Deck 42: The United States and the Global Economy

Question 1

As a percentage of GDP (total output),U.S.exports are:

A) about 20 percent.
B) lower than in some other industrial countries,including Germany and Canada.
C) less today than they were in the 1970s.
D) the highest in the world.

Answer 1

B

Question 2

Which of the following statements is correct?

A) The United States' combined exports and imports are smaller absolutely,but larger as a percentage of GDP,than other nations'.
B) A number of other nations have exports and imports that are absolutely larger than those of the United States.
C) The United States' combined exports and imports are absolutely larger than any other nation's,but the exports and imports of many other nations are a larger percentage of their GDPs.
D) The United States' combined exports and imports are larger absolutely and as a percentage of GDP than any other nation's.

Answer 2

C

Question 3

Which of the following statements is correct?

A) U.S.exports and imports have been decreasing as a percentage of U.S.GDP,but the U.S.share of total world trade has been increasing.
B) U.S.exports and imports have been decreasing as a percentage of U.S.GDP and the U.S.share of total world trade has been declining.
C) U.S.exports and imports have been expanding as a percentage of U.S.GDP and the U.S.share of total world trade has been increasing.
D) U.S.exports and imports have been expanding as a percentage of U.S.GDP,but the U.S.share of total world trade has been declining.

Answer 3

D

Question 4

The business-to-business (B2B)retrieval of prices of foreign resources via the Internet best illustrates a(n):

A) trade flow.
B) capital and labor flow.
C) financial flow.
D) information flow.

Question 5

Approximately half of the U.S.international trade is with:

A) the nations of Eastern Europe.
B) the developing countries of Africa,Asia,and Latin America.
C) other industrialized nations,for example,Canada,Japan,and the countries of the European Union.
D) China.

Question 6

The purchase by an American firm of the right to produce a prescription drug patented in Germany best illustrates a:

A) trade flow.
B) capital flow.
C) goods and services flow.
D) technology flow.

Question 7

The spending by Americans while traveling in Europe best illustrates a:

A) trade flow.
B) labor flow.
C) financial flow.
D) technology flow.

Question 8

In recent years,the United States has:

A) exported more goods and services than it has imported.
B) imported more goods and services than it has exported.
C) realized an approximate balance in its imports and exports.
D) experienced a falling absolute dollar amount of imports and a rising absolute dollar amount of exports.

Question 9

The physical export of motorcycles from the United States to Mexico best illustrates a:

A) trade flow.
B) resource flow.
C) financial flow.
D) technology flow.

Question 10

In terms of absolute volume of exports (as of 2011),the world's leading trading nation is:

A) Germany.
B) Japan.
C) the United States.
D) China.

Question 11

Trade flows measure the:

A) movement of resources between nations.
B) exports and imports of goods and services.
C) transfer of information from one nation to another.
D) transfer of money between nations.

Question 12

The emigration of software designers from India to the United States best illustrates a(n):

A) trade flow.
B) resource flow.
C) financial flow.
D) information flow.

Question 13

Which of the following is a true statement?

A) The United States has the world's largest ratio of exports to GDP.
B) The United States is almost entirely dependent on other countries in obtaining items such as silk,nickel,tin,and coffee.
C) U.S.exports to China greatly exceed U.S.imports from China.
D) Since 1947 the United States has accounted for a rising percentage of total world trade.

Question 14

Since 1975,U.S.exports and imports have:

A) grown absolutely but remained a constant proportion of GDP.
B) grown absolutely but declined as a proportion of GDP.
C) grown both absolutely and as a percentage of GDP.
D) declined both absolutely and as a percentage of GDP.

Question 15

The United States' exports are approximately what percentage of U.S.GDP?

A) 3-4 percent.
B) 20-25 percent.
C) 14-17 percent.
D) 30-34 percent.

Question 16

The average U.S.tariff rate on imported goods is about:

A) 5 percent.
B) 12 percent.
C) 37 percent.
D) 50 percent.

Question 17

The building of a production plant in China by an American firm best illustrates a(n):

A) trade flow.
B) resource flow.
C) financial flow.
D) information flow.

Question 18

The United States' most important trading partner in terms of dollar volume is:

A) Mexico.
B) Canada.
C) Germany.
D) China.

Question 19

The physical import of DVD players to the United States from Japan best illustrates a:

A) resource flow.
B) financial flow.
C) trade flow.
D) technology flow.

Question 20

Foreign currency exchanges and interest payments on foreign debt are examples of:

A) financial flows.
B) trade flows.
C) capital flows.
D) technology flows.

Question 21

The primary benefits of international trade include:

A) the more efficient use of world resources and higher living standards.
B) greater stability of domestic output,employment,and the price level.
C) diminished dependence on foreign supplies of goods and materials.
D) greater economic security for our domestic producers.

Question 22

Answer the question on the basis of the following production possibilities tables for countries Alpha and Beta: Alpha Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline{ \mathrm { D } } \\ \text { Product } X & 3 & 2 & 1 & 0 \\ \text { Product } Y & 0 & 4 & 8 & 12 \end{array}$

Beta Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline { \mathrm { D } } \\\text { Product } X &6&4&2&0\\\text { Product } Y & 0 & 4 & 8 & 12 \end{array}$ Refer to the tables.The domestic opportunity cost of one unit of X in Beta is:

A) 2 units of Y.
B) 4 units of Y.
C) 1 unit of Y.
D) 3 units of Y.

Question 23

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

$\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}$

Scandia Production Possibilities:

$\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array}$ Refer to the given data.Which of the following would be feasible terms of trade between Landia and Scandia?

A) 1 fish for 4 chips.
B) 1 fish for 6 chips.
C) 1 fish for 7 chips.
D) 2 fish for 4 chips.

Question 24

According to the concept of comparative advantage,a good should be produced in that nation where:

A) its domestic opportunity cost is greatest.
B) money is used as a medium of exchange.
C) its domestic opportunity cost is least.
D) the terms of trade are maximized.

Question 25

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

$\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}$

Scandia Production Possibilities:

$\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array}$ Refer to the given data.On the basis of the production possibilities data shown:

A) Landia has a comparative advantage in chips while Scandia has a comparative advantage in fish.
B) Landia has a comparative advantage in fish while Scandia has a comparative advantage in chips.
C) both Landia and Scandia have a comparative advantage in fish.
D) both Landia and Scandia have a comparative advantage in chips.

Question 26

Which of the following has not been a facilitating factor in world trade?

A) Dramatic improvements in communications technology.
B) General declines in tariffs.
C) Import quotas.
D) Improvements in transportation technology.

Question 27

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

$\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}$

Scandia Production Possibilities:

$\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array}$ Refer to the given data.If Landia and Scandia fully specialize based on comparative advantage,their aggregate output will be:

A) 48 chips and 8 fish.
B) 40 chips and 16 fish.
C) 36 chips and 10 fish.
D) 42 chips and 12 fish.

Question 28

U.S.tariffs on imported goods:

A) have steadily increased since the 1970s.
B) have declined since the 1940s and are currently around 5 percent.
C) are currently around 20 percent.
D) are illegal.

Question 29

Answer the question on the basis of the following production possibilities tables for countries Alpha and Beta: Alpha Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline{ \mathrm { D } } \\ \text { Product } X & 3 & 2 & 1 & 0 \\ \text { Product } Y & 0 & 4 & 8 & 12 \end{array}$

Beta Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline { \mathrm { D } } \\\text { Product } X &6&4&2&0\\\text { Product } Y & 0 & 4 & 8 & 12 \end{array}$ Refer to the given tables.The domestic opportunity cost of one unit of X in Alpha is:

A) 2 units of Y.
B) 4 units of Y.
C) 1 unit of Y.
D) 3 units of Y.

Question 30

The world's largest exporter (measured in total dollar volume,2011)is:

A) the United States.
B) China.
C) Japan.
D) Germany.

Question 31

The largest goods exports of the United States (in dollar volume,2012)are:

A) energy products,agricultural products,metals,and chemicals.
B) petroleum,automobiles,clothing,and household appliances.
C) iron and steel,clothing,beef,and sugar.
D) aircraft,glassware,television sets,and furniture.

Question 32

The largest goods imports of the United States (in dollar volume)are:

A) chemicals,consumer durables,aircraft,and grain.
B) petroleum,household appliances,metals,and apparel.
C) iron and steel,clothing,electronic equipment,and sugar.
D) aircraft,paper products,television sets,and furniture.

Question 33

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

$\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}$

Scandia Production Possibilities:

$\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array}$ Refer to the given data.Assume that before specialization and trade Landia was producing combination C and Scandia was producing combination B.If these two nations now specialize completely based on comparative advantage,the total gains from specialization and trade would be:

A) 8 fish and 2 chips.
B) 10 fish and 4 chips.
C) 0 fish and 8 chips.
D) 4 fish and 6 chips.

Question 34

In terms of absolute dollar volume,the world's leading export nations are:

A) Germany,the United States,and China.
B) the United States,Japan,and Canada.
C) Japan,China,and the United Kingdom.
D) Japan,the United States,and France.

Question 35

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

$\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}$

Scandia Production Possibilities:

$\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array}$ Refer to the given data.The domestic opportunity cost of 1 fish in Scandia is:

A) 12 chips.
B) 4 chips.
C) 3 chips.
D) 1 chip.

Question 36

Answer the question on the basis of the following production possibilities data for Landia and Scandia: Landia Production Possibilities:

$\begin{array} { l c c c c c } & \underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish }&8&6&4&2&0\\ \text { Chips } & 0 & 10 & 20 & 30 & 40 \end{array}$

Scandia Production Possibilities:

$\begin{array} { c c c c c } &\underline { A } & \underline { B } & \underline { C } & \underline { D } & \underline { E } \\\text { Fish } &16 & 12 & 8 & 4 & 0 \\\text { Chips } &0 & 12 & 24 & 36 & 48 \end{array}$ Refer to the given data.The domestic opportunity cost of 1 fish in Landia is:

A) 10 chips.
B) 2 chips.
C) 4 chips.
D) 5 chips.

Question 37

A trade deficit occurs for a nation when it:

A) exports more than it imports.
B) imports more than it exports.
C) receives more foreign currency than it sends out in domestic currency.
D) loans out U.S.dollars to foreign buyers of domestically produced goods.

Question 38

Which of the following countries has recently emerged as one of the world's top trading nations in terms of total trade volume?

A) Chile.
B) India.
C) Ireland.
D) China.

Question 39

Which of the following concepts provides the basic rationale for international trade?

A) Increasing opportunity costs.
B) Consumer sovereignty.
C) Comparative advantage.
D) The law of supply.

Question 40

The terms of trade:

A) show the ratio at which nations will exchange two goods.
B) show how the gains from trade can be equally shared.
C) show the value of one nation's currency in terms of another nation's currency.
D) compare the volume of a nation's exports and imports.

Question 41

If the equilibrium exchange rate changes so that it takes more dollars to buy a British pound,then:

A) the dollar has appreciated in value.
B) Americans will import more British goods.
C) the British will buy fewer U.S.goods.
D) the dollar has depreciated in value.

Question 42

If the Japanese yen appreciates relative to the Swedish krona,then the krona:

A) will be more expensive to the Japanese.
B) may either appreciate or depreciate relative to the yen.
C) will appreciate relative to the yen.
D) will depreciate relative to the yen.

Question 43

Exchange rates are particularly important because:

A) they present a challenge to financial speculators.
B) they link the price levels of various nations to one another.
C) they represent exceptions to the laws of demand and supply.
D) equilibrium is never achieved in such markets.

Question 44

If the exchange rate changes from $1 = 2 euros to $1 = 3 euros:

A) the dollar has appreciated in value.
B) the dollar has depreciated in value.
C) the dollar has neither appreciated nor depreciated,but the euro has appreciated in value.
D) U.S.exports to Europe will increase.

Question 45

If yesterday $1 would buy 800 South Korean won,but today $1 will only buy 790 won;the:

A) dollar has appreciated in value.
B) dollar has depreciated in value.
C) demand for dollars in the foreign exchange market has increased relative to the supply of won.
D) won price of dollars has gone up.

Question 46

A change in the dollar price of yen from $1 = 100 yen to $1 = 50 yen will:

A) make U.S.goods more expensive to the Japanese.
B) make Japanese goods less expensive to Americans.
C) increase U.S.exports and depress Japanese exports.
D) increase Japanese exports and depress U.S.exports.

Question 47

Answer the question on the basis of the following table,which indicates the dollar price of luta,the currency used in the hypothetical economy of Luteland: $\begin{array}{c}\begin{array}{c}\underline{\text {Quantity of Luta}}\\\underline{\text {Demanded (Billions)}}\\200 \\400 \\600 \\800\end{array}\begin{array}{c}\underline{\text {Dollar Price}}\\\underline{\text {of Luta }}\\ \$ 10 \\8 \\6 \\2\end{array}\begin{array}{c}\underline{\text {Quantity of Luta}}\\\underline{\text {Supplied (Billions)}}\\650 \\400 \\200 \\150\end{array}\end{array}$
Refer to the table.The equilibrium dollar price of luta is:

A) $10.
B) $8.
C) $6.
D) $2.

Question 48

Appreciation of the Mexican peso will:

A) make Mexico's exports and imports both more expensive.
B) make Mexico's exports more expensive and its imports less expensive.
C) make Mexico's exports less expensive and its imports more expensive.
D) increase Mexican exports.

Question 49

Answer the question on the basis of the following production possibilities tables for countries Alpha and Beta: Alpha Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline{ \mathrm { D } } \\ \text { Product } X & 3 & 2 & 1 & 0 \\ \text { Product } Y & 0 & 4 & 8 & 12 \end{array}$

Beta Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline { \mathrm { D } } \\\text { Product } X &6&4&2&0\\\text { Product } Y & 0 & 4 & 8 & 12 \end{array}$ Refer to the tables.Assume that before specialization both nations chose to produce alternative B.The gains from specialization and trade would be:

A) 2 units of X and 2 units of Y.
B) 4 units of X.
C) 4 units of Y.
D) 6 units of X and 3 units of Y.

Question 50

If incomes rise rapidly in the United States and U.S.preferences for foreign goods strengthen,we would expect:

A) the dollar to appreciate in value.
B) the dollar to depreciate in value.
C) the dollar price of foreign monies to decrease.
D) U.S.exports to increase.

Question 51

Mexican imports of U.S.goods:

A) create a supply of pesos.
B) create a supply of dollars.
C) reduce the demand for dollars.
D) have no effect on the peso-dollar exchange rate.

Question 52

Depreciation of the dollar will:

A) increase the prices of U.S.imports but decrease the prices of U.S.exports.
B) decrease the prices of U.S.imports but increase the prices of U.S.exports.
C) increase the prices of both U.S.imports and exports.
D) decrease the prices of both U.S.imports and exports.

Question 53

Answer the question on the basis of the following production possibilities tables for countries Alpha and Beta: Alpha Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline{ \mathrm { D } } \\ \text { Product } X & 3 & 2 & 1 & 0 \\ \text { Product } Y & 0 & 4 & 8 & 12 \end{array}$

Beta Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline { \mathrm { D } } \\\text { Product } X &6&4&2&0\\\text { Product } Y & 0 & 4 & 8 & 12 \end{array}$ Refer to the tables.Which one of the following terms of trade would be acceptable to both countries?

A) 1 unit of X for 3 units of Y.
B) 1 unit of X for 5 units of Y.
C) 1 unit of X for 12 units of Y.
D) 1 unit of X for 1 unit of Y.

Question 54

Answer the question on the basis of the following table,which indicates the dollar price of luta,the currency used in the hypothetical economy of Luteland: $\begin{array}{c}\begin{array}{c}\underline{\text {Quantity of Luta}}\\\underline{\text {Demanded (Billions)}}\\200 \\400 \\600 \\800\end{array}\begin{array}{c}\underline{\text {Dollar Price}}\\\underline{\text {of Luta }}\\ \$ 10 \\8 \\6 \\2\end{array}\begin{array}{c}\underline{\text {Quantity of Luta}}\\\underline{\text {Supplied (Billions)}}\\650 \\400 \\200 \\150\end{array}\end{array}$
Refer to the table.Suppose that the United States imports more products from Luteland than before.All else equal,the dollar price of luta will:

A) rise and the dollar will depreciate.
B) fall and the dollar will depreciate.
C) rise and the dollar will appreciate.
D) fall and the dollar will appreciate.

Question 55

All else equal,depreciation of the Mexican peso relative to the U.S.dollar would make a trip by:

A) an American to Mexico more expensive.
B) a Mexican to the United States less expensive.
C) an American to Mexico less expensive.
D) an Australian to the United States more expensive.

Question 56

Answer the question on the basis of the following production possibilities tables for countries Alpha and Beta: Alpha Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline{ \mathrm { D } } \\ \text { Product } X & 3 & 2 & 1 & 0 \\ \text { Product } Y & 0 & 4 & 8 & 12 \end{array}$

Beta Production Possibilities:

$\begin{array} { l c c c c } & \underline { \mathrm { A } } & \underline { \mathrm { B } } & \underline { \mathrm { C } } & \underline { \mathrm { D } } \\\text { Product } X &6&4&2&0\\\text { Product } Y & 0 & 4 & 8 & 12 \end{array}$ Refer to the tables.According to the concept of comparative advantage:

A) Alpha should specialize in X;Beta,in Y.
B) Beta should produce some X and some Y.
C) Alpha should produce some X and some Y.
D) Beta should specialize in X;Alpha,in Y.

Question 57

Other things equal,Canadian imports of U.S.goods:

A) create a supply of Canadian dollars in the foreign exchange market.
B) create a supply of U.S.dollars in the foreign exchange market.
C) reduce the demand for U.S.dollars.
D) have no effect on the U.S.dollar price of Canadian dollars.

Question 58

All else equal,U.S.imports from Germany create a:

A) demand for European euros.
B) supply of European euros.
C) demand for American dollars.
D) surplus of European euros.

Question 59

Answer the question on the basis of the following table,which indicates the dollar price of luta,the currency used in the hypothetical economy of Luteland: $\begin{array}{c}\begin{array}{c}\underline{\text {Quantity of Luta}}\\\underline{\text {Demanded (Billions)}}\\200 \\400 \\600 \\800\end{array}\begin{array}{c}\underline{\text {Dollar Price}}\\\underline{\text {of Luta }}\\ \$ 10 \\8 \\6 \\2\end{array}\begin{array}{c}\underline{\text {Quantity of Luta}}\\\underline{\text {Supplied (Billions)}}\\650 \\400 \\200 \\150\end{array}\end{array}$
Refer to the table.The exchange rate in this market is:

A) 8 luta for one dollar.
B) 0.60 luta for one dollar.
C) 6 luta for one dollar.
D) 0.125 luta for one dollar.

Question 60

Renee earns $500 per hour in the courtroom as a trial lawyer;she can type up her legal documents at a rate of 80 words per minute.Christopher has no training as a trial lawyer but can type legal documents at a rate of 50 words per minute for a wage of $30 per hour.Based on the theory of comparative advantage:

A) Renee should do all of her own typing.
B) Renee should specialize in courtroom trials and hire Christopher to type her legal documents.
C) Renee should only hire Christopher if he can raise his typing speed to faster than 80 words per minute.
D) Comparative advantage doesn't apply to this case because it does not involve international trade.

Question 61

The Reciprocal Trade Agreements Act:

A) exempted American exporters from the Sherman Antitrust Act.
B) provided technological assistance to developing countries.
C) brought about considerable reductions in American trade barriers.
D) eliminated American subsidies to agricultural exports.

Question 62

Import quotas are:

A) maximum limits on the quantity or total value of specific products imported to a nation.
B) excise taxes or duties placed on imported products.
C) licensing requirements,unreasonable quality standards,and the like designed to impede imports.
D) government payments to domestic producers to reduce the world prices of exported goods.

Question 63

A nation's true gain from international trade is:

A) increased employment in export industries.
B) an overall increase in output obtained through specialization and exchange.
C) added technological knowledge.
D) the tariff revenue that goes to the national treasury.

Question 64

An important outcome of the Uruguay Round of GATT negotiations was:

A) a worldwide reduction of agricultural export subsidies.
B) establishment of the European Union.
C) the elimination of all tariffs and quotas worldwide.
D) establishment of the World Bank.

Question 65

Nontariff barriers are:

A) maximum limits on the quantity or total value of specific products imported to a nation.
B) excise taxes or duties placed on imported products.
C) licensing requirements,unreasonable quality standards,and the like designed to impede imports.
D) government payments to domestic producers to reduce the world prices of exported goods.

Question 66

The World Trade Organization (WTO):

A) sets tariffs to balance international trade among nations.
B) is the successor to NAFTA.
C) hears and rules on trade disputes between nations.
D) sets exchange rates to balance international trade among nations.

Question 67

American critics of the WTO argue that free international trade and investment will:

A) reduce U.S.imports.
B) reduce employment in developing nations.
C) undermine environmental and labor protections in the United States.
D) increase immigration from low-income to high-income nations.

Question 68

The World Trade Organization:

A) is also known as the International Monetary Fund (IMF).
B) is also known as NAFTA.
C) was established to resolve disputes arising under world trade rules.
D) enhances world trade by providing interest rate subsidies to foreign borrowers who buy exports on credit.

Question 69

The General Agreement on Tariffs and Trade (GATT)is based on the principle of:

A) establishing a single international currency.
B) tariff reductions through multilateral negotiations.
C) converting tariffs to import quotas.
D) establishing common environmental and labor standards for all member nations.

Question 70

Tariffs and quotas:

A) benefit producers of protected products but harm domestic consumers.
B) benefit both producers of protected products and domestic consumers.
C) benefit neither producers of protected products nor domestic consumers.
D) benefit domestic consumers at the expense of producers of protected products.

Question 71

Proponents of the WTO argue that free international trade and investment will:

A) reduce economic growth rates in the industrial economies.
B) reduce employment in developing nations.
C) eliminate world poverty.
D) increase living standards of all trading nations.

Question 72

All else equal,U.S.exports to Germany create a:

A) demand for European euros.
B) supply of European euros.
C) supply of American dollars.
D) shortage of European euros.

Question 73

The "most-favored-nation" clause of reciprocal trade agreements:

A) outlaws tariffs on products for which an exporting nation has a comparative advantage.
B) singles out a particular nation for exemption from an import quota.
C) means that any tariff reductions the United States negotiates with a specific nation will automatically apply to many other nations.
D) confers special trade privileges to nations in which the United States has military bases.

Question 74

If the dollar price of one yen is $.04,a Japanese good priced at 560 yen would cost an American:

A) $22.40.
B) $2,240.
C) $14,000.
D) $2.40.

Question 75

The World Trade Organization (WTO):

A) sets tariffs to balance international trade among nations.
B) is the successor to GATT.
C) is better known as the European Union.
D) sets exchange rates to balance international trade among nations.

Question 76

Export subsidies are:

A) maximum limits on the quantity or total value of specific products imported to a nation.
B) excise taxes or duties placed on imported products.
C) licensing requirements,unreasonable quality standards,and the like designed to impede imports.
D) government payments to domestic producers to enable them to charge lower prices and sell more goods in world markets.

Question 77

The Uruguay Round of GATT negotiations completed in late 1993:

A) established a free trade zone between the United States and Mexico.
B) made the Russian ruble convertible into other currencies.
C) created the European Union (EU).
D) created international protections for intellectual property such as patents,copyrights,and trademarks.

Question 78

The latest,ongoing international round of trade negotiations is called the:

A) Bangkok Round.
B) Doha Round.
C) Seattle Round.
D) Stockholm Round.

Question 79

Protective tariffs are:

A) maximum limits on the quantity or total value of specific products imported to a nation.
B) excise taxes or duties placed on imported products.
C) licensing requirements,unreasonable quality standards,and the like designed to impede imports.
D) government payments to domestic producers to reduce the world prices of exported goods.

Question 80

The Smoot-Hawley Act:

A) bound the world's nations to a gradual process of tariff reduction.
B) established very high tariffs on goods imported to the United States.
C) exempted American exporters from the Sherman Antitrust Act.
D) established the reciprocal trade agreements program.