Question 1

According to Nobel Prize winning economist Joseph Stiglitz

Accepted Answer

Joseph Stiglitz has criticized the IMF for various reasons over the years, including its shift towards championing free markets and its departure from its original founding beliefs that markets can often fail. He has also acknowledged that the IMF has undergone significant changes over time.

Question 2

Statement I: A society in which everyone is self-sufficient will generally have a higher standard of living than one in which everyone specializes in a particular type of work.
Statement II: People can specialize only if there is a well-developed system of exchange.

Accepted Answer

Statement I is false because specialization leads to increased productivity, which in turn leads to higher standards of living. Statement II is true as without a well-developed system of exchange, people cannot specialize as they would not be able to obtain the goods and services that they need but cannot produce themselves.

Question 3

The basis for international trade is

Accepted Answer

The basis for international trade is not about self-sufficiency, selling more than buying, or maximizing exports while minimizing imports. It's about comparative advantage and the mutual benefits countries get from exchanging goods and services they produce more efficiently.

Question 4

Statement I: U.S.self-sufficiency in food production and its huge manufacturing base were important factors in winning World War I and II.
Statement II: The relatively small U.S.export-import sector of its economy began to grow significantly in the 1970s.

Accepted Answer

Both statements are true. The U.S.'s self-sufficiency in food production and its large manufacturing base were indeed crucial in its World War I and II victories, providing the necessary resources and equipment. The U.S. export-import sector did start to grow significantly in the 1970s, marking a shift towards a more globalized economy.

Question 5

Which statement is TRUE,according to economist Joseph Stiglitz?

Accepted Answer

Economist Joseph Stiglitz argues that the IMF was founded upon the belief that there was a need for international pressure for countries to have expansionary economic policies, not to cut deficits, raise taxes and interest rates. Therefore, statement C is true. Statements A and B are false, as Stiglitz believes that IMF policies can create human suffering and that the IMF should have a more active role in directing how countries use its loans. Statement D is also false, as it contradicts Stiglitz's view of the IMF's founding principles.

Question 6

The basis for international trade is

Accepted Answer

All of the choices are true. International trade is based on the principle of comparative advantage, which states that each country should specialize in producing the goods and services that it can produce most efficiently, and then trade with other countries for goods and services that they can produce more efficiently. This allows both countries to benefit from trade by increasing efficiency, lowering costs, and expanding markets.

Question 7

If U.S.exports of goods and services exceed imports

Accepted Answer

When U.S. exports of goods and services exceed imports, there is a trade surplus, which leads to an increase in GDP. This is because GDP is calculated as the sum of consumption, investment, government purchases, and net exports. Since net exports are positive, it means that the value of exports is greater than the value of imports, which adds to the overall GDP. Therefore, GDP in the United States will exceed the sum of consumption, investment, and government purchases.

Question 8

Statement I: The most potent argument against globalization is that workers in poorer countries are exploited to produce goods that are shipped to relatively rich countries.
Statement II: Most economists are against globalization.

Accepted Answer

Statement I is true as it is a common critique of globalization that it exploits workers in poorer countries to produce goods for richer countries. However, statement II is false as the majority of economists support globalization as it can promote economic growth, create jobs, and improve living standards.

Question 9

All modern economies

Accepted Answer

Modern economies rely heavily on specialization of labor, which means workers have a high degree of specialized skills in a particular field. This allows them to perform their job efficiently and produce high-quality goods and services in large quantities, which is essential for the growth of the economy. While some economies in the past may have relied on self-sufficient workers or those who had to acquire a wide variety of skills, this is not the case for modern economies. The idea of workers building their own tools is also not relevant in modern economies where tools are typically bought or rented from specialized suppliers.

Question 10

Specialization and exchange

Accepted Answer

Specialization allows individuals and countries to focus on producing goods and services they are relatively more efficient at producing. This leads to an increase in productivity, output, and income. Exchange, on the other hand, allows individuals and countries to access goods and services that they cannot produce or produce efficiently themselves. This leads to a wider variety of goods and services being available at lower prices, and increases the overall welfare of society.

Question 11

Net exports

Accepted Answer

Net exports are indeed often the smallest component of GDP, especially in large economies like the United States. They are calculated as exports minus imports. For the United States, net exports have been negative (meaning imports exceed exports) since the mid-1970s, reflecting a consistent trade deficit.

Question 12

The main criticism Joseph Stiglitz levels at the IMF is that

Accepted Answer

Stiglitz criticizes the IMF for promoting policies that result in economic contraction rather than growth, such as austerity measures and privatization of public goods. He also argues that the IMF's focus on promoting the market system is misguided, as it fails to address the underlying structural issues and inequalities that lead to economic instability.

Question 13

Which was NOT an argument of the protesters against the IMF,WTO,and the World Bank?

Accepted Answer

The argument that globalization is hurting the American standard of living (C) was not typically an argument made by protesters against the IMF, WTO, and the World Bank. These protesters often focused on the negative impacts of globalization on developing countries and the exploitation of workers, rather than the effects on the American standard of living.

Question 14

A characteristic of a modern economy is

Accepted Answer

Specialization and exchange are key features of a modern economy, where individuals and businesses focus on producing certain goods or services and then engage in trade with others to obtain a wide range of goods and services they need. This specialization allows for greater efficiency in production and greater variety and abundance of goods and services for consumers. The other choices are not characteristic of modern economies. Self-sufficiency is an outdated concept that ignores the benefits of global trade, and a high percentage of people who are jacks-of-all-trades is associated with lower productivity and technology levels. Finally, the proportion of people employed in agriculture is declining in modern economies due to increased efficiency and automation in farming.

Question 15

All modern economies depend on

Accepted Answer

Specialization is the process of focusing on specific tasks or skills in order to increase productivity and efficiency. This is a key feature of modern economies, as workers specialize in particular industries or professions, enabling them to produce more and better-quality goods and services. While free-enterprise (C) is also important in many modern economies, government ownership of the means of production (B) and the exploitation of workers (A) are not necessary components of a modern economic system.

Question 16

Statement I: We could not have a modern,highly productive economy without specialization and trade.
Statement II: In modern economies,virtually everyone is a jack-of-all-trades.

Accepted Answer

Statement I is true because specialization and trade allow individuals and businesses to focus on what they do best and exchange goods and services with others who specialize in different areas. Statement II is false because modern economies are characterized by highly specialized roles and professions, with individuals often focusing on a narrow skill set or area of expertise.

Question 17

Net exports is a positive number whenever

Accepted Answer

Net exports represent the difference between a nation's exports and imports. If exports exceed imports, then net exports will be positive. Therefore, option A is correct.

Question 18

Statement I: There have been a series of demonstrations,beginning in Seattle in 1999,in favor of the policies of the WTO and the IMF.
Statement II: Globalization has helped almost everyone and hurt almost no one.

Accepted Answer

Statement I is false because the demonstrations beginning in Seattle in 1999 were actually against the policies of the WTO and the IMF, not in favor. Statement II is false because globalization has had mixed effects, helping some while hurting others, particularly those in industries or regions that face increased competition from abroad.

Question 19

Statement I: Until the mid-1970s,U.S.exports and imports were less than 1 percent of our domestic output.
Statement II: America was called the "arsenal of democracy" because of the vast quantity of armaments we sent to our allies during World War II.

Accepted Answer

Statement I is false because U.S. exports and imports were significantly more than 1 percent of domestic output by the mid-1970s. Statement II is true as America was indeed referred to as the "arsenal of democracy" during World War II due to the large amounts of military aid provided to Allied nations.

Question 20

Adam Smith believed all of the following EXCEPT

Accepted Answer

Adam Smith believed in the benefits of free trade, and that nations should specialize in producing goods they were most efficient at producing and then trade with other nations for goods they lacked. Therefore, he did not believe that a nation would lose by trading with other nations.

Quiz 8: The Export-Import Sector

According to Nobel Prize winning economist Joseph Stiglitz

Statement I: A society in which everyone is self-sufficient will generally have a higher standard of living than one in which everyone specializes in a particular type of work. Statement II: People can specialize only if there is a well-developed system of exchange.

The basis for international trade is

Statement I: U.S.self-sufficiency in food production and its huge manufacturing base were important factors in winning World War I and II. Statement II: The relatively small U.S.export-import sector of its economy began to grow significantly in the 1970s.

Which statement is TRUE,according to economist Joseph Stiglitz?

The basis for international trade is

If U.S.exports of goods and services exceed imports

Statement I: The most potent argument against globalization is that workers in poorer countries are exploited to produce goods that are shipped to relatively rich countries. Statement II: Most economists are against globalization.

All modern economies

Specialization and exchange

Net exports

The main criticism Joseph Stiglitz levels at the IMF is that

Which was NOT an argument of the protesters against the IMF,WTO,and the World Bank?

A characteristic of a modern economy is

All modern economies depend on

Statement I: We could not have a modern,highly productive economy without specialization and trade. Statement II: In modern economies,virtually everyone is a jack-of-all-trades.

Net exports is a positive number whenever

Statement I: There have been a series of demonstrations,beginning in Seattle in 1999,in favor of the policies of the WTO and the IMF. Statement II: Globalization has helped almost everyone and hurt almost no one.

Statement I: Until the mid-1970s,U.S.exports and imports were less than 1 percent of our domestic output. Statement II: America was called the "arsenal of democracy" because of the vast quantity of armaments we sent to our allies during World War II.

Adam Smith believed all of the following EXCEPT