Deck 13: The United States in the World Economy

Question 1

Free trade agreements

A)have increased U.S. exports more than U.S. imports from free trade partners.
B)have limited benefits to the U.S.
C)have acted as substitutes for multilateral trade agreements.
D)have decreased in scope since the 1990s.

Answer 1

A

Question 2

Explain the importance of free trade agreements to the U.S.and how they benefit the U.S.economy.

Answer 2

The United States currently has free trade agreements in force with twenty countries grouped into three strategic geographical regions: the Middle East and North Africa,the Pacific Basin,and the Americas.Most agreements are with small countries that account for a small share of U.S.merchandise trade,but Canada,Mexico,and Korea are major exceptions.Free Trade Agreement countries account for around 47 percent of U.S.exports and approximately 34 percent of imports.Proponents of FTAs make the argument that U.S.markets are relatively more open than many foreign markets.Given the relative openness of the U.S.market,bilateral and plurilateral FTAs that help open foreign markets promote U.S.exports relatively more than U.S.imports instead of causing a proportional increase in both.Consequently,U.S.exports to FTA partners are a larger share of total merchandise trade than U.S.imports from FTA partners.This supports the idea that FTAs have been relatively good for the U.S.insofar as they have helped to open foreign markets.

Question 3

Why is the U.S.putting less emphasis on multilateral and more emphasis on bilateral trade agreements?

Answer 3

Tariffs are low and quotas have mostly been eliminated; the Cold War is over; remaining trade issues are tough; more participants make multilateral negotiations difficult; bilateral can be testing ground for new arrangements.

Question 4

U)S.opponents of NAFTA argued that the agreement will hurt the United States.In their view,NAFTA's greatest harm is in its

A)harmonization of labor policies.
B)harmonization of environmental policies.
C)harmonization of the use of pesticides and herbicides.
D)job destruction and downward pressure on U.S. wages.

Question 5

Twenty-four years before CUSTA,another agreement between the same countries covered trade in

A)textiles.
B)steel.
C)autos.
D)agriculture.

Question 6

Which of the following is a correct statement about U.S.manufacturing?

A)U)S. manufacturing output is generally declining.
B)U)S. manufacturing employment has declined sharply since the 1970s.
C)Most relocation of U.S. manufacturing has been from southern states to northern states.
D)Productivity in U.S. manufacturing has fallen as employment has decreased.

Question 7

Under NAFTA,environmental standards are

A)harmonized around U.S. rules.
B)harmonized around Canadian rules.
C)harmonized around a combination of the rules in all three countries.
D)not harmonized.

Question 8

Purchasing power parity (PPP)measurements of income are a way to make international comparisons by correcting for national differences in

A)unemployment.
B)inflation.
C)prices of goods and services.
D)economic growth.

Question 9

One area of labor issues that the labor side agreement to NAFTA does not open to foreign consultation or investigation is

A)the use of child labor.
B)worker exposure to unsafe conditions.
C)minimum wages.
D)workers' rights to organize.

Question 10

Which of the following countries is NOT involved in a free trade agreement with the U.S.?

A)China
B)Australia
C)Jordan
D)Guatemala

Question 11

The main area of economic activity that Canada chose not to open to free trade is

A)agriculture.
B)lumber.
C)cultural industries.
D)financial services.

Question 12

Major trading partners with the United States have not changed significantly over the last several decade with the exception of trade with

A)the United Kingdom.
B)Mexico.
C)China.
D)Canada.

Question 13

The ratio of trade to GDP for the U.S.has roughly tripled since the 1960s.

Question 14

U.S.trade with the rest of the world is a larger share of GDP than is typical for developed countries.

Question 15

Which of the following is most important in determining the number of jobs in an economy?

A)Macroeconomic policies
B)Trade policies
C)Urban policies
D)Tax policies

Question 16

Which of the following is NOT a true statement about U.S.exports?

A)Services have become more important part of exports.
B)The U.S. is the world's second-largest exporter of goods.
C)Three-fourths of U.S. merchandise exports are manufactured goods.
D)The manufacturing sector in the U.S. is no longer significant.

Question 17

U.S manufacturing exports have declined since the 1990s.

Question 18

Describe the trends in U.S.manufacturing employment and U.S.manufacturing output over the last 40 years.What factors have contributed to these?

Question 19

The U.S.has free trade agreements only with Mexico and Canada.

Question 20

The single most important reason for Canada's seeking a free trade agreement with the United States was to

A)ensure its access to the U.S. market.
B)ensure its ability to join NAFTA.
C)harmonize its environmental laws with the United States.
D)avoid international outsourcing in low wage countries.

Question 21

One reason why most economists forecast that the effects of NAFTA on the U.S.economy would be small is because

A)NAFTA does not bring down tariffs far enough.
B)the Mexican economy is small relative to the U.S. economy.
C)NAFTA trade opening provisions only cover a handful of sectors.
D)Mexico was not expected to live up to its obligations under the agreement.

Question 22

What lessons did Mexico's policy makers learn from the 1980s debt crisis? What reforms did President Salinas pursue? What were his main goals?

Question 23

What is the main problem with rules of origin?

Question 24

A slowing U.S.economy and increased enforcement of immigration laws will reduce ________ factors for Mexican immigration to the United States.

A)demand growth
B)demand pull
C)supply push
D)supply growth

Question 25

When did NAFTA go into effect?

Question 26

Even though Mexico is a developing country,the NAFTA market is very rich.

Question 27

What type of economic policy did Mexico follow from the end of World War II until the 1980s? Describe the three-stage strategy that supporters of this policy emphasized.What was the outcome of these policies for Mexico's manufacturing sector?

Question 28

Why are trade agreements between the U.S.and Mexico more controversial than trade agreements between the U.S.and Canada?

Question 29

What two trends was Canada trying to address in negotiating CUSTA?

Question 30

Explain what a purchasing power parity adjustment is and why it is necessary.Should it always be used?

Question 31

Most Mexican workers can increase their wages if they migrate to the United States,a demand-pull factor for migration.

Question 32

In Canada,there are no preferences given to Canadian TV networks and programming over U.S.networks and programming.

Question 33

Free trade agreements between the United States and Canada started with the auto industry in the year 1965.

Question 34

In negotiating NAFTA,what two side agreements were reached?

Question 35

One problem with NAFTA that is NOT shared by some other trade blocs is that

A)national environmental laws differ greatly.
B)the countries are at very different stages of economic development.
C)the countries speak different languages.
D)the countries are not natural trading partners.

Question 36

Which of the following is a free trade agreement?

A)the Trans-Pacific Partnership (TPP)
B)the Transatlantic Trade and Investment Partnership (TTIP)
C)the Caribbean Basin Initiative (CBI)
D)the African Growth and Opportunity Act (AGOA)

Question 37

President Salinas of Mexico devised a strategy to restore Mexican growth by encouraging

A)large inflows of foreign capital.
B)large increases in domestic savings.
C)an expansion of import substitution industrialization policies.
D)more government ownership of industrial firms.

Question 38

Which of the following is NOT a reason Mexico and Canada wanted a free trade agreement with the United States?

A)Mexico wanted increased direct foreign investment.
B)Canada wanted to guarantee access to the U.S. market.
C)Mexico wanted the United States to lower its high barriers to Mexican products.
D)Mexico wanted to institutionalize its economic reforms.

Question 39

Few countries have a higher GDP per capita than the weighted average of Canada,Mexico and U.S.GDP.

Question 40

Preferential agreements

A)are the same as free trade agreements.
B)provide market access without demanding reciprocation.
C)are not recognized under WTO rules.
D)must be approved by the IMF.

Question 41

Which of the following is a true statement about U.S.job gains and losses under free trade agreements?

A)Whether jobs have been gained or lost, the size of these gains or losses is small relative to total U.S. job creation.
B)Free trade agreements have resulted in a significant loss of jobs in the U.S.
C)Free trade agreements have resulted in a significant gain in jobs in the U.S.
D)Free trade agreements have resulted in no change in jobs in the U.S.

Question 42

Which of the following is a preferential agreement?

A)the Trans-Pacific Partnership (TPP)
B)the Transatlantic Trade and Investment Partnership (TTIP)
C)the Caribbean Basin Initiative (CBI)
D)the Asia-Pacific Economic Cooperation (APEC)

Question 43

Under the NAFTA,countries must enforce their own labor standards.

Question 44

Explain the key principles of the labor and environmental side agreements to the NAFTA.

Question 45

The TPP incorporates labor standards directly rather than as a side agreement.

Question 46

The NAFTA would probably not have been ratified by Congress without labor and environmental side agreements.

Question 47

The Trans-Pacific Partnership (TPP)is a preferential agreement.

Question 48

Why is it difficult to estimate job gains or losses due to free trade agreements?

Question 49

What are bilateral investment treaties?

Question 50

What is the United States' primary trade promotion initiative with Africa?

Question 51

Under the side agreements to the NAFTA,

A)low environmental standards should not be used to attract trade or investment.
B)the U.S. sets environmental standards.
C)the U.S. enforces environmental standards in the rest of the free trade area.
D)environmental standards are not specifically discussed.

Question 52

What evidence is there as to job gains and losses in the U.S.due to free trade agreements?

Question 53

Explain the criticisms of labor and environmental clauses and how these are being addressed in the TPP.

Question 54

A preferential agreement requires that the other country also provide market access.

Question 55

Bilateral investment treaties are uncommon.

Question 56

What is the significant feature of a preferential arrangement?

Question 57

Estimates of U.S.job gains and losses due to free trade agreements

A)show no change in jobs.
B)show clear gains in the number of jobs.
C)show clear losses in the number of jobs.
D)show mixed results, leading to no clear conclusion.