The International Economy And Globalization MCQs

Option A: primary products

Option B: intermediate products

Option C: manufactured products

Option D: financial services

Correct Answer: primary products ✔

Option A: banks were unable to function

Option B: there was little corporate control

Option C: vital infrastructure was missing

Option D: All of the above

Correct Answer: All of the above ✔

Option A: an import subsidy

Option B: a quota

Option C: comparative advantage

Option D: an export subsidy

Correct Answer: an export subsidy ✔

Option A: overproduce, under consume

Option B: Overproduce, overconsume

Option C: underproduce, under consume

Option D: underproduce, overconsume

Correct Answer: overproduce, under consume ✔

Option A: comparative advantage

Option B: absolute advantage

Option C: opportunity cost

Option D: relative costs

Correct Answer: absolute advantage ✔

Option A: Comparative advantage

Option B: High exchange rates

Option C: trade barriers

Option D: trade quotas

Correct Answer: Comparative advantage ✔

Option A: Reduce interest rates

Option B: Sell its own currency

Option C: Buy its own currency with foreign reserves

Option D: Increase its own spending

Correct Answer: Buy its own currency with foreign reserves ✔

Option A: Total spending / total consumption

Option B: Total consumption / total income

Option C: Change in consumption / change in income

Option D: Change in consumption / change in savings

Correct Answer: Change in consumption / change in income ✔

Option A: The income of one country compared to another

Option B: The GDP of one country compared to another

Option C: The quantity of exports of one country compared to another

Option D: Export prices compared to import prices

Correct Answer: Export prices compared to import prices ✔

Option A: 0.4A

Option B: 2.5A

Option C: 10A

Option D: 1B

Correct Answer: 2.5A ✔

Option A: Higher interest rates

Option B: Higher income tax

Option C: Tariffs

Option D: Reduced government spending

Correct Answer: Tariffs ✔

Option A: Elimination of border controls

Option B: No import taxes on goods bought in another members country

Option C: Each country can retain its own technical standards

Option D: Common security arrangements

Correct Answer: Each country can retain its own technical standards ✔

Option A: trade diversion

Option B: trade channeling

Option C: trade creation and trade diversion

Option D: trade creation

Correct Answer: trade diversion ✔

Option A: occurs when countries are granted most favored nation status

Option B: occurs when one country voluntarily agrees to reduce its exports to another country

Option C: occurs when two or more nations join to form a free-trade zone

Option D: Occurs when countries develop an acquired comparative advantage that makes their industries more competitive in international markets

Correct Answer: occurs when two or more nations join to form a free-trade zone ✔

Option A: employ many young or untrained workers

Option B: are competing with well-established overseas firms

Option C: are not yet large enough to achieve economies of scale

Option D: use a new technology

Correct Answer: are not yet large enough to achieve economies of scale ✔

Option A: a quota

Option B: dumping

Option C: a tariff

Option D: an export subsidy

Correct Answer: a quota ✔

Option A: technological change

Option B: competitions with foreign suppliers

Option C: development of tourism

Option D: lower tariffs

Correct Answer: competitions with foreign suppliers ✔

Option A: resource; resource

Option B: foreign exchange money

Option C: opportunity; opportunity

Option D: money; opportunity

Correct Answer: opportunity; opportunity ✔

Option A: The industrial policies of governments

Option B: different sizes of the countries

Option C: different factor endowment between countries

Option D: the different tastes and preferences of people in different countries

Correct Answer: different factor endowment between countries ✔

Option A: services and white-collar jobs

Option B: manufacturing and blue-collar jobs

Option C: natural resource extraction and mining jobs

Option D: agriculture and farming jobs

Correct Answer: services and white-collar jobs ✔

Option A: Import-competing industries

Option B: Industries that are only exporters

Option C: Industries that sell domestically as well as export

Option D: industries that neither import nor export

Correct Answer: Import-competing industries ✔

Option A: Imported, but not exported

Option B: Exported, but not imported

Option C: Imported and exported

Option D: Neither exported nor imported

Correct Answer: Imported and exported ✔

Option A: Increase all domestic costs and prices

Option B: Keep all domestic costs and prices at the same level

Option C: Lessen the amount of competition facing home manufacturers

Option D: Increase the amount of competition facing home manufacturers

Correct Answer: Increase the amount of competition facing home manufacturers ✔

Option A: Monopoly in the home market becomes an oligopoly in the world market

Option B: Oligopoly in the home market becomes a monopoly in the world market

Option C: Purely competitive firm in the home market becomes an oligopolist

Option D: purely competitive firm in the home market becomes a monopolist

Correct Answer: Monopoly in the home market becomes an oligopoly in the world market ✔

A. The less mobile the country’s resources
B. The more mobile the country’s resources
C. The lower the country’s initial living standard
The higher the country’s initial living standard

Correct Answer: A. The less mobile the country’s resources ✔

Option A: Increased competition for world producers

Option B: A wider selection of products for consumers

Option C: The utilization of the most efficient production methods

Option D: Relatively high wages levels for all domestic workers

Correct Answer: Relatively high wages levels for all domestic workers ✔

Option A: 5 percent

Option B: 10 percent

Option C: 25 percent

Option D: 55 percent

Correct Answer: 5 percent ✔

Option A: Canada

Option B: Germany

Option C: Mexico

Option D: United Kingdom

Correct Answer: Canada ✔

Option A: Maximizing domestic efficiency is not considered imports

Option B: Maximizing consumer welfare may not be a chief priority

Option C: There exist sound economic reasons for keeping one’s economy isolated from other economies

Option D: Economists tend to favor high protected domestic markets

Correct Answer: Maximizing consumer welfare may not be a chief priority ✔

Option A: Industries in which there are neither imports nor exports

Option B: Imports competing industries

Option C: Industries that sell to domestic and foreign buyers

Option D: Industries that sell to only foreign buyers

Correct Answer: Imports competing industries ✔

Option A: Allows private ownership of capital

Option B: Has flexible exchange rates

Option C: Has fixed exchange rates

Option D: conducts trade with other countries

Correct Answer: conducts trade with other countries ✔

Option A: Economies of large-scale production

Option B: The specializing country behaving as a monopoly

Option C: Smaller production runs resulting in lower unit costs

Option D: High wages paid to foreign workers

Correct Answer: Economies of large-scale production ✔

Option A: reschedule debt

Option B: get a loan from an international organization

Option C: default on the loan

Option D: any of the above

Correct Answer: any of the above ✔

Option A: exports, subsidies

Option B: exports, patents

Option C: imports, high tariffs or import quotas

Option D: imports, subsidies

Correct Answer: imports, high tariffs or import quotas ✔

Option A: The upward trend in commodity prices the stability of primary products real prices

Option B: The upward trend in commodity prices, the volatility of primary products real prices

Option C: The downward trend in commodity prices the stability of primary products real prices

Option D: The downward trend in commodity prices the volatility of primary products real prices

Correct Answer: The downward trend in commodity prices the volatility of primary products real prices ✔

Option A: resource scarcity

Option B: low levels of investment

Option C: low population

Option D: poor infrastructure

Correct Answer: low population ✔

Option A: high monetary growth high wages

Option B: high budget deficits devaluation

Option C: high monetary growth devaluation

Option D: Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue

Correct Answer: Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue ✔

Option A: imports, exports

Option B: the balance of trade, zero

Option C: The demand for currency the supply of currency

Option D: social marginal cost, social marginal benefit

Correct Answer: social marginal cost, social marginal benefit ✔

Option A: rise, rise

Option B: fall, rise

Option C: fall, fall

Option D: rise, fall

Correct Answer: fall, fall ✔

Option A: relative factor competition

Option B: relative factor mobility

Option C: relative factor substitution

Option D: relative factor endowments

Correct Answer: relative factor endowments ✔

Option A: differences in technology

Option B: differences in factor endowments

Option C: scale economies

Option D: All of the above

Correct Answer: All of the above ✔

Option A: The external value of the currency would tend to fall

Option B: The external value of the currency would tend to rise

Option C: The injections from trade are greater then the withdrawals

Option D: Aggregate demand is increasing

Correct Answer: The external value of the currency would tend to fall ✔

Option A: The government intervenes to influence the exchange rate

Option B: The exchange rate should adjust to equate the supply and demand of the currency

Option C: The Balance of payments should always be in surplus

Option D: The Balance of payments will always equal the government budget

Correct Answer: The exchange rate should adjust to equate the supply and demand of the currency ✔

Option A: Decrease the domestic price of a product

Option B: Increase government earnings from tax

Option C: Increase the quantity of imports

Option D: Decrease domestic production

Correct Answer: Increase the quantity of imports ✔

Option A: Comparative advantage

Option B: Comparative scale

Option C: Economies of advantage

Option D: Production possibility advantage

Correct Answer: Comparative advantage ✔

Option A: To protect infant industries

Option B: To increase the level of imports

Option C: To Protect strategic industries

Option D: To improve the balance of payments

Correct Answer: To increase the level of imports ✔

Option A: balance of trade

Option B: comparative advantage

Option C: balance of payments

Option D: terms of trade

Correct Answer: terms of trade ✔

Option A: common market

Option B: free trade area

Option C: customs union

Option D: federation

Correct Answer: customs union ✔

Option A: Comparative advantage is achieved

Option B: Price elasticity of imports is unity and tariff revenue is maximized

Option C: import prices are the same as export prices

Option D: marginal social cost equals marginal social benefit

Correct Answer: marginal social cost equals marginal social benefit ✔

Option A: Side payments

Option B: Tariffs

Option C: subsidies

Option D: export quotas

Correct Answer: subsidies ✔

Option A: The price of goods when they leave the producing country

Option B: a limit on the quantity of a good that can be imported into a country

Option C: a tax on imports

Option D: a government payment to encourage exports

Correct Answer: a tax on imports ✔

Option A: its opportunity costs; world opportunity costs

Option B: export prices; import prices

Option C: Value of exports; value of imports

Option D: its currency; other currencies

Correct Answer: export prices; import prices ✔

Option A: absolute advantage

Option B: mutual advantage

Option C: multilateral advantage

Option D: comparative advantage

Correct Answer: comparative advantage ✔

Option A: Ricardo Malthus theorem

Option B: Heckscher Ohlin theorem

Option C: Lucas-Laffer theorem

Option D: Friedman Samuelson theorem

Correct Answer: Heckscher Ohlin theorem ✔

Option A: Decreased productivity in U.S manufacturing

Option B: High incomes of American households

Option C: Relatively low interest rates in the United States

Option D: High levels of investment by American corporations

Correct Answer: Decreased productivity in U.S manufacturing ✔

Option A: Provide benefits for all producers and consumers

Option B: Increase the nation’s aggregate income

Option C: Reduce unemployment for all domestic workers

Option D: Ensure that industries can operate at less than full capacity

Correct Answer: B. Increase the nation’s aggregate income ✔

Option A: Technological progress, but not international trade

Option B: International trade but not technological progress

Option C: Technological Progress and international trade

Option D: Neither technological progress nor international trade

Correct Answer: Technological Progress and international trade ✔

Option A: Imported, but not exported

Option B: Exported, but not imported

Option C: Exported and imported

Option D: Neither imported not exported

Correct Answer: Exported and imported ✔

Option A: U.S firms shipping component production overseas

Option B: High profit levels for American corporations

Option C: Sluggish rates of productivity growth in the United States

Option D: High unemployment rates among America workers

Correct Answer: High profit levels for American corporations ✔

Option A: Canada

Option B: Mexico

Option C: China

Option D: North Korea

Correct Answer: North Korea ✔

Option A: Intensify inflationary pressure at home

Option B: Induce falling output per worker-hour for domestic workers

Option C: Place constraints on the wages of domestic workers

Option D: Increase profits of domestic import competing industries

Correct Answer: Place constraints on the wages of domestic workers ✔

Option A: Automobiles

Option B: Steel

Option C: Radios and TVs

Option D: Computer software

Correct Answer: Computer software ✔

Option A: Exports should exceed imports

Option B: imports should exceed exports

Option C: Resources are more mobile internationally than are goods

Option D: Resources are less mobile internationally than are goods

Correct Answer: Resources are less mobile internationally than are goods ✔

Option A: The introduction of new products

Option B: Product design and quality

Option C: Product price

Option D: All of the above

Correct Answer: All of the above ✔

Option A: International movements of capital

Option B: International movements of labor

Option C: International movements of technology

Option D: Domestic production of different goods and services

Correct Answer: Domestic production of different goods and services ✔

Option A: Some nations prefer to produce one thing while others produce another

Option B: Resources are not equally distributed to all trading nations

Option C: Trade enhances opportunities to accumulate profits

Option D: interest rates are not identical in all trading nations

Correct Answer: Resources are not equally distributed to all trading nations ✔