Question 1

One factor mentioned in the text as a reason for the "first golden age" of trade was:

Accepted Answer

A)  the invention of the cotton gin. 
B)  the invention of the wheel. 
C)  improved methods of transporting goods. 
D)  the invention of the computer. 
A)  the invention of the cotton gin. 
B)  the invention of the wheel. 
C)  improved methods of transporting goods. 
D)  the invention of the computer.

Question 2

If a country's GDP is $10 trillion and its overall trade flows are $2 trillion (exports plus imports), then:

Accepted Answer

A)  its trade-to-GDP ratio is 20%. 
B)  it is not a successful country. 
C)  its GDP needs to increase. 
D)  its trade-to-GDP ratio is too high. 
A)  its trade-to-GDP ratio is 20%. 
B)  it is not a successful country. 
C)  its GDP needs to increase. 
D)  its trade-to-GDP ratio is too high.

Question 3

Currently, which of the following countries is the world's largest exporter of goods (in dollar volume)?

Accepted Answer

A)  China 
B)  the United States 
C)  Japan 
D)  Germany 
A)  China 
B)  the United States 
C)  Japan 
D)  Germany

Question 4

Europe and the United States accounted for ______ of world exports in 2014.

Accepted Answer

A)  20% 
B)  15% 
C)  80% 
D)  50% 
A)  20% 
B)  15% 
C)  80% 
D)  50%

Question 5

Which of the following is NOT classified as horizontal FDI?

Accepted Answer

A)  NUCOR, a U.S. steel manufacturer, purchases an iron ore mine in Australia. 
B)  BMW, a German auto manufacturer, constructs an auto assembly plant in South Carolina. 
C)  Burger King, an American fast food chain, buys Canadian fast-food chain Tim Horton's. 
D)  General Motors, an American auto manufacturer, constructs an auto assembly plant in Toronto, Canada. 
A)  NUCOR, a U.S. steel manufacturer, purchases an iron ore mine in Australia. 
B)  BMW, a German auto manufacturer, constructs an auto assembly plant in South Carolina. 
C)  Burger King, an American fast food chain, buys Canadian fast-food chain Tim Horton's. 
D)  General Motors, an American auto manufacturer, constructs an auto assembly plant in Toronto, Canada.

Question 6

Which of the following is an example of trade of goods, otherwise known as trade flow?

Accepted Answer

A)  Robert Feenstra purchases $100 million of British treasury bonds. 
B)  Robert Feenstra purchases a yogurt factory in France. 
C)  Robert Feenstra purchases a British-made Range Rover. 
D)  Robert Feenstra purchases 100 shares of Novartis AG, a Swiss pharmaceutical company. 
A)  Robert Feenstra purchases $100 million of British treasury bonds. 
B)  Robert Feenstra purchases a yogurt factory in France. 
C)  Robert Feenstra purchases a British-made Range Rover. 
D)  Robert Feenstra purchases 100 shares of Novartis AG, a Swiss pharmaceutical company.

Question 7

Until recently, labor could freely move from one country to another within the EU. However, some EU countries now place restrictions on migrants from new EU members. Why have these countries done so?

Accepted Answer

The freedom of movement for workers is o

Question 8

Which of the following statements best explains the low level (about $35 billion) of trade between the United States and Russia?

Accepted Answer

A)  Russia doesn't produce goods that Americans want to buy. 
B)  The Russian market is smaller than the markets of most other countries. 
C)  Political tensions between Russia and the United States reduce the level of trade between the two countries. 
D)  The United States has banned food imports from Russia. 
A)  Russia doesn't produce goods that Americans want to buy. 
B)  The Russian market is smaller than the markets of most other countries. 
C)  Political tensions between Russia and the United States reduce the level of trade between the two countries. 
D)  The United States has banned food imports from Russia.

Question 9

The United States-China bilateral trade balance may overstate the trade gap if:

Accepted Answer

A)  some of the inputs used to produce Chinese exports are imported. 
B)  none of the inputs used to produce Chinese exports are imported. 
C)  Chinese exports are valued in the United States versus Chinese currency. 
D)  the United States imposes trade restrictions on Chinese imports. 
A)  some of the inputs used to produce Chinese exports are imported. 
B)  none of the inputs used to produce Chinese exports are imported. 
C)  Chinese exports are valued in the United States versus Chinese currency. 
D)  the United States imposes trade restrictions on Chinese imports.

Question 10

What caused the decline in trade during the 2008-09 financial crisis?

Accepted Answer

A)  rising house prices, which took up more consumer income 
B)  decreased demand during the crisis 
C)  greater productivity in the developing countries 
D)  pirate activity off the coast of Africa 
A)  rising house prices, which took up more consumer income 
B)  decreased demand during the crisis 
C)  greater productivity in the developing countries 
D)  pirate activity off the coast of Africa

Question 11

If we measure the ratio of total trade to GDP, which of the following nations had the highest ratio in 2014?

Accepted Answer

A)  Hong Kong (China) 
B)  Japan 
C)  Germany 
D)  the United States 
A)  Hong Kong (China) 
B)  Japan 
C)  Germany 
D)  the United States

Question 12

Other nations responded to the Smoot-Hawley tariff by:

Accepted Answer

A)  complaining to the United Nations. 
B)  raising tariffs on imports in retaliation. 
C)  lowering prices on exports in order to increase sales. 
D)  attacking military bases in nations that refused to lower tariffs. 
A)  complaining to the United Nations. 
B)  raising tariffs on imports in retaliation. 
C)  lowering prices on exports in order to increase sales. 
D)  attacking military bases in nations that refused to lower tariffs.

Question 13

Most foreign direct investment among industrialized countries is:

Accepted Answer

A)  vertical FDI. 
B)  horizontal FDI. 
C)  industrial FDI. 
D)  reverse-vertical FDI. 
A)  vertical FDI. 
B)  horizontal FDI. 
C)  industrial FDI. 
D)  reverse-vertical FDI.

Question 14

Which of the following ratios is used to measure a country's openness to international trade?

Accepted Answer

A)  the ratio of its exports to its GDP 
B)  the ratio of its imports to its GDP 
C)  the ratio of its trade balance (exports minus imports) to its GDP 
D)  the ratio of its exports plus imports to its GDP 
A)  the ratio of its exports to its GDP 
B)  the ratio of its imports to its GDP 
C)  the ratio of its trade balance (exports minus imports) to its GDP 
D)  the ratio of its exports plus imports to its GDP

Question 15

When a foreign resident purchases a good or service from someone in the United States, the transaction is:

Accepted Answer

A)  a U.S. export. 
B)  a U.S. import. 
C)  bilateral exchange. 
D)  a compensating differential. 
A)  a U.S. export. 
B)  a U.S. import. 
C)  bilateral exchange. 
D)  a compensating differential.

Question 16

What was an eventual outcome of the Smoot-Hawley tariff enacted by the United States?

Accepted Answer

A)  a renewed effort to reestablish international trade and the flow of payments via new international organizations 
B)  a focus on environmental and labor problems caused by trade 
C)  a renewed emphasis on gold as a means of payment 
D)  flows of foreign aid to low-income nations 
A)  a renewed effort to reestablish international trade and the flow of payments via new international organizations 
B)  a focus on environmental and labor problems caused by trade 
C)  a renewed emphasis on gold as a means of payment 
D)  flows of foreign aid to low-income nations

Question 17

Which of the following statements explains why Asian countries such as China and Vietnam export goods to industrialized countries?

Accepted Answer

A)  Workers in China and Vietnam receive low wages. 
B)  Workers are more productive in China and Vietnam than in industrialized countries. 
C)  China and Vietnam have an abundant supply of raw materials. 
D)  Chinese and Vietnamese factories are more technologically advanced than those in industrialized countries. 
A)  Workers in China and Vietnam receive low wages. 
B)  Workers are more productive in China and Vietnam than in industrialized countries. 
C)  China and Vietnam have an abundant supply of raw materials. 
D)  Chinese and Vietnamese factories are more technologically advanced than those in industrialized countries.

Question 18

Imports are:

Accepted Answer

A)  goods or services purchased from a foreign resident. 
B)  goods or services sold to foreign residents. 
C)  goods only purchased from foreigners-you cannot purchase services from foreigners. 
D)  services only-imports do not include goods. 
A)  goods or services purchased from a foreign resident. 
B)  goods or services sold to foreign residents. 
C)  goods only purchased from foreigners-you cannot purchase services from foreigners. 
D)  services only-imports do not include goods.

Question 19

After 1945, world trade:

Accepted Answer

A)  grew more slowly than in the decade before World War II. 
B)  grew more rapidly than in the decade before World War II. 
C)  grew in absolute dollar terms but not as a ratio of GDP. 
D)  fell both in absolute and relative terms. 
A)  grew more slowly than in the decade before World War II. 
B)  grew more rapidly than in the decade before World War II. 
C)  grew in absolute dollar terms but not as a ratio of GDP. 
D)  fell both in absolute and relative terms.

Question 20

An American tourist buys a ticket to an opera in Paris. The U.S. government classifies this transaction as:

Accepted Answer

A)  a goods' import of a French Opera. 
B)  a service export. 
C)  a service import. 
D)  a goods' export. 
A)  a goods' import of a French Opera. 
B)  a service export. 
C)  a service import. 
D)  a goods' export.

Exam 1: Trade in the Global Economy

One factor mentioned in the text as a reason for the "first golden age" of trade was:

If a country's GDP is $10 trillion and its overall trade flows are $2 trillion (exports plus imports), then:

Currently, which of the following countries is the world's largest exporter of goods (in dollar volume)?

Europe and the United States accounted for ______ of world exports in 2014.

Which of the following is NOT classified as horizontal FDI?

Which of the following is an example of trade of goods, otherwise known as trade flow?

Until recently, labor could freely move from one country to another within the EU. However, some EU countries now place restrictions on migrants from new EU members. Why have these countries done so?

Which of the following statements best explains the low level (about $35 billion) of trade between the United States and Russia?

The United States-China bilateral trade balance may overstate the trade gap if:

What caused the decline in trade during the 2008-09 financial crisis?

If we measure the ratio of total trade to GDP, which of the following nations had the highest ratio in 2014?

Other nations responded to the Smoot-Hawley tariff by:

Most foreign direct investment among industrialized countries is:

Which of the following ratios is used to measure a country's openness to international trade?

When a foreign resident purchases a good or service from someone in the United States, the transaction is:

What was an eventual outcome of the Smoot-Hawley tariff enacted by the United States?

Which of the following statements explains why Asian countries such as China and Vietnam export goods to industrialized countries?

Imports are:

After 1945, world trade:

An American tourist buys a ticket to an opera in Paris. The U.S. government classifies this transaction as:

Trade and Technology: The Ricardian Model

Gains and Losses From Trade in the Specific-Factors Model

Trade and Resources: the Heckscher-Ohlin Model

Movement of Labor and Capital Between Countries

Increasing Returns to Scale and Monopolistic Competition

Offshoring of Goods and Services

Import Tariffs and Quotas Under Perfect Competition

Import Tariffs and Quotas Under Imperfect Competition

Export Subsidies in Agriculture and High-Technology Industries

International Agreements: Trade, Labor, and the Environment

The Global Macroeconomy

Introduction to Exchange Rates and the Foreign Exchange Market

Exchange Rates I: the Monetary Approach in the Long Run

Exchange Rates II: the Asset Approach in the Short Run

National and International Accounts: Income, Wealth, and the Balance of Payments

Balance of Payments I: the Gains From Financial Globalization

Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

Fixed Versus Floating: International Monetary Experience

Exchange Rate Crises: How Pegs Work and How They Break

The Euro

Topics in International Macroeconomics

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