Question 1

What are the differences between vertical and horizontal FDI?

Accepted Answer

Foreign Direct Investment (FDI) is an in

Question 2

Which of the following is a reason why a Chinese pork-producing firm recently acquired Smithfield Foods (an American pork-processing firm)?

Accepted Answer

A)  The Chinese firm wanted to use its pork-processing techniques to improve Smithfield's pork-processing techniques. 
B)  The Chinese firm's acquisition would help it satisfy a growing demand for pork in China. 
C)  The Chinese firm wanted to take advantage of lower wages in the United States. 
D)  The Chinese firm wanted to monopolize the U.S. pork-producing industry. 
A)  The Chinese firm wanted to use its pork-processing techniques to improve Smithfield's pork-processing techniques. 
B)  The Chinese firm's acquisition would help it satisfy a growing demand for pork in China. 
C)  The Chinese firm wanted to take advantage of lower wages in the United States. 
D)  The Chinese firm wanted to monopolize the U.S. pork-producing industry.

Question 3

Why do some countries (such as the United States) have low ratios of international trade (exports + imports) to GDP?

Accepted Answer

Countries like the United States may hav

Question 4

Which decade of the twentieth century had the highest average tariffs worldwide?

Accepted Answer

A)  1900-09 
B)  1930-39 
C)  1950-59 
D)  1970-79 
A)  1900-09 
B)  1930-39 
C)  1950-59 
D)  1970-79

Question 5

What is a major concern of many Americans about the number of Mexican migrants in the United States?

Accepted Answer

A)  Mexican migrants may petition the United States to adopt Spanish as its official language. 
B)  Mexican migrants may drive down wages of American workers. 
C)  Many Mexican migrants never learn to speak English. 
D)  Mexican migrants are displacing American workers in high-tech jobs. 
A)  Mexican migrants may petition the United States to adopt Spanish as its official language. 
B)  Mexican migrants may drive down wages of American workers. 
C)  Many Mexican migrants never learn to speak English. 
D)  Mexican migrants are displacing American workers in high-tech jobs.

Question 6

Is most FDI from high-income to low-income countries?

Accepted Answer

Yes, most Foreign Direct Investment (FDI

Question 7

An example of "value-added" as an important concept for international trade was the case of imports of iPhones from China. The value-added by China was equal to:

Accepted Answer

A)  the total value of imported raw and semi-finished materials into China plus the value of the export to the United States. 
B)  the total value of the export to the United States minus the total value of imported raw and semi-finished materials into China. 
C)  the total value of the export plus shipping costs. 
D)  the difference between the total values of exports to the United States minus the total value of imports from the United States. 
A)  the total value of imported raw and semi-finished materials into China plus the value of the export to the United States. 
B)  the total value of the export to the United States minus the total value of imported raw and semi-finished materials into China. 
C)  the total value of the export plus shipping costs. 
D)  the difference between the total values of exports to the United States minus the total value of imports from the United States.

Question 8

Some countries have low ratios of international trade (exports + imports) to GDP (such as the United States), while, in other countries, the ratio of international trade to GDP exceeds 100%. How is it possible for trade to exceed the value of GDP?

Accepted Answer

The ratio of international trade to GDP

Question 9

Which of the following is classified as reverse-vertical FDI?

Accepted Answer

A)  Subaru, a Japanese automaker, builds a plant in Indiana to assemble Subaru Outbacks. 
B)  Coca-Cola, an American multinational corporation, constructs a bottling plant in Saudi Arabia. 
C)  A Chinese steel producer purchases an iron ore mine in Minnesota. 
D)  Fiat, an Italian automaker, buys Chrysler Motors. 
A)  Subaru, a Japanese automaker, builds a plant in Indiana to assemble Subaru Outbacks. 
B)  Coca-Cola, an American multinational corporation, constructs a bottling plant in Saudi Arabia. 
C)  A Chinese steel producer purchases an iron ore mine in Minnesota. 
D)  Fiat, an Italian automaker, buys Chrysler Motors.

Question 10

Which of the following is an example of a service export?

Accepted Answer

A)  Universal Pictures licenses the right to show the movie Jurassic Park to a Chinese theater chain. 
B)  Joan Brown migrates from the United States to Canada. 
C)  Tom Jones purchases 100 shares of Eaton Corporation, an Irish company. 
D)  Monique le Flambeau, a French citizen, purchases a Ford F150 while visiting the United States. 
A)  Universal Pictures licenses the right to show the movie Jurassic Park to a Chinese theater chain. 
B)  Joan Brown migrates from the United States to Canada. 
C)  Tom Jones purchases 100 shares of Eaton Corporation, an Irish company. 
D)  Monique le Flambeau, a French citizen, purchases a Ford F150 while visiting the United States.

Question 11

Which of the following is an example of reverse-vertical FDI?

Accepted Answer

A)  Geely-a Chinese automaker-buys Volvo from Ford Motor Company. 
B)  Toyota-a Japanese automaker-constructs a truck manufacturing plant in Texas. 
C)  Chevron-an American petroleum firm-acquires a British petroleum firm. 
D)  General Motors-an American auto manufacturer-builds a plant in China to supply Buicks to the Chinese market. 
A)  Geely-a Chinese automaker-buys Volvo from Ford Motor Company. 
B)  Toyota-a Japanese automaker-constructs a truck manufacturing plant in Texas. 
C)  Chevron-an American petroleum firm-acquires a British petroleum firm. 
D)  General Motors-an American auto manufacturer-builds a plant in China to supply Buicks to the Chinese market.

Question 12

A tariff is:

Accepted Answer

A)  a tax on an import. 
B)  a physical limitation on the quantity of imports of a certain good. 
C)  a health or safety requirement on imports. 
D)  a regulation affecting imports. 
A)  a tax on an import. 
B)  a physical limitation on the quantity of imports of a certain good. 
C)  a health or safety requirement on imports. 
D)  a regulation affecting imports.

Question 13

What is the term for a capital flow that is used to purchase or build a tangible asset like a factory?

Accepted Answer

A)  migration 
B)  service exports 
C)  service imports 
D)  foreign direct investment 
A)  migration 
B)  service exports 
C)  service imports 
D)  foreign direct investment

Question 14

Which of the following is NOT a reason for a firm to engage in horizontal FDI?

Accepted Answer

A)  It may want to expand its business across international borders. 
B)  It may want to avoid tariffs in its foreign markets. 
C)  It may want to avoid tariffs in its home market. 
D)  It may want to reduce its corporate taxes. 
A)  It may want to expand its business across international borders. 
B)  It may want to avoid tariffs in its foreign markets. 
C)  It may want to avoid tariffs in its home market. 
D)  It may want to reduce its corporate taxes.

Question 15

Which of the following statements best describes one of the textbook authors' views on how global warming might affect international trade?

Accepted Answer

A)  It may reduce international trade as countries develop policies to offset global warming. 
B)  The melting of Arctic ice may allow cheaper and faster transportation of goods between Asia and Europe. 
C)  The melting of Arctic ice may allow cheaper and faster transportation of goods between Europe and the United States. 
D)  It may increase international trade as countries develop policies to offset global warming. 
A)  It may reduce international trade as countries develop policies to offset global warming. 
B)  The melting of Arctic ice may allow cheaper and faster transportation of goods between Asia and Europe. 
C)  The melting of Arctic ice may allow cheaper and faster transportation of goods between Europe and the United States. 
D)  It may increase international trade as countries develop policies to offset global warming.

Question 16

The movement of people across borders is known as:

Accepted Answer

A)  resettlement. 
B)  guest workers. 
C)  migration. 
D)  fractionalization. 
A)  resettlement. 
B)  guest workers. 
C)  migration. 
D)  fractionalization.

Question 17

A Chinese student pays tuition to a U.S. university. How is this transaction entered in Chinese and U.S. trade data?

Accepted Answer

When a Chinese student pays tuition to a

Question 18

How does trade in the modern world economy differ from trade in the past-say, 1925?

Accepted Answer

Trade in the modern world economy differ

Question 19

What is the immediate effect of increasing tariffs in a country on its economy?

Accepted Answer

A)  It increases the volume of trade. 
B)  It reduces the volume of imports. 
C)  It increases the volume of exports. 
D)  It promotes better trade relations with other countries. 
A)  It increases the volume of trade. 
B)  It reduces the volume of imports. 
C)  It increases the volume of exports. 
D)  It promotes better trade relations with other countries.

Question 20

Merchandise trade among European countries accounted for approximately what share of total world merchandise (goods) trade in 2014?

Accepted Answer

A)  3% 
B)  23% 
C)  50% 
D)  75% 
A)  3% 
B)  23% 
C)  50% 
D)  75%

Exam 1: Trade in the Global Economy

What are the differences between vertical and horizontal FDI?

Which of the following is a reason why a Chinese pork-producing firm recently acquired Smithfield Foods (an American pork-processing firm)?

Why do some countries (such as the United States) have low ratios of international trade (exports + imports) to GDP?

Which decade of the twentieth century had the highest average tariffs worldwide?

What is a major concern of many Americans about the number of Mexican migrants in the United States?

Is most FDI from high-income to low-income countries?

An example of "value-added" as an important concept for international trade was the case of imports of iPhones from China. The value-added by China was equal to:

Some countries have low ratios of international trade (exports + imports) to GDP (such as the United States), while, in other countries, the ratio of international trade to GDP exceeds 100%. How is it possible for trade to exceed the value of GDP?

Which of the following is classified as reverse-vertical FDI?

Which of the following is an example of a service export?

Which of the following is an example of reverse-vertical FDI?

A tariff is:

What is the term for a capital flow that is used to purchase or build a tangible asset like a factory?

Which of the following is NOT a reason for a firm to engage in horizontal FDI?

Which of the following statements best describes one of the textbook authors' views on how global warming might affect international trade?

The movement of people across borders is known as:

A Chinese student pays tuition to a U.S. university. How is this transaction entered in Chinese and U.S. trade data?

How does trade in the modern world economy differ from trade in the past-say, 1925?

What is the immediate effect of increasing tariffs in a country on its economy?

Merchandise trade among European countries accounted for approximately what share of total world merchandise (goods) trade in 2014?

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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