What was a key requirement of the Werner Report for the creation of a shared European currency?

  • Adopt a single language for all EU nations.
  • Coordinate budgets among member countries. (correct)
  • Reinstate the gold standard for all currencies.
  • Establish a common military force.
  • What was the main reason for the failure of the Currency Snake in 1972?

  • Lack of interest from EU countries.
  • Oil crises and uncoordinated national responses. (correct)
  • High levels of trade between nations.
  • Introduction of the euro before the agreement.
  • When was the European Currency Unit (ECU) introduced?

  • 1971
  • 1989
  • 1979 (correct)
  • 1992
  • What significant event helped Germany agree to join the project for economic and monetary union?

    <p>The fall of the Berlin Wall. (D)</p> Signup and view all the answers

    Which countries chose not to adopt the euro after the Maastricht Treaty was implemented?

    <p>The UK and Denmark. (A)</p> Signup and view all the answers

    What was one outcome caused by Denmark voting against the Maastricht Treaty in 1992?

    <p>Speculation against weaker currencies causing economic trouble. (B)</p> Signup and view all the answers

    In what year did the euro become a 'virtual' currency, primarily used in banks?

    <p>1999 (C)</p> Signup and view all the answers

    What institutional body was set up in 1994 to prepare for the euro's introduction?

    <p>European Monetary Institute. (B)</p> Signup and view all the answers

    What was the primary reason Ecuador and Gabon temporarily left OPEC?

    <p>To gain freedom from production quotas (D)</p> Signup and view all the answers

    Which of the following is NOT a challenge faced by OPEC?

    <p>Inability to influence oil prices (B)</p> Signup and view all the answers

    What is a key characteristic of Brent Oil?

    <p>Light, sweet oil from North Sea fields (D)</p> Signup and view all the answers

    Why does West Texas Intermediate (WTI) trade at a discount to Brent Oil?

    <p>Due to oversupply in the Midwest (A)</p> Signup and view all the answers

    What defines the pricing of oil sands products like dilbit?

    <p>Heavier oil priced lower than lighter oils due to quality (A)</p> Signup and view all the answers

    The term 'bitumen netback' refers to what aspect of oil pricing?

    <p>Price after transport and diluent costs deduction (C)</p> Signup and view all the answers

    What factor primarily affects Alberta's royalties from oil production?

    <p>The geographic distance of oil from markets (D)</p> Signup and view all the answers

    To improve the value of resource production in Alberta, what solution is suggested?

    <p>Improved access to global markets (D)</p> Signup and view all the answers

    What innovation did Eli Whitney create that significantly increased cotton output?

    <p>Cotton Gin (C)</p> Signup and view all the answers

    In what way did Samuel Slater contribute to the textile industry in the United States?

    <p>He introduced British technology to the U.S. (A)</p> Signup and view all the answers

    How did the Industrial Revolution influence gender roles in the workforce?

    <p>Women gained financial independence through factory jobs. (B)</p> Signup and view all the answers

    What percentage of textile revenue qualifies as fair trade or environmentally stable as of 2007?

    <p>0.5% (C)</p> Signup and view all the answers

    What was a significant societal change resulting from the Industrial Revolution?

    <p>Growth of a middle class (B)</p> Signup and view all the answers

    What was one of the consequences of the transition from cottage industry to factories?

    <p>Greater overall production capacity (D)</p> Signup and view all the answers

    What does the textile industry contribute to the global economy annually?

    <p>$450 billion (D)</p> Signup and view all the answers

    What were the working conditions like in textile factories during the Industrial Revolution?

    <p>Long hours and exploitative practices (A)</p> Signup and view all the answers

    What was the primary purpose of OPEC's oil embargo in 1973?

    <p>To cause a recession in western economies (B)</p> Signup and view all the answers

    Which petroleum category involves the transportation and storage of oil?

    <p>Midstream (A)</p> Signup and view all the answers

    What major impact does petroleum have on the environment?

    <p>Causes toxic emissions (C)</p> Signup and view all the answers

    What was the main purpose of the establishment of the Bank of England in 1694?

    <p>To raise funds for government naval operations (A)</p> Signup and view all the answers

    What aspect of petroleum is considered a major con?

    <p>It is a non-renewable resource (C)</p> Signup and view all the answers

    What key function does the Federal Reserve serve in the United States?

    <p>Acts as a lender of last resort for banks (B)</p> Signup and view all the answers

    Which of the following was a major role of Petrocanada when it was established?

    <p>To serve as a window on the industry (D)</p> Signup and view all the answers

    When was the Bank of Canada established?

    <p>1935 (B)</p> Signup and view all the answers

    Which country has one of the largest oil reserves as of 2022?

    <p>Venezuela (B)</p> Signup and view all the answers

    What significant event in 1923 led to stronger banking regulations in Canada?

    <p>The Home Bank Failure (D)</p> Signup and view all the answers

    What is a common way to invest in the petroleum sector?

    <p>Investing in oil futures (B)</p> Signup and view all the answers

    What was the aim of the Royal Commission's recommendations in 1964 regarding Canadian banking?

    <p>To establish a more competitive banking system (A)</p> Signup and view all the answers

    What process leads to the formation of petroleum?

    <p>Decomposition of organic matter (A)</p> Signup and view all the answers

    Which of the following banks was established first in British North America?

    <p>Bank of Montreal (C)</p> Signup and view all the answers

    What primary feature differentiates chartered banks in Canada from those in the US?

    <p>Involvement of federal government (A)</p> Signup and view all the answers

    What significant change occurred in Canada with the 1967 Bank Act revision?

    <p>Introduction of mortgage loans by banks (B)</p> Signup and view all the answers

    What year did the Treaty of Rome, which initiated discussions about a cooperative economic policy, occur?

    <p>1957 (C)</p> Signup and view all the answers

    What common EU currency policy is not adopted by all EU member countries?

    <p>The Euro (C)</p> Signup and view all the answers

    Which professionals are typically classified as gold-collar professionals?

    <p>CEOs and government officials (A)</p> Signup and view all the answers

    What is the primary difference between offshoring and outsourcing?

    <p>Offshoring involves managing facilities in a foreign location, while outsourcing uses independent suppliers. (A)</p> Signup and view all the answers

    What factors contributed to the rise of offshoring in the United States?

    <p>Technological improvements and favorable global trade agreements (B)</p> Signup and view all the answers

    Which of the following best describes 'global production' as used in the context of offshoring?

    <p>A strategy of distributing production across multiple countries based on certain conditions (B)</p> Signup and view all the answers

    When did US companies first begin offshoring production in East Asia?

    <p>1960s (C)</p> Signup and view all the answers

    Which technology contributed significantly to the efficiency of the global freight network?

    <p>Advancements in ship design and air travel (A)</p> Signup and view all the answers

    In what context did the semiconductor industry begin offshoring?

    <p>Starting from 1963 and expanding rapidly thereafter (C)</p> Signup and view all the answers

    Which organization played a role in supporting economic development that facilitated offshoring?

    <p>The World Bank (B), International Monetary Fund (D)</p> Signup and view all the answers

    Flashcards

    Bank of England's founding year

    The Bank of England was established in 1694.

    Bank of England's initial purpose

    Raising money for the government, primarily for the navy.

    Federal Reserve Act

    Established the Federal Reserve System in the US, in response to financial crises to stabilize the economy.

    Bank of Canada's establishment year

    The Bank of Canada was established in 1935.

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    Chartered Banks (Canada)

    Canadian banks authorized to operate by the Federal government, taking deposits and making loans.

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    Home Bank Failure (year)

    A significant Canadian Bank failure, leading to stricter regulations in 1923.

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    Porter Commission

    A Canadian Royal Commission on banking and finance in 1964, recommending more open and competitive banking.

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    Treaty of Rome (year)

    In 1957, the Treaty of Rome fostered discussions about economic and monetary cooperation among European countries.

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    Euro currency

    A common currency used by some European Union (EU) member states, but not all.

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    Central Banks' role

    Institutions responsible for managing a country's currency, often setting interest rates and providing financial stability.

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    Bretton Woods System

    A system where currencies were tied to the US dollar, which was tied to gold.

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    Werner Report

    A 1970 plan proposing a shared European currency; required coordinated budgets, free money movement, and fixed exchange rates.

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    Currency Snake (1972)

    A system where EU countries pegged their currencies to each other, limiting fluctuations within a 2.25% band.

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    European Monetary System (EMS 1979)

    Introduced the European Currency Unit (ECU) and the Exchange Rate Mechanism (ERM) for fixed (but adjustable) exchange rates.

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    Delors Plan (1989)

    A 3-stage plan for European Monetary Union (EMU): economic coordination, a central bank, and a single currency.

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    Maastricht Treaty (1992)

    Set the rules for the euro, including criteria for countries to join (low inflation, low debt).

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    European Monetary Institute

    Established in 1994 to prepare for the launch of the euro.

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    Euro Launch (1999)

    The euro began as a virtual currency, used in banking systems, before physical coins and banknotes were introduced.

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    OPEC

    The Organization of the Petroleum Exporting Countries, a group of oil-producing nations that works to control oil production and prices.

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    1973 Oil Embargo

    OPEC's decision to stop selling oil to Western countries, causing a recession in those economies due to a shortage of energy.

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    Upstream Petroleum Industry

    The first stage of the petroleum industry, focusing on exploration and extraction of raw oil and gas.

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    Midstream Petroleum Industry

    The middle stage of the industry, responsible for transporting and storing extracted oil and gas.

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    Downstream Petroleum Industry

    The final stage of the petroleum industry, refining crude oil into usable products like gasoline and plastics, and marketing them.

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    Petroleum Formation

    Created over millions of years from decomposed organic matter under high heat and pressure.

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    Petroleum's Environmental Impact

    Petroleum extraction, processing, and use contribute to greenhouse gas emissions and environmental damage.

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    Alternative Energy Sources

    Renewable energy sources like solar, wind, and biofuels are being explored as replacements for petroleum.

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    Cottage Industry

    A system where workers produce goods at home, often textiles, on their own schedules, but with less efficient production compared to factories.

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    Spinning Jenny

    A machine invented by James Hargreaves that drastically sped up thread production in textile manufacturing.

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    Water Frame

    A textile machine invented by Richard Arkwright that used water power to create stronger and more consistent thread, improving quality.

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    Steam Engine

    An engine that uses steam power, popularized by Boulton and Watt, which revolutionized industrial efficiency by driving machinery.

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    Cotton Gin

    A machine invented by Eli Whitney that significantly sped up cotton seed separation, increasing cotton output by 50 times.

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    Lowell Mills

    Textile factories established by Francis Cabot Lowell in the U.S., integrating production from raw cotton to finished cloth in a single location.

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    Lowell Girls

    Young women who worked in Lowell mills for cheap labor, providing them with financial independence.

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    Urbanization

    The process of population growth in cities, as seen in Britain and the U.S. by the mid-19th century, fueled by industrialization.

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    OPEC's Influence

    OPEC can influence global oil prices by controlling production, but it lacks full market control due to non-OPEC producers and alternative energy sources.

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    OPEC's Internal Challenges

    Disagreements among OPEC members and external competition from non-OPEC producers limit OPEC's effectiveness in controlling oil prices.

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    Brent Oil

    The global benchmark for oil prices, sourced from North Sea oil fields. Its light, sweet quality and accessibility make it highly valuable.

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    WTI (West Texas Intermediate)

    The U.S. benchmark for oil prices, produced in landlocked regions like Oklahoma. Its landlocked location and export restrictions cause it to trade at a discount to Brent.

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    Western Canada Select (WCS)

    The Canadian benchmark for heavy oil, blended with diluents. Its heavy quality, location far from markets, and transportation challenges result in significant price discounts.

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    Bitumen Pricing

    The price of Alberta's bitumen is calculated by subtracting transportation and diluent costs from the final selling price, resulting in a 'bitumen netback'.

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    Alberta's Oil Royalties

    Royalties paid to Alberta depend on the price received for its oil production. Lower prices due to oil quality and market access challenges affect royalties.

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    Improving Alberta's Oil Value

    Increased market access for Alberta's oil can reduce price discounts and raise its value, increasing revenue and royalties.

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    Gold-Collar Professionals

    High-level executives, government officials, and decision-makers whose choices impact large populations or entire countries.

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    Offshoring vs. Outsourcing

    Offshoring involves a company establishing its own facilities in a foreign location for production. Outsourcing relies on an independent supplier for goods or services, also potentially overseas.

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    What drives offshoring?

    Factors like global trade agreements (like GATT), technological advancements (faster shipping and communication), and economic development initiatives (from institutions like the IMF and World Bank) all contributed to offshoring becoming more common.

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    Global Production Model

    A strategy where different stages of production for a product are spread across multiple countries, taking advantage of each country's strengths like market conditions, technology, and stability.

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    Semiconductor Industry and Offshoring

    The semiconductor industry (making computer chips), pioneered offshoring from the US to East Asia in the 1960s, leading to a global production model in electronics.

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    Deindustrialization in Advanced Economies

    As offshoring shifted production to other countries, some advanced economies experienced a decrease in manufacturing jobs and industries within their own borders.

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    Is More Offshoring Inevitable?

    While offshoring has become prevalent due to cost and efficiency advantages, the future of offshoring is currently debated.

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    Study Notes

    Part 1 - The Business of Alcohol

    • Gin Craze: Alcohol was mixed with juniper berries and other herbs for flavouring and medicinal purposes. The 16th century Dutch created "genever," which the British shortened to gin. Gin was inexpensive but also politically impactful. William III, the King of England in the 1600s, placed high tariffs on French brandy and wine, granting tax breaks to British gin distillers. This led to a gin craze, but also backlash with temperance movements and new government licensing to control production. In the 1800s, gin regained popularity, mixed with quinine water as an anti-malaria treatment.

    • Rum: Distilled from molasses, a byproduct of sugar manufacturing. Rum rose to popularity in the 1700s, driven by large sugar plantations in French and British Caribbean colonies. These required cheap labor, leading to an increase in the importation of slaves. British sailors received a daily ration of Jamaican rum, a tradition lasting until the 1970s. American rum producers later turned to whiskey. The rum industry played a political role throughout history.

    Part 2 - "Every day's a Sunday” - The Temperance Movement and Prohibition

    • Prohibition: The act of forbidding the production, sale, or consumption of alcoholic beverages by law. Largely influenced by Protestant church moral beliefs. Economic arguments were also used.

    • Prohibition Movements in Canada: Similar to the US, influenced by British and American examples, largely a protestant movement. The Dominion Alliance for the Total Suppression of the Liquor Traffic, and the Women's Christian Temperance Union were 2 major organizations. Women's roles were prominent, linked to the suffrage movement.

    • The Politics of Prohibition: Scott Act and Local Option were debated. Reformers (Liberals) generally favored the movement. The 1898 referendum saw close results with Quebec strongly opposing prohibition; the Wilfrid Laurier Government didn't act. WWI saw significant prohibition movements, but Quebec did not join in, and only PEI maintained these laws through 1948. The federal government stopped the manufacture and importation of liquor in March 1918.

    Part 3 - "Every day's a Sunday” - The Temperance Movement and Prohibition (American Experience), Lack of Success

    • American Experience: Prohibitionists successfully passed the 18th amendment in 1920, making alcohol illegal in the US. It remained illegal until 1933 when the 21st amendment repealed the 18th. Ken Burns, in a PBS documentary, noted that the initial economic effects of Prohibition on businesses were largely negative, eliminating jobs at breweries, distilleries, saloons, and related trades. The solution was to create a black market.

    Article: Buzzkillers

    • LCBO: Created in 1927 during Prohibition in the US to regulate the sale of alcohol in Ontario, Canada. First day of operations was June 1st, 1927. Aimed to regulate alcohol sales and reduce public intoxication, generate government revenue, and regulate alcohol sales.
    • Brand growth: The global market is controlled by a small number of multinational enterprises (MNEs). The largest, AB InBev, had annual revenue of $46.6 billion in 2017. The growth of alcohol companies was driven by heritage brands and familiar names. Technology was also a factor.

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    Description

    Explore the historical significance and impact of gin and rum on society and economy. From the gin craze in the 16th century to rum's role in the Caribbean slave trade, this quiz dives into the intertwined history of these popular spirits. Test your knowledge on the development and cultural implications of these alcoholic beverages.

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