Deck 20: The Giant Economy and Its International Relations

Question 1

Consumers of most goods usually experience diminished satisfaction in each additional unit consumed.However,when variety appears endless,this may not be the case.Consider manufactured goods between 1890 and 1910.

Answer 1

True

Question 2

International trade was not important to the industrializing U.S.since it was relatively rich in raw materials and land.

Answer 2

False

Question 3

During the entire period of 1820-1920,there were persistent trends in the structure of American foreign trade.They exhibited

A) a decrease in imported finished manufactures and an increase in exported finished manufactures.
B) an increase in the exports of crude materials and foodstuffs and a decline in their importation.
C) increases in both imports and exports of manufactured goods and foodstuffs.
D) no exports or imports.

Answer 3

a decrease in imported finished manufactures and an increase in exported finished manufactures.

Question 4

The rise in European protectionism helped the U.S.economy by increasing foreign demand for agricultural goods.

Question 5

The McKinley Tariff of 1890 marked the beginning of the American move toward free trade.

Question 6

The U.S.and other industrializing nations depended heavily on international trade.

Question 7

With the exception of the U.S.,the majority of the world's trading partners utilized the gold standard.

Question 8

The U.S.claimed a disproportionate share of world trade given its share of the world's population.

Question 9

Tariff rates make everyone better off in the country by protecting it from foreign competition.

Question 10

The long-term pattern of American foreign trade policy from 1789 to 1914 was

A) protectionist at first, becoming more liberal before 1861, then more protectionist again.
B) liberal at first, becoming more protectionist before 1861, then shifting to greater liberalism ?as the country's industrialization spread in the later 19th century.
C) free trade after the Civil War, but very protectionist in general before 1861.
D) none of the above.

Question 11

The "rules of the game," if followed closely by central banks,would have

A) made trade fluctuations worse than they were.
B) wiped out trade fluctuations.
C) "neutralized" central bank policy.
D) forced the federal government to borrow directly from central banks.

Question 12

Between 1821 and 1930,the U.S.gained a comparative advantage in the production of agricultural goods.

Question 13

Despite the huge increase in American exports of manufactures and the importation of primarily luxury goods in 1880-1910,the American market for American products was still largely self-sufficient.

Question 14

Where was the largest market for the huge increase in U.S.manufacturing output in 1860-1910 located?

A) In Europe
B) In Asia
C) Within the U.S.
D) In the Third World

Question 15

Between 1866 and 1914,statistical evidence suggests that many big businesses depended heavily on U.S.protectionist policies.

Question 16

Technological advancements and changes in factor proportions shift a producer's comparative advantage.

Question 17

Engel's Law asserts that consumer expenditures on daily food in the aggregate decline as incomes rise.This explains the decreased demand for daily foods and the increased U.S.demand for exotic foods.

Question 18

Tariff rates remained high after the Civil War because government revenue needs were pressing and there were protectionist sentiments.

Question 19

The opportunity cost of the U.S.producing tea or coffee is measured by the value of the foregone production alternative-manufacturing or staples.

Question 20

What does a successful protective tariff do?

A) It forces foreign manufacturers to pay higher wages.
B) It re-enforces competition.
C) It creates an "economic rent" that goes to the competing domestic industries producing the ?taxed imported goods.
D) It mandates accelerated technological advance in the domestic economy.

Question 21

From the Civil War until 1914,what change(s)occurred in U.S.policies regarding tariffs?

A) Tariff rates were generally higher and customs receipts were higher than before the ?Civil War.
B) As the momentum of the westward movement increased, increased revenues from land sales allowed Congress to return tariff rates to their pre-Civil War levels.
C) Customs revenues increased because of economic growth and the lack of important changes?in tariff policy.
D) All of the above

Question 22

A current account deficit exists when

A) Government revenue exceeds spending
B) Government spending exceeds revenue
C) Imports exceed exports
D) Exports exceed imports

Question 23

For the gold standard to achieve its maximum functioning efficiency,central banks should theoretically play the "rules of the game." What are these rules?

A) Central bank policy should tie the flow of their gold reserves to their current accounts.
B) Central banks should "lean against the wind" and follow policies that offset gold movements.
C) Central banks should raise interest rates as gold flows in and lower them as gold flows out.
D) Central banks should sell securities as gold flows in and buy them as gold flows out.

Question 24

Operation on the basis of comparative advantages implies which of the following?

A) Countries allocate their resources across all sectors regardless of opportunity costs.
B) Countries will specialize even if they can produce everything.
C) Countries not efficient in any production should not trade.
D) none of the above.

Question 25

What is/are the central argument(s)against tariffs?

A) They redistribute income away from consumers who are paying higher prices because of the tariffs. These rents are given to the individual industries that are protected by the tariffs and?are operating inefficiently.
B) A laissez-faire economy is the American way.
C) They protect the wealthy.
D) They benefit only fast-growing industries.

Question 26

What do Baack and Ray (1983)find in their survey of U.S.tariff history?

A) Tariff rates in the U.S. were low.
B) Tariff cuts were associated with the fast-growing industries.
C) The highest tariff rates in the U.S. were associated with the fastest growing industries.
D) The U.S. was a world leader in free trade policy.

Question 27

From 1865 to 1910,the U.S.share of world trade was

A) nonexistent.
B) miniscule.
C) disproportionately small compared to the British.
D) disproportionately high compared to the U.S. population.

Question 28

Tariff rates remained high in the U.S.throughout the postbellum period for which of the following reasons?

A) The government needed revenues to finance its expenditures.
B) Special interest groups organized themselves to realize rents.
C) Land sales dwindled as the Western frontier closed.
D) All of the above.

Question 29

A tariff is which type of tax?

A) Progressive
B) Regressive
C) Proportional
D) Neutral

Question 30

Which of the following are arguments that have been and currently are used to justify protectionism?

A) The infant industry argument
B) Tariffs create lower profits, generate fewer jobs, and reduce wages in the U.S.
C) Countries should not operate on the basis of comparative advantage.
D) All of the above

Question 31

What does international voluntary trade do?

A) Exploits small countries
B) Benefits all trading partners
C) Places labor unions at an unfair disadvantage
D) Forces productive domestic firms to close their doors

Question 32

Under the gold standard,a country experiencing a fall in its gold reserves was supposed to:

A) Expand loans
B) Buy securities
C) Lower discount rates
D) Cut loans

Question 33

In the industrial period of U.S.history,the manufacturing goods consumed by U.S.households were subject to

A) high taxes.
B) Engel's Law.
C) income effects.
D) none of the above.

Question 34

What is/are the advantage(s)of the gold standard?

A) The government can print money as required by cyclical fluctuations in domestic markets.
B) Floating exchange rates.
C) It requires monetary discipline.
D) All of the above.

Question 35

For the late 19th and the first half of the 20th century,which of the following did NOT occur?

A) The demand for foreign goods declined relatively as domestic income expanded.
B) Population soared.
C) Government intervention in market affairs slowed considerably.
D) The competitive economy fueled industrialization in the U.S.

Question 36

During the postbellum period of U.S.history,

A) the U.S. balance of payments experienced a deficit throughout the entire period.
B) manufacturing exports became the top foreign exchange earner.
C) cotton exports continued to be the top foreign exchange earner.
D) the U.S. never borrowed from foreigners.

Question 37

From the end of the Civil War to the start of World War I,the direction of U.S.trade

A) stayed the same.
B) was dominated by trade with Europe.
C) grew and broadened to include other countries in Asia and the Americas.
D) dwindled.

Question 38

Trade with the United States during the late 19th and the first half of the 20th century benefited those individuals living in less developed countries by

A) Boosting their incomes.
B) Restricting markets.
C) Exploiting their resources.
D) Increasing pollution and crime.

Question 39

The big current-account deficits in the late 1880s and early 1890s were financed primarily by

A) Borrowing from other nations, especially England
B) Interests earned on bonds and dividends paid on other investments
C) Taxes
D) Sale of public land

Question 40

Imports into the U.S.increased when

A) deflation in the U.S. occurred.
B) real wages and incomes rose in the U.S.
C) the International Trade Commission was established.
D) all of the above occurred.

Question 41

Discuss the link between the U.S.balance of account and its international capital flows.

Question 42

Define Engel's Law.Explain why it applies to food consumption but not to consumption of manufactured goods.

Question 43

Discuss the types of protection from foreign competition that American industry had under the Morrill Act of 1861.What was their importance in the development of manufacturing?

Question 44

Explain why goals to eliminate a current account deficit require deflation and why current account surpluses encourage inflation under the gold standard.

Question 45

Explain why net economic progress is accompanied by periods of booms and busts,by financial progress and crisis,as well as by economic expansion and depressions.

Question 46

What was the Morill Tarriff Act of 1861? Why was it passed,and what were the economic ramifications?

Question 47

Describe the international factors encouraging and hindering the rise of manufacturing in the U.S.during the mid-nineteenth century.

Question 48

Describe the new directions of U.S.trading patterns from the Civil War throughout the early 1920s.Account for some of the new patterns of international trade.

Question 49

Describe the gold standard.What are its advantages and disadvantages?

Question 50

Explain how the U.S.becomes a capital-rich net exporter of industrial goods in a relatively short period of time.

Question 51

Explain how globalization can close the economic gap between rich and poor nations.