Question 1

A natural barrier that faces Argentina when it sells beef to Siberia is which of the following?

Accepted Answer

The distance between Argentina and Siberia presents a natural barrier for beef trade because it increases transportation costs and logistics challenges. Exchange controls, custom regulations, and government controls may also pose challenges, but they are not natural barriers.

Question 2

Which of the following terms means that prices of currencies vary based upon demand and supply of that currency?

Accepted Answer

The term that means that prices of currencies vary based upon demand and supply of that currency is the floating exchange rate.

Question 3

What are the benefits associated with free trade and globalization?

Accepted Answer

Free trade and globalization lead to an open economy that encourages competition and innovation, leading to increased productivity and economic growth. This can result in job creation and higher standards of living. Choices A, B, and C are not associated with the benefits of free trade and globalization.

Question 4

Which of the following is the reduction of a currency's value relative to another currency?

Accepted Answer

Devaluation is the reduction of a currency's value relative to another currency. This can happen intentionally by a country's government in order to make their exports cheaper and more competitive, or it can happen naturally due to market forces.

Question 5

Why do many people fear trade and globalization?

Accepted Answer

Many people fear that trade and globalization will lead to massive job losses, as companies may outsource jobs to countries with lower labor costs or increase their use of automation. This fear is not unfounded as there have been instances where trade agreements have resulted in job losses in certain industries.

Question 6

Which of the following best describes protectionism?

Accepted Answer

Protectionism refers to the use of various artificial barriers such as tariffs, quotas, and import licenses to protect domestic industries from foreign competition. Hence, option A is the most appropriate description of protectionism. The option B is incorrect because protectionism is not based on the concept of absolute advantage. The option C is incorrect because protectionism generally restricts the freedom to buy and sell goods from anywhere in the world. The option D is incorrect because protectionism involves the use of tariffs, embargoes, and import quotas to protect local industries.

Question 7

If a country specializes in goods that it can produce most readily and cheaply and trades those goods for the goods that another country can produce most readily and cheaply,then both countries are exercising which of the following principles?

Accepted Answer

This scenario represents the concept of comparative advantage, which occurs when one country can produce a good at a lower opportunity cost than another country. By specializing in the goods they can produce most efficiently, both countries can benefit from trading with each other, ultimately maximizing their overall production and consumption.

Question 8

Which of the following is a protectionist argument that says Canada should use tariffs to keep foreign labour from taking away Canadian jobs?

Accepted Answer

The job-protection argument is a protectionist argument that supports the use of tariffs to keep foreign labour from taking away Canadian jobs. This argument maintains that protecting domestic jobs is necessary to maintain employment opportunities and a stable economy.

Question 9

A policy of permitting the people of a country to buy and sell where they please,without restrictions,is called which of the following?

Accepted Answer

Free trade is a policy where there are no restrictions on the movement of goods and services between countries. This means that people are free to buy and sell wherever they want without any interference from the government. Protectionism, on the other hand, is a policy that seeks to protect domestic industries from foreign competition by imposing restrictions on imports. Premium exchange is not a term commonly used in economics, and comparative advantage is a concept that refers to a country's ability to produce a particular good or service more efficiently than other countries.

Question 10

Which of the following best describes an effect of free trade?

Accepted Answer

Free trade allows people to buy and sell where they please, without restrictions or barriers. This promotes competition and often leads to increased efficiency and lower prices for consumers. Options A, B, and D are incorrect as they do not describe the effects of free trade.

Question 11

The karakul is a breed of Central Asian sheep that produces curly,glossy wool for the manufacturing of warm hats and coats.Since the breed can be grown only in Central Asia,this region can be said to have which of the following?

Accepted Answer

The answer of The karakul is a breed of Central...

Question 12

An argument in favour of protective tariffs is the "infant-industry argument." Which of the following statements would reflect that argument?

Accepted Answer

The infant-industry argument proposes that protecting new, smaller industries from established foreign competition through tariffs will enable them to grow and develop to a point where they can compete on a level playing field with established industries. Therefore, choice A is the best answer as it directly reflects this argument. Choice B is incorrect as it discusses antitrust laws, which are not related to protective tariffs. Choice C is incorrect as it is too vague and unrelated to the concept of infant industries. Choice D is also incorrect as it discusses government loans, which are not necessarily related to protective tariffs.

Question 13

When Steve went to Mexico,he found that he could go to his bank and trade his 100 Canadian dollars for 750 Mexican pesos (the nation's currency).This is an example of 7.5 Mexican pesos representing which of the following?

Accepted Answer

The exchange rate is the value of one currency for the purpose of conversion to another. In this case, Steve exchanged 100 Canadian dollars for 750 Mexican pesos, indicating an exchange rate of 7.5 Mexican pesos per Canadian dollar.

Question 14

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

Accepted Answer

Distance is a natural trade barrier because the farther two countries are from each other, the more expensive and difficult it is to transport goods between them. This can make it more costly for countries to trade with each other, acting as a natural barrier. Options A, B, and C are not natural trade barriers - Price can be affected by a variety of factors including supply and demand, exchange controls are a government-imposed trade barrier, and product characteristics are a result of choices made by producers and are not inherent barriers.

Question 15

China imposes a 45 percent tax on the market value of all chickens that are imported from other countries into China.What would be another name for this type of tax?

Accepted Answer

A tariff is a tax imposed on goods and services that are imported from other countries. In this case, China is imposing a 45 percent tax on the market value of all chickens that are imported from other countries, which is a type of tariff.

Question 16

Which of the following is a tax levied by a nation on imported goods?

Accepted Answer

A tariff is a tax levied by a nation on imported goods. An embargo refers to a complete ban on trade with a particular country. A boycott refers to a voluntary refusal to engage with a particular company or product. A premium is an additional cost added to a product or service for a perceived higher value.

Question 17

Which of the following terms best describes the reduction of value,if,during the past decade,the Canadian dollar's value has been reduced relative to most other world currencies?

Accepted Answer

Devaluation refers to the deliberate reduction of a currency's value in relation to other currencies. In this scenario, if the Canadian dollar's value has been reduced relative to most other world currencies over the past decade, it would be considered a devaluation.

Question 18

Venezuela can grow and sell cut flowers for floral bouquets more easily and more cheaply than most other countries can produce the same flowers.When it comes to flowers,Venezuela has which of the following?

Accepted Answer

Venezuela has a comparative advantage in the production of cut flowers for floral bouquets, meaning they can produce and sell these products at a lower opportunity cost than other countries. This is due to factors such as favorable climates and lower costs of production.

Question 19

Which of the following is a benefit associated with free trade and globalization?

Accepted Answer

The answer of Which of the following is a benefit...

Question 20

The Caucasus Mountains along the northeastern border of Georgia make it difficult for the nation to trade with other former Soviet republics that are to its north and east.The mountain range acts as which type of barrier or deterrent?

Accepted Answer

The Caucasus Mountains act as a natural trade barrier, making it difficult for Georgia to trade with other former Soviet republics to its north and east.

Quiz 2: the Global Marketplace and Governments’ Roles