Deck 1: The International Economy and Globalization

Question 1

Human rights activists contend that this organization supports governments that permit sweatshops:

A) The International Organization for Standardization
B) The International Monetary Fund
C) The World Health Organization
D) All of these

Answer 1

B

Question 2

A primary reason why nations conduct international trade is because:

A) Some nations prefer to produce one thing while others produce other things
B) Resources are not equally distributed among all trading nations
C) Trade enhances opportunities to accumulate profits
D) Interest rates are not identical in all trading nations

Answer 2

B

Question 3

Open economies have more:

A) competition
B) firm turnover
C) new firms entering the market
D) all of these

Answer 3

D

Question 4

With globalization and import competition,U.S.prices have generally:

A) increased
B) decreased
C) remained stable
D) all of these at various times

Question 5

Economists have generally found that economic growth rates have a close relation to:

A) openness to trade
B) education
C) communications infrastructure
D) all of these

Question 6

International trade forces domestic firms to become more competitive in terms of:

A) The introduction of new products
B) Product design and quality
C) Product price
D) All of the above

Question 7

International trade benefits:

A) all workers
B) most workers
C) many workers
D) None of these is correct

Question 8

A main advantage of specialization results from:

A) Economies of large-scale production
B) The specializing country behaving as a monopoly
C) Smaller production runs resulting in lower unit costs
D) High wages paid to foreign workers

Question 9

For a nation to maximize its productivity in a global economy:

A) Only imports are necessary
B) Only exports are necessary
C) Both imports and exports are necessary
D) Neither imports nor exports are necessary

Question 10

A firm's ____,relative to that of other firms,is generally regarded as the most important determinant of competitiveness.

A) Income level
B) Tastes and preferences
C) Governmental regulation
D) Productivity

Question 11

The movement to free international trade is most likely to generate short-term unemployment in which industries?

A) Industries in which there are neither imports nor exports
B) Import-competing industries
C) Industries that sell to domestic and foreign buyers
D) Industries that sell to only foreign buyers

Question 12

International trade is based on the idea that:

A) Exports should exceed imports
B) Imports should exceed exports
C) Resources are more mobile internationally than are goods
D) Resources are less mobile internationally than are goods

Question 13

Most of the world's population now lives in countries that are:

A) integrated into world markets
B) becoming integrated into world markets
C) near poverty
D) a and b

Question 14

If a nation has an open economy,it means that the nation:

A) Allows private ownership of capital
B) Has flexible exchange rates
C) Has fixed exchange rates
D) Conducts trade with other countries

Question 15

Free traders maintain that an open economy is advantageous in that it provides all of the following except:

A) Increased competition for world producers
B) A wider selection of products for consumers
C) The utilization of the most efficient production methods
D) Relatively high wage levels for all domestic workers

Question 16

____ is the ability of a firm/industry,under free and fair market conditions,to design,produce,and market goods and services that are better and/or cheaper than those of other firms/industries.

A) Competitiveness
B) Protectionism
C) Comparative advantage
D) Absolute advantage

Question 17

Regarding the applicability of free trade to cigarettes,it is correct to say:

A) the rules of free trade apply to cigarettes
B) the rules of free trade should not apply to cigarettes
C) a and b are the topic of current debate
D) ​there are special rules applying to cigarettes world-wide

Question 18

International trade in goods and services is sometimes used as a substitute for all of the following except:

A) International movements of capital
B) International movements of labor
C) Domestic production of the same goods and services
D) Domestic production of different goods and services

Question 19

Increased foreign competition tends to:

A) Intensify inflationary pressures at home
B) Induce falling output per worker-hour for domestic workers
C) Place constraints on the wages of domestic workers
D) Increase profits of domestic import-competing industries

Question 20

The largest amount of trade with the United States in recent years has been conducted by:

A) Canada
B) Germany
C) Chile
D) United Kingdom

Question 21

Multilateral trade negotiations have led to

A) Continued trade liberalization
B) Financial liberalization
C) Increased investment
D) All of the above

Question 22

Which of the following is a fallacy of international trade?

A) Trade is a zero-sum activity
B) Exports increase employment in exporting industries
C) Import restrictions increase employment in import-competing industries
D) Tariffs and quotas reduce trade volume

Question 23

Following World War II,The U.S.:

A) became less open
B) negotiated reductions in trade barriers with other countries
C) passed a number of protective tariffs
D) concentrated on armament production

Question 24

Important trading partners of the United States include Canada,Mexico,Japan,and China.

Question 25

The United States was less open to international trade between:

A) 1890 and 1910
B) 1930 and 1950
C) 1890 and 1950
D) 1950 and 2013

Question 26

Opening the economy to international trade tends to lessen inflationary pressures at home.

Question 27

Studies have shown that there is an inverse relationship between

A) Local competition and regional competition
B) Regional competition and global competition
C) level of trade barriers and economic growth
D) level of education and communications infrastructure

Question 28

During the last century,the relative importance of international trade for the U.S.has:

A) significantly increased
B) slightly increased
C) significantly decreased
D) slightly decreased

Question 29

Foreign ownership of U.S.financial assets

A) Has decreased since the 1960's
B) Has increased since the 1960's
C) Has made the U.S.a net borrower since the late 1980's
D) Both a and c

Question 30

A closed economy is one in which:

A) Imports exactly equal exports,so that trade is balanced
B) Domestic firms invest in industries overseas
C) The home economy is isolated from foreign trade
D) Saving exactly equals investment at full employment

Question 31

Producing goods for export produces:

A) jobs
B) income
C) tariffs
D) a and b

Question 32

The first wave of globalization was brought to an end by

A) The Great Depression
B) The Second World War
C) The First World War
D) The Smoot-Hawley Act

Question 33

In an open trading system,a country will import those commodities that it produces at relatively low cost while exporting commodities that can be produced at relatively high cost.

Question 34

Although free trade provides benefits for consumers,it is often argued that import protection should be provided to domestic producers of strategic goods and materials vital to the nation's security.

Question 35

The United States exports a larger percentage of its gross domestic product than Japan,Germany,and Canada.

Question 36

A sudden shift from import tariffs to free trade may induce short-term unemployment in:

A) Import-competing industries
B) Industries that are only exporters
C) Industries that sell domestically as well as export
D) Industries that neither import nor export

Question 37

The benefits of international trade accrue in the forms of lower domestic prices,development of more efficient methods and new products,and a greater range of consumption choices.

Question 38

As an economy opens up to international trade,domestic prices:

A) become lower
B) become more aligned with international prices
C) stabilize
D) none of the above; what will happen cannot be predicted

Question 39

Small countries tend to have higher measures of openness than larger countries because:

A) their productivity is higher
B) they are more reliant on international trade
C) they are less reliant on international trade
D) they are more diverse

Question 40

Economic interdependence occurs through

A) trade
B) labor migratin
C) capital flows
D) all of these

Question 41

Current trade rules permit countries to enact measures to protect the health and safety of their citizens as long as all goods are treated equally,the tobacco companies argue.

Question 42

Does exposure to competition with the world leader in a particular industry improve a firm's productivity?

Question 43

In the long run,competitiveness depends on an industry's natural resources,its stock of machinery and equipment,and the skill of its workers in creating goods that people want to buy.

Question 44

What are the challenges of the international trading system?

Question 45

Increased foreign competition tends to increase profits of domestic import-competing companies.

Question 46

If a nation has an open economy,it means that the nation allows private ownership of capital.

Question 47

What are the essential arguments in favor of free trade?

Question 48

What is the most important factor which contributes to competitiveness?