Question 1

Which of the following is true of economic communities?
A) They are groups of nations organized to work toward common goals.
B) They were formed to increase trade barriers between member nations.
C) They were formed to mediate global trade disputes.
D) They require member countries to establish one currency.
E) They tend to improve imports and hinder exports.

Accepted Answer

Economic communities, also known as regional economic integration, are groups of nations that work together towards common goals such as promoting trade, economic growth, and political stability. They aim to reduce trade barriers between member countries rather than increase them. They do not require member countries to establish one currency, and they may improve both imports and exports.

Question 2

Which of the following is true of the World Trade Organization (WTO)?
A) It was replaced by the GATT in 1995.
B) It increases tariffs and other international trade barriers.
C) It lacks the power to impose international trade sanctions.
D) It restricts the maximum number of member nations to 100.
E) It mediates global trade disputes.

Accepted Answer

The World Trade Organization (WTO) mediates global trade disputes, making it the best choice out of the options presented. It was established in 1995 to replace the General Agreement on Tariffs and Trade (GATT), making choice A incorrect. The WTO seeks to reduce trade barriers, not increase them, so choice B is incorrect. The WTO does have the power to impose trade sanctions, making choice C incorrect. There is no limit to the number of member nations who can join the WTO, making choice D incorrect.

Question 3

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semi-finished goods. This is an example of a(n)________ economy.
A) agricultural
B) emerging
C) industrial
D) raw material exporting
E) subsistence

Accepted Answer

Japan's economy is considered industrial, as it is highly developed and focused on manufacturing and exporting high-tech goods and services. The country has a highly skilled workforce and advanced infrastructure, which contributes to its success in the global market. While Japan also imports raw materials and semi-finished goods, its overall economic focus is on manufacturing and exporting finished products.

Question 4

Which of the following is true of raw material exporting economies?
A) These economies are major exporters of agricultural products.
B) These economies are poor markets for large equipment and trucks.
C) These economies are major exporters of manufactured goods, services, and investment funds.
D) These economies are rich in one or more natural resources but poor in other ways.
E) These economies consume most of their output and barter the rest.

Accepted Answer

Raw material exporting economies are rich in natural resources but often poor in other ways, such as having a lack of diversified industries or infrastructure. They rely heavily on the exportation of raw materials to generate income and may struggle to develop other sectors of their economy.

Question 5

________ economies are major exporters of manufactured goods, services, and investment funds.
A) Industrializing
B) Industrial
C) Subsistence
D) Raw material exporting
E) Emerging

Accepted Answer

Industrial economies are those that have a high proportion of their gross domestic product (GDP) generated through manufacturing and industrial activity. These economies tend to be major exporters of manufactured goods, services, and investment funds, as they have a highly developed infrastructure and access to advanced technology, equipment, and techniques. Examples of industrialized economies include the United States, Japan, Germany, and South Korea.

Question 6

A multinational company may face nontariff trade barriers that include biases against its bids, restrictive product standards, or excessive host-country regulations.

Accepted Answer

Non-tariff trade barriers refer to any type of trade barrier other than a tariff, such as biases against certain countries' bids, product standards that may prevent certain imports, and excessive regulations in the host country. These barriers can make it more difficult for multinational companies to compete in certain markets.

Question 7

A country in South America has large reserves of copper and tin. Mining forms the pillar of its economy. A major part of its revenue is generated from exporting these resources. This country is poor in many other ways. It is a good market for large equipment, tools, supplies, and trucks. Since there are many foreign residents in this country and a wealthy upper class, it is also a market for luxury goods. This country most likely has a(n)________ economy.
A) subsistence
B) raw material exporting
C) emerging
D) developed
E) industrial

Accepted Answer

The country's main source of revenue comes from exporting its natural resources, indicating a raw material exporting economy. The fact that it is poor in many other ways suggests that the economy is not yet fully developed, ruling out options C, D, and E. The existence of a wealthy upper class and foreign residents suggests that there is some level of demand for luxury goods, but this is not the main driving force behind the economy, ruling out option A.

Question 8

A country's ________ shapes its product and service needs, income levels, and employment levels.
A) quotas
B) tariffs
C) raw material export economy
D) subsistence economy
E) industrial structure

Accepted Answer

The industrial structure of a country affects its product and service needs, as well as the income and employment levels of its citizens. For example, a country with a heavily industrialized economy may have a high demand for technology and machinery, while a country with a more agricultural-based economy may prioritize products related to farming and livestock. Additionally, the types of jobs available and the wages paid can vary greatly depending on the country's industrial structure.

Question 9

Which of the following statements is true of industrial economies?
A) They export their goods to other types of economies for raw materials.
B) They have a declining middle class population.
C) They depend on agriculture as the primary revenue generator.
D) They do not trade goods amongst themselves.
E) They consume most of their output and barter the rest for simple goods and services.

Accepted Answer

Industrial economies rely on a steady supply of raw materials to sustain their manufacturing processes. As such, they often import materials from other economies, such as agricultural or resource-based economies, and export their finished goods to other markets. Option B, C, D, and E are incorrect because they do not accurately describe industrial economies.

Question 10

Which of the following is most likely true of a global firm?
A) A global firm typically operates from one country.
B) A global firm engages in joint partnerships overseas.
C) A global firm sees the world as many different markets.
D) A global firm maximizes the importance of national boundaries.
E) A global firm manufactures and markets goods wherever it can do the best job.

Accepted Answer

A global firm manufactures and markets goods wherever it can do the best job. This is because global firms operate on a worldwide scale, seeking to maximize profits and minimize costs. In order to achieve these goals, they will manufacture and market their products wherever they can do so most efficiently, regardless of national boundaries. Joint partnerships overseas (B) may be one way for global firms to expand their operations, but this is not necessarily true for all global firms. Option A, C, and D are incorrect as they do not accurately describe the characteristics of a global firm.

Question 11

The ________ established a free trade zone among the United States, Mexico, and Canada.
A) Union of South American Nations
B) European Union
C) North American Free Trade Agreement
D) Central American Free Trade Agreement
E) Latin American Free Trade Association

Accepted Answer

The North American Free Trade Agreement, or NAFTA, was established in 1994 and created a free trade zone among the United States, Mexico, and Canada. The other options listed either do not apply to this specific trade agreement or are outdated organizations.

Question 12

Which type of economy consists mostly of households with very low family incomes?
A) post-industrial
B) developed
C) emerging
D) industrial
E) subsistence

Accepted Answer

Subsistence economy primarily consists of households with very low family incomes. In this type of economy, people produce goods and services only for their own consumption and do not engage in trade or commerce with the outside world. It is mostly found in underdeveloped and developing countries where a significant proportion of the population live in poverty and lack access to basic resources and infrastructure.

Question 13

Tariffs and duties are often used to force favorable trade behaviors from other nations.

Accepted Answer

Tariffs and duties are taxes imposed on imported goods, which can make them more expensive and less competitive in the domestic market. Other countries may then be incentivized to adjust their trade behaviors in order to avoid or lessen these tariffs and duties. Therefore, tariffs and duties can be used as a tool to influence trade relationships and encourage more favorable behavior from other nations.

Question 14

A tax on an imported product designed to raise revenue or protect domestic firms is referred to as a(n)________.
A) exchange
B) excise
C) fine
D) quota
E) tariff

Accepted Answer

A tariff is a tax on imported goods that is designed to either raise revenue for the government or protect domestic industries from foreign competition.

Question 15

An emerging economy is one which ________.
A) imports large amounts of finished textiles and automobiles
B) offers few market opportunities for imported goods
C) consumes all or most of its output
D) needs few imports of raw textile materials and steel
E) has a rapid growth in manufacturing

Accepted Answer

An emerging economy is characterized by rapid growth in manufacturing, indicating a shift from low-productivity agriculture to higher-productivity industry. This growth often leads to increased exports and the need for raw materials to sustain production, contradicting options A and D. Option B describes a closed economy, while an emerging economy typically seeks market opportunities through greater global integration. Option C is a general statement that does not accurately define an emerging economy.

Question 16

Walmart's decision to suspend its planned expansion into India's huge but fragmented retail market due to obstacles put in place by the host nation to protect its mom-and-pop retailers is an example of ________.
A) tariffs
B) excise duties
C) quotas
D) nontariff trade barriers
E) exchange controls

Accepted Answer

The obstacles put in place by India to protect its small retailers are considered nontariff trade barriers, which are any measures other than tariffs that can be used to restrict trade between countries. In this case, the host country's regulations have impeded Walmart's planned expansion into the Indian market.

Question 17

A country may place a limit on the volume of imported citrus fruit that is allowed. This is an example of a(n)________.
A) quota
B) tariff
C) customs duty
D) fine
E) excise duty

Accepted Answer

A limit on the volume of imported citrus fruit is an example of a quota, which is a restriction on the quantity of goods that can be imported into a country. Tariffs are taxes on imports, customs duties are fees charged on imported goods, fines are penalties for breaking rules or laws, and excise duties are taxes on specific goods, such as alcohol or tobacco.

Question 18

Which of the following is an example of a nontariff trade barrier?
A) a sales tax
B) customs duty
C) a host-country regulation
D) excise duty
E) an import quota

Accepted Answer

A host-country regulation is an example of a nontariff trade barrier. These are regulations that are not related to taxes or duties and can include things like product safety standards, labeling requirements, and environmental regulations. Import quotas (E) and excise duties (D) are both examples of tariff barriers, while sales taxes (A) and customs duties (B) are both forms of taxes.

Question 19

Which type of economy consumes most of its output and barters the rest for simple goods and services?
A) industrial economy
B) developed economy
C) subsistence economy
D) emerging economy
E) raw material exporting economy

Accepted Answer

A subsistence economy is one in which most, if not all, of the output is consumed by the households that produce it. Any surplus may be bartered for simple goods and services, but there is little, if any, exchange with a larger market or monetary economy. This type of economy is often found in rural or remote areas where there is limited access to modern infrastructure and technology.

Question 20

Which of the following is true of the Uruguay Round of the WTO?
A) It promoted short-term global trade growth.
B) It increased the world's merchandise tariffs by 50 percent.
C) It reduced the influence of the WTO in agriculture.
D) It toughened the international protection of intellectual property.
E) It consisted of discussions that lasted for two years.

Accepted Answer

The Uruguay Round of the WTO toughened the international protection of intellectual property, hence option D is correct. Option A is incorrect as the Uruguay Round was meant for promoting long-term global trade growth. Option B is incorrect as the Uruguay Round aimed to reduce the world's merchandise tariffs. Option C is incorrect as it increased the influence of the WTO in agriculture. Option E is incorrect as the discussions for the Uruguay Round lasted for more than 7 years.

Quiz 15: The Global Marketplace

Which of the following is true of economic communities?

Which of the following is true of the World Trade Organization (WTO) ?

Japan is a major exporter of manufactured goods, services, and investment funds. Japan also exports its goods to other types of economies for raw materials and semi-finished goods. This is an example of a(n) ________ economy.

Which of the following is true of raw material exporting economies?

________ economies are major exporters of manufactured goods, services, and investment funds.

A multinational company may face nontariff trade barriers that include biases against its bids, restrictive product standards, or excessive host-country regulations.

A country's ________ shapes its product and service needs, income levels, and employment levels.

Which of the following statements is true of industrial economies?

Which of the following is most likely true of a global firm?

The ________ established a free trade zone among the United States, Mexico, and Canada.

Which type of economy consists mostly of households with very low family incomes?

Tariffs and duties are often used to force favorable trade behaviors from other nations.

A tax on an imported product designed to raise revenue or protect domestic firms is referred to as a(n) ________.

An emerging economy is one which ________.

Walmart's decision to suspend its planned expansion into India's huge but fragmented retail market due to obstacles put in place by the host nation to protect its mom-and-pop retailers is an example of ________.

A country may place a limit on the volume of imported citrus fruit that is allowed. This is an example of a(n) ________.

Which of the following is an example of a nontariff trade barrier?

Which type of economy consumes most of its output and barters the rest for simple goods and services?

Which of the following is true of the Uruguay Round of the WTO?