Question 1

More than one half of migration is:

Accepted Answer

A)  from Organization for Economic Cooperation and Development (OEC
D)  countries to other OECD countries. 
B)  from OECD countries to non-OECD countries. 
C)  from non-OECD countries to OECD countries. 
D)  from non-OECD countries to other non-OECD countries. 
A)  from Organization for Economic Cooperation and Development (OEC
D)  countries to other OECD countries. 
B)  from OECD countries to non-OECD countries. 
C)  from non-OECD countries to OECD countries. 
D)  from non-OECD countries to other non-OECD countries.

Question 2

__________ foreign direct investment occurs when a firm from an industrial country owns a plant in a developing country.

Accepted Answer

A)  Vertical 
B)  Horizontal 
C)  Industrial 
D)  Reverse-vertical 
A)  Vertical 
B)  Horizontal 
C)  Industrial 
D)  Reverse-vertical

Question 3

Which of the following statements about the United States-China bilateral trade balance is correct?

Accepted Answer

A)  It is a good indicator of the inequality of imports and exports between the United States and China. 
B)  It vastly understates the gap in imports and exports between the United States and China. 
C)  It may overstate the gap in imports and exports between the United States and China because some material inputs used to produce Chinese exports do not originate in China. 
D)  It shows that there is balanced trade between the United States and China. 
A)  It is a good indicator of the inequality of imports and exports between the United States and China. 
B)  It vastly understates the gap in imports and exports between the United States and China. 
C)  It may overstate the gap in imports and exports between the United States and China because some material inputs used to produce Chinese exports do not originate in China. 
D)  It shows that there is balanced trade between the United States and China.

Question 4

If a country's GDP is $10 trillion, its exports are $1 trillion, and its imports are $1.5 trillion, then:

Accepted Answer

A)  its trade-to-GDP ratio is 10%. 
B)  its trade-to-GDP ratio is 15%. 
C)  its trade-to-GDP ratio is 25%. 
D)  its trade-to-GDP ratio is 400%. 
A)  its trade-to-GDP ratio is 10%. 
B)  its trade-to-GDP ratio is 15%. 
C)  its trade-to-GDP ratio is 25%. 
D)  its trade-to-GDP ratio is 400%.

Question 5

Which of the following statements is an example of vertical FDI?

Accepted Answer

A)  An American company purchases a British soccer team. 
B)  Ford Motor company establishes a plant in Canada. 
C)  GM opens a plant in India. 
D)  BMW opens a plant in Bilbao, Spain. 
A)  An American company purchases a British soccer team. 
B)  Ford Motor company establishes a plant in Canada. 
C)  GM opens a plant in India. 
D)  BMW opens a plant in Bilbao, Spain.

Question 6

What entries are used to calculate a country's bilateral trade balance?

Accepted Answer

A)  its unemployment and inflation rates 
B)  its exports to and imports from another country 
C)  its per capita income and imports 
D)  its exports and per capita income 
A)  its unemployment and inflation rates 
B)  its exports to and imports from another country 
C)  its per capita income and imports 
D)  its exports and per capita income

Question 7

When a firm in an industrial nation purchases a firm in a lower-income nation, economists call it:

Accepted Answer

A)  egalitarian FDI. 
B)  balanced FDI. 
C)  horizontal FDI. 
D)  vertical FDI. 
A)  egalitarian FDI. 
B)  balanced FDI. 
C)  horizontal FDI. 
D)  vertical FDI.

Question 8

Whenever the value of a nation's exports is more than the value of its imports, the nation has:

Accepted Answer

A)  a trade deficit. 
B)  a trade surplus. 
C)  balanced trade. 
D)  a trade balance. 
A)  a trade deficit. 
B)  a trade surplus. 
C)  balanced trade. 
D)  a trade balance.

Question 9

What is the principal reason for Intel (a U.S. computer chip producer) to establish a computer chip manufacturing plant in a developing country (e.g., Malaysia)?

Accepted Answer

A)  to take advantage of low wages in Malaysia 
B)  to take advantage of Malaysia's climate 
C)  to take advantage of Malaysia's low tariffs on imported computer chips 
D)  to avoid Malaysia's low export taxes on computer chips 
A)  to take advantage of low wages in Malaysia 
B)  to take advantage of Malaysia's climate 
C)  to take advantage of Malaysia's low tariffs on imported computer chips 
D)  to avoid Malaysia's low export taxes on computer chips

Question 10

By 2012, the average worldwide tariff had fallen to about:

Accepted Answer

A)  35%. 
B)  25%. 
C)  15%. 
D)  7%. 
A)  35%. 
B)  25%. 
C)  15%. 
D)  7%.

Question 11

NAFTA is:

Accepted Answer

A)  a free-trade area among Mexico, Canada, and the United States. 
B)  a trade agreement to limit environmentally dangerous imports and exports. 
C)  a law preventing illegal immigration. 
D)  another name for the European Union. 
A)  a free-trade area among Mexico, Canada, and the United States. 
B)  a trade agreement to limit environmentally dangerous imports and exports. 
C)  a law preventing illegal immigration. 
D)  another name for the European Union.

Question 12

Intel, an American company, has manufacturing plants in China that assemble U.S.-made components. Suppose one of these plants produces and sells a computer chip to a Chinese computer manufacturer. How is this sale recorded in U.S. international trade statistics?

Accepted Answer

A)  It is considered to be neither a U.S. import nor a U.S. export. 
B)  It is considered to be a U.S. export to China 
C)  It is considered to be a U.S. import from China 
D)  The value of U.S.-made chip components is considered to be a U.S. export. 
A)  It is considered to be neither a U.S. import nor a U.S. export. 
B)  It is considered to be a U.S. export to China 
C)  It is considered to be a U.S. import from China 
D)  The value of U.S.-made chip components is considered to be a U.S. export.

Question 13

What country was the world's largest exporter of goods in 2014?

Accepted Answer

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

Question 14

Reasons that firms in an industrial nation acquire firms in another industrial nation do NOT include:

Accepted Answer

A)  avoidance of import tariffs and quotas in the other nation. 
B)  the ability to acquire technology and resources from the other nation. 
C)  access to the other nation's market. 
D)  avoidance of export taxes in the other nation. 
A)  avoidance of import tariffs and quotas in the other nation. 
B)  the ability to acquire technology and resources from the other nation. 
C)  access to the other nation's market. 
D)  avoidance of export taxes in the other nation.

Question 15

Jane Ferlengeti, a U.S. citizen, purchases a phone for $300 that Apple imported from China. Apple paid its Chinese subsidiary $150 for the phone. How did these transactions change the U.S.-Chinese bilateral trade balance?

Accepted Answer

A)  It improved (i.e., increased) by $300. 
B)  It worsened (i.e., fell) by $300. 
C)  It worsened by $150. 
D)  It did not change the U.S.--Chinese trade balance, since Apple's $150 margin ($300-$150) offset the $150 cost of importing the phone from China. 
A)  It improved (i.e., increased) by $300. 
B)  It worsened (i.e., fell) by $300. 
C)  It worsened by $150. 
D)  It did not change the U.S.--Chinese trade balance, since Apple's $150 margin ($300-$150) offset the $150 cost of importing the phone from China.

Question 16

The difference in value between a nation's exports and imports is called:

Accepted Answer

A)  its trade deficit. 
B)  its bilateral trade balance. 
C)  balanced trade. 
D)  its trade balance. 
A)  its trade deficit. 
B)  its bilateral trade balance. 
C)  balanced trade. 
D)  its trade balance.

Question 17

Which of the following is classified as a United States service export?

Accepted Answer

A)  Renee LaFrancois, a French citizen, has her hair dyed in a New York salon. 
B)  Miguel Ramirez, a Mexican citizen, gets paid for working in a Kansas vegetable-canning factory. 
C)  Harvey Guelph, a U.S. citizen, gets his haircut in a British barber shop. 
D)  Marie Thompson, a U.S. citizen, purchases a bottle of champagne in a French grocery store. 
A)  Renee LaFrancois, a French citizen, has her hair dyed in a New York salon. 
B)  Miguel Ramirez, a Mexican citizen, gets paid for working in a Kansas vegetable-canning factory. 
C)  Harvey Guelph, a U.S. citizen, gets his haircut in a British barber shop. 
D)  Marie Thompson, a U.S. citizen, purchases a bottle of champagne in a French grocery store.

Question 18

Which of the following is an example of a foreign direct investment (FDI) flow?

Accepted Answer

A)  the purchase of a controlling interest in a foreign firm by a domestic firm 
B)  the purchase of stocks or bonds directly from an international dealer 
C)  the purchase of foreign government bonds by domestic investors 
D)  accounts denominated in foreign currency in foreign banks owned by domestic depositors 
A)  the purchase of a controlling interest in a foreign firm by a domestic firm 
B)  the purchase of stocks or bonds directly from an international dealer 
C)  the purchase of foreign government bonds by domestic investors 
D)  accounts denominated in foreign currency in foreign banks owned by domestic depositors

Question 19

A country's service exports include:

Accepted Answer

A)  a restaurant meal purchased by its resident in another country. 
B)  equipment or automobiles with a warranty and a service contract sold to a foreign resident. 
C)  a ticket on a country's airline sold to a foreign resident. 
D)  a country's resident who migrates to work in another country. 
A)  a restaurant meal purchased by its resident in another country. 
B)  equipment or automobiles with a warranty and a service contract sold to a foreign resident. 
C)  a ticket on a country's airline sold to a foreign resident. 
D)  a country's resident who migrates to work in another country.

Question 20

FDI flows into the United States and Europe are:

Accepted Answer

A)  the largest in the world. 
B)  smaller than FDI to China. 
C)  smaller than their share of trade flows. 
D)  called horizontal FDI. 
A)  the largest in the world. 
B)  smaller than FDI to China. 
C)  smaller than their share of trade flows. 
D)  called horizontal FDI.

Exam 1: Trade in the Global Economy

More than one half of migration is:

__________ foreign direct investment occurs when a firm from an industrial country owns a plant in a developing country.

Which of the following statements about the United States-China bilateral trade balance is correct?

If a country's GDP is $10 trillion, its exports are $1 trillion, and its imports are $1.5 trillion, then:

Which of the following statements is an example of vertical FDI?

What entries are used to calculate a country's bilateral trade balance?

When a firm in an industrial nation purchases a firm in a lower-income nation, economists call it:

Whenever the value of a nation's exports is more than the value of its imports, the nation has:

What is the principal reason for Intel (a U.S. computer chip producer) to establish a computer chip manufacturing plant in a developing country (e.g., Malaysia)?

By 2012, the average worldwide tariff had fallen to about:

NAFTA is:

Intel, an American company, has manufacturing plants in China that assemble U.S.-made components. Suppose one of these plants produces and sells a computer chip to a Chinese computer manufacturer. How is this sale recorded in U.S. international trade statistics?

What country was the world's largest exporter of goods in 2014?

Reasons that firms in an industrial nation acquire firms in another industrial nation do NOT include:

Jane Ferlengeti, a U.S. citizen, purchases a phone for $300 that Apple imported from China. Apple paid its Chinese subsidiary $150 for the phone. How did these transactions change the U.S.-Chinese bilateral trade balance?

The difference in value between a nation's exports and imports is called:

Which of the following is classified as a United States service export?

Which of the following is an example of a foreign direct investment (FDI) flow?

A country's service exports include:

FDI flows into the United States and Europe are:

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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