Question 1

The United States is less dependent on trade than most other countries because
A) the United States is a relatively large country with diverse resources.
B) the United States is a "Superpower."
C) the military power of the United States makes it less dependent on anything.
D) the United States invests in many other countries.
E) many countries invest in the United States.

Accepted Answer

The United States is a relatively large country with diverse resources, meaning it has a diversified economy with various industries that can domestically meet the needs of its citizens. This reduces the country's dependence on international trade as compared to smaller and less resource-rich countries.

Question 2

From 1960 to 2012
A) the U.S. economy roughly tripled in size.
B) U.S. imports roughly tripled in size.
C) the share of US Trade in the global economy roughly tripled in size.
D) U.S. Imports roughly tripled as compared to U.S. exports.
E) U.S. exports roughly tripled in size.

Accepted Answer

C

Question 3

Who sells what to whom
A) has been a major preoccupation of international economics.
B) is not a valid concern of international economics.
C) is not considered important for government foreign trade policy since such decisions are made in the private competitive market.
D) is determined by political rather than economic factors.
E) is less important than international economic theory.

Accepted Answer

The question of who sells what to whom is a fundamental aspect of international trade and a major preoccupation of international economics. It is concerned with the patterns and flows of goods and services among countries, as well as the factors that influence these flows. Understanding these patterns and factors is crucial for governments, firms, and individuals seeking to engage in trade and maximize its benefits.

Question 4

Theories of international economics from the 18th and 19th Centuries are
A) not relevant to current policy analysis.
B) only of moderate relevance in today's modern international economy.
C) highly relevant in today's modern international economy.
D) the only theories that actually relevant to modern international economy.
E) not well understood by modern mathematically oriented theorists.

Accepted Answer

The theories of international economics from the 18th and 19th centuries, such as absolute advantage and comparative advantage, are highly relevant in today's modern international economy as trade and globalization continue to be important factors in international relations and economic growth. While some of the specifics may need to be adapted to modern circumstances, the core principles remain relevant.

Question 5

The euro,a common currency for most of the nations of Western Europe,was introduced
A) before 1900.
B) before 1990.
C) before 2000.
D) in order to snub the pride of the U.S.
E) in order to fix currencies in terms of the U.S dollar.

Accepted Answer

The euro was introduced in 1999 and officially began circulating as physical currency on January 1, 2002. Therefore, option A and B are incorrect. Option D is not a valid reason for the introduction of the euro, and Option E is inaccurate as the euro is fixed to a basket of currencies, not just the US dollar.

Question 6

International economics ________ use the same fundamental methods of analysis as other branches of economics,because ________.
A) does not, the level of complexity of international issues is unique
B) does not, the interactions associated with international economic relations is highly mathematical
C) does not, international economics takes a different perspective on economic issues
D) does not, international economic policy requires cooperation with other countries
E) does, the motives and behavior of individuals are the same in international trade as they are in domestic transactions

Accepted Answer

International economics uses the same fundamental methods of analysis as other branches of economics because the motives and behavior of individuals are the same in international trade as they are in domestic transactions. Therefore, the same concepts of supply and demand, production, and consumption apply in domestic and international economics.

Question 7

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by
A) Adam Smith.
B) David Hume.
C) David Ricardo.
D) Eli Heckscher.
E) Lerner and Samuelson.

Accepted Answer

The answer of The insight that patterns of trade are...

Question 8

The study of exchange rate determination is a relatively new part of international economics,since
A) for much of the past century, exchange rates were fixed by government action.
B) the calculations required for this were not possible before modern computers became available.
C) economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time.
D) dynamic overshooting asset pricing models are a recent theoretical development.
E) the exchange rate never fluctuates.

Accepted Answer

For much of the past century, exchange rates were fixed by government action with the Bretton Woods system and later the Smithsonian Agreement. It was not until the collapse of the Bretton Woods system in 1971 that exchange rates began to float freely and the study of exchange rate determination became more relevant.

Question 9

Because the Constitution forbids restraints on interstate trade
A) the U.S. may not impose tariffs on imports from NAFTA countries.
B) the U.S. may not affect the international value of the $ U.S.
C) the U.S. may not put restraints on foreign investments in California if it involves a financial intermediary in New York State.
D) the U.S. may not impose export duties.
E) the U.S. may not disrupt commerce between Florida and Hawaii.

Accepted Answer

The answer of Because the Constitution forbids restraints on interstate...

Question 10

An important insight of international trade theory is that when two countries engage in voluntary trade
A) one country always benefits at the expense of the other.
B) it is almost always beneficial to both countries.
C) it only benefits the low wage country.
D) it only benefits the high wage country.
E) it is almost never beneficial to both countries.

Accepted Answer

International trade theory suggests that when countries engage in voluntary trade, they are always better off than they would be without trade, even if one country is more efficient than the other in all goods. This is because each country can focus on producing goods for which they have a comparative advantage, lowering prices and increasing choices for both countries. Therefore, it is almost always beneficial to both countries, making B the correct answer.

Question 11

Which of the following does NOT belong?
A) NAFTA
B) Uruguay Round
C) World Trade Organization
D) non-tariff barriers
E) major free trade agreements of the 1990s

Accepted Answer

A, B, and C are all related to international trade agreements and organizations, whereas D is a specific type of barrier to trade. E is also related to international trade agreements specifically from the 1990s.

Question 12

If there are large disparities in wage levels between countries,then
A) trade is likely to be harmful to both countries.
B) trade is likely to be harmful to the country with the high wages.
C) trade is likely to be harmful to the country with the low wages.
D) trade is likely to be harmful to neither country.
E) trade is likely to have no effect on either country.

Accepted Answer

The answer of If there are large disparities in wage...

Question 13

A fundamental problem in international economics is how to produce
A) a perfect degree of monetary harmony.
B) an acceptable degree of harmony among the international trade policies of different countries.
C) a world government that can harmonize trade and monetary policies
D) a counter-cyclical monetary policy so that all countries will not be adversely affected by a financial crisis in one country.
E) a worldwide form of currency.

Accepted Answer

While all options suggest a need for harmonization among countries, option B suggests a more realistic and feasible goal of achieving an acceptable degree of harmony among international trade policies. Achieving a perfect degree of monetary harmony (A) and a world government that can harmonize trade and monetary policies (C) are difficult if not impossible to achieve in practical terms. A counter-cyclical monetary policy (D) is important but does not address the larger issue of conflicting trade policies. A worldwide form of currency (E) could also face resistance and difficulties in implementation.

Question 14

"Trade is generally harmful if there are large disparities between countries in wages."
A) This is generally true.
B) This is generally false.
C) Trade theory has nothing to say about this issue.
D) This is true if the trade partner ignores child labor laws.
E) This is true if the trade partner uses prison labor.

Accepted Answer

Trade theory, particularly the theory of comparative advantage, suggests that trade can be beneficial for all countries involved, regardless of wage disparities. It posits that countries will specialize in producing goods for which they have a comparative advantage, leading to increased efficiency and gains from trade for all parties involved.

Question 15

After World War II,the United States has pursued a broad policy of
A) strengthening "Fortress America" protectionism.
B) removing barriers to international trade.
C) isolating Iran and other members of the "axis of evil."
D) protecting the U.S. from the economic impact of oil producers.
E) restricting trade of manufactured goods.

Accepted Answer

After World War II, the United States pursued a policy of removing barriers to international trade with the implementation of the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO). This policy aimed to increase global economic growth and stability through increased trade and investment. This policy was known as the "open door" economic policy.

Question 16

The balance of payments has become a central issue for the United States because
A) when the balance of payments is not balanced, society is unbalanced.
B) the U.S. economy cannot grow when the balance of payments is in deficit.
C) the U.S. has run huge trade deficits in every year since 1982.
D) the U.S. never experienced a surplus in its balance of payments.
E) the U.S. once ran a large trade surplus of about $40 billion.

Accepted Answer

The U.S. has run huge trade deficits in every year since 1982, making the balance of payments a central issue for the country. This has led to concerns about the sustainability of the U.S. economy and its ability to continue to fund its current account deficit.

Question 17

Which of the following is NOT a major concern of international economic theory?
A) protectionism
B) the balance of payments
C) exchange rate determination
D) bilateral trade relations with China
E) the international capital market

Accepted Answer

Bilateral trade relations with China is not a major concern of international economic theory. Protectionism, the balance of payments, exchange rate determination, and the international capital market are all central topics in international economic theory.

Question 18

During the first three years of its existence,the euro
A) depreciated against the $U.S.
B) maintained a strict parity with the $U.S.
C) strengthened against the $U.S.
D) proved to be an impossible dream.
E) exported exclusively to the U.S.

Accepted Answer

The euro depreciated against the U.S. dollar during its initial years after being introduced in 1999.

Question 19

The benefits of international trade are derived from trade in
A) tangible goods only.
B) intangible goods only.
C) goods but not services.
D) services but not goods.
E) anything of value.

Accepted Answer

The benefits of international trade are derived from exchange of anything of value, including goods and services, tangible and intangible goods.

Question 20

Historians of economic thought often describe ________ written by ________ and published in ________ as the first real exposition of an economic model.
A) "Of the Balance of Trade," David Hume, 1776
B) "Wealth of Nations," David Hume, 1758
C) "Wealth of Nations," Adam Smith, 1758
D) "Wealth of Nations," Adam Smith, 1776
E) "Of the Balance of Trade," David Hume, 1758

Accepted Answer

The answer of Historians of economic thought often describe ________...

Quiz 1: Introduction

The United States is less dependent on trade than most other countries because

From 1960 to 2012

Who sells what to whom

Theories of international economics from the 18th and 19th Centuries are

The euro,a common currency for most of the nations of Western Europe,was introduced

International economics use the same fundamental methods of analysis as other branches of economics,because .

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by

The study of exchange rate determination is a relatively new part of international economics,since

Because the Constitution forbids restraints on interstate trade

An important insight of international trade theory is that when two countries engage in voluntary trade

Which of the following does NOT belong?

If there are large disparities in wage levels between countries,then

A fundamental problem in international economics is how to produce

"Trade is generally harmful if there are large disparities between countries in wages."

After World War II,the United States has pursued a broad policy of

The balance of payments has become a central issue for the United States because

Which of the following is NOT a major concern of international economic theory?

During the first three years of its existence,the euro

The benefits of international trade are derived from trade in

Historians of economic thought often describe written by and published in as the first real exposition of an economic model.