Question 1

A country has a comparative advantage in production of a product if:&#10;A) It has a lower revenue.&#10;B) It has a higher revenue.&#10;C) It has a lower opportunity cost.&#10;D) It produces less.

Accepted Answer

A country has a comparative advantage in the production of a product if it has a lower opportunity cost for producing that product compared to other countries. This means it sacrifices less of other goods to produce it.

Question 2

What do the terms of trade measure?&#10;A) The volume of exports compared to the volume of imports.&#10;B) Export prices compared to import prices.&#10;C) The value of your currency against other currencies.&#10;D) The government regulations to allow trade in a country.

Accepted Answer

The terms of trade measure the ratio of export prices to import prices, indicating how much import goods a country can purchase through its exports.

Question 3

Common arguments against globalization include:&#10;A) Greater inequality&#10;B) Boost world economic growth&#10;C) Shares technology&#10;D) Greater access for consumers to wider range of products

Accepted Answer

Arguments against globalization often focus on its potential to increase inequality among different socio-economic groups, as it can disproportionately benefit wealthier nations or individuals, leaving behind poorer communities.

Question 4

Which of the following is not a reason why globalization has increased?&#10;A) Better communications&#10;B) Better ICT&#10;C) More protectionism&#10;D) Developments in transportation

Accepted Answer

Globalization has increased due to advancements in communications, information and communication technology (ICT), and transportation, which have made it easier for countries to trade and interact. Protectionism, on the other hand, refers to economic policies that restrict imports from other countries, which can actually hinder the process of globalization by limiting international trade and exchange.

Question 5

Free trade is based on:&#10;A) Comparative advantage&#10;B) Comparative disadvantage&#10;C) Absolution&#10;D) Absolute advantage

Accepted Answer

Free trade is based on the principle of comparative advantage, where countries specialize in producing goods they can produce more efficiently relative to other goods, leading to increased overall economic welfare.

Question 6

When does free trade occur?&#10;A) It occurs when there are no transportation costs.&#10;B) It occurs when a government pays for the imports.&#10;C) It occurs when there are barriers to entry.&#10;D) It occurs when there are no barriers to trade.

Accepted Answer

Free trade occurs when there are no barriers to trade, such as tariffs, quotas, or other restrictions, allowing goods and services to move freely between countries.

Question 7

The World Trade Organization aims to make all barriers to trade equal.

Accepted Answer

The World Trade Organization (WTO) aims to reduce or eliminate barriers to trade, not to make them equal. Its goal is to ensure that trade flows as smoothly, predictably, and freely as possible.

Question 8

In a customs union this occurs: member states have free trade between each other and a common external tariff with non-member countries

Accepted Answer

In a customs union, member states indeed have free trade among themselves and agree to apply a common external tariff to goods imported from non-member countries.

Question 9

The exchange rate is the value of one ___________ in terms of another

Accepted Answer

The answer of The exchange rate is the value of...

Question 10

Depreciation occurs when the value of a currency rises..

Accepted Answer

Depreciation occurs when the value of a currency falls relative to another currency, not when it rises.

Question 11

Which of the following influences the level of exports from a country?&#10;A) The level of income abroad&#10;B) Customer preferences&#10;C) The exchange rate&#10;D) All of the above

Accepted Answer

The answer of Which of the following influences the level...

Question 12

PPP stands for Purchasing ______________ _____________

Accepted Answer

The answer of PPP stands for Purchasing ______________ _____________...

Question 13

The single European currency is known as the _________

Accepted Answer

The answer of The single European currency is known as...

Deck 24: Influences on Aggregate Demand: International Trade, Globalization, and Exchange Rates