1. Which political system offers the most political stability?
A. Anarchy
B. Democracy
C. Dictatorship Correct
D. Oligarchy
Explanation
Dictatorship provides the most political stability because power is concentrated in one leader or a very small group with absolute authority. There are no elections, opposition parties, or power struggles that cause instability. Anarchy has no government at all, so it is completely unstable with constant chaos. Democracy is stable long-term but often has short-term instability from elections, protests, and policy changes. Oligarchy is ruled by a small elite, but power struggles among the elite can cause instability. Only dictatorship consistently delivers the highest level of short- to medium-term political stability.
2. What is a characteristic of a command economy?
A. Exchanges are mainly made by bartering.
B. Innovation is rewarded.
C. Prices are regulated by the market.
D. Labor is allocated by the state. Correct
Explanation
In a command (planned) economy, the government decides what is produced, how much, and who works where. Labor is allocated by the state through central planning. Bartering is typical of traditional economies, not command. Innovation is usually not rewarded because there is no profit motive. Prices are set by the government, not the market. Only D is correct.
3. Which policy commitments form is 'used to ensure a country meets specific and measurable conditions in order to complete a review'?
A. Quantitative performance criteria Correct
B. Indicative targets
C. Prior actions
D. Structural benchmarks
Explanation
Quantitative performance criteria (QPCs) are specific, measurable targets (e.g., keep inflation below 5%, budget deficit under 3% of GDP) that a country must meet to pass an IMF or World Bank review and get the next loan tranche. Indicative targets are looser goals for later in the program. Prior actions are reforms done before the program starts. Structural benchmarks are important policy steps but not always quantifiable. Only QPCs are the strict, measurable conditions tied directly to review completion.
4. Why does the World Bank have a AAA bond rating?
A. Its debt is backed by member countries. Correct
B. Its loans to developing countries are made at high interest rates.
C. It consistently avoids lending to high-risk countries.
D. It uses a standardized assessment of countries seeking a loan.
Explanation
The World Bank has a AAA rating because its bonds are backed by the callable capital of its rich member countries (especially the U.S., Japan, Germany, etc.). If the Bank ever had trouble paying, these countries would have to pay in extra money. It does NOT charge high interest (it lends at very low or zero interest to poor countries), it DOES lend to high-risk countries, and the assessment process is not what gives it the top rating. The guarantee from rich governments is the real reason.
5. How does the World Trade Organization (WTO) promote transparency among its member nations?
A. By coordinating trade negotiations with other nations with the WTO
B. By mandating that changes in trade policies be reported to member nations Correct
C. By allowing the other member nations to vote on a change in trade agreements
D. By requiring trade proposals to be submitted to the WTO for approval
Explanation
The WTO’s transparency rule requires every member to notify all other members whenever it changes trade policies (tariffs, subsidies, regulations). This notification system lets everyone see what others are doing. The WTO does not vote on individual policy changes, does not require proposals to be pre-approved, and does not coordinate negotiations—that happens in rounds. The key transparency tool is mandatory notification.