Deck 1: The Global Economy

Question 1

What country was the world's largest exporter of goods in
2012?
B)China
C)Germany
D)the United States
E)Japan

Answer 1

B

Question 2

Exports are:

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

Answer 2

B

Question 3

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

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

Answer 3

D

Question 4

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

A)Rene LaFrancois, a French citizen, has her hair dyed in a New York hair salon.
B)Miguel Ramirez, a Mexican citizen, gets paid for working in a Kansas vegetable­canning 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 5

The difference between the total value of a country's
Exports and the total value of its imports is defined as the
Country's:

A)trade status.
B)trade balance.
C)trade deficit.
D)bilateral trade balance.

Question 6

If country X has a GDP of $1 trillion and exports $200
Billion to country Y and imports $300 billion from country
Y, then its bilateral trade balance with country Y is:

A)-$100 billion.
B)$100 billion.
C)$500 billion.
D)50%.

Question 7

Which of the following entries is considered to be a service
Export?

A)the Japanese buying soybeans from the United States
B)the Chinese selling iPhones to the United States
C)Mexican tourists visiting the Grand Canyon
D)the French selling wine to the United States

Question 8

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

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

Question 9

A Chinese student pays tuition at a U.S.university.The
Chinese government classifies this transaction as:

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

Question 10

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

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

Question 11

Which of the following is a trade flow?

A)Robert Feenstra purchases $100 million of British treasury bonds.
B)Robert Feenstra purchases a yogurt factory in France.
C)Neither of Robert Feenstra's purchases is considered a trade flow.
D)Both of Robert Feenstra's purchases are considered trade flows.

Question 12

If the value of a nation's imports is more than the value of
Its exports, then the nation is experiencing:

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

Question 13

Imports are:

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 14

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

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

Question 15

Which of the following transactions is NOT a trade flow?

A)domestic residents' purchases of foreign­made goods
B)domestic residents' purchases of foreign­provided services
C)domestic residents' purchases of foreign stocks and bonds
D)domestic residents' purchases of foreign­produced software

Question 16

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

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

Question 17

A country's service exports include:

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 18

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

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

Question 19

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

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

Question 20

Whenever the value of a nation's exports equals the value
Of its imports, the nation is experiencing:

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

Question 21

"Value added" in the context of international trade refers
To:

A)the difference between the value of exports and the value of imported inputs used in producing exports.
B)the additional value a worker provides to a firm when she is hired.
C)the value added by being able to purchase goods in a competitive market.
D)the value added by import brokers when they mark up the price of the products.

Question 22

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?

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 23

U.S.and European merchandise trade accounted for
Approximately what share of total world merchandise
(goods) trade in 2010?

A)slightly more than one fourth
B)slightly more than one third
C)about one half
D)slightly more than two thirds

Question 24

NAFTA is:

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 25

Africa's share of world exports was _________ in 2010.

A)2%
B)12%
C)1.5%
D)58%

Question 26

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

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 27

Which of the following countries is NOT a member of the
European Union?

A)Turkey
B)Slovakia
C)Hungary
D)Poland

Question 28

Why should the recorded U.S.­Chinese bilateral trade
Deficit in goods be interpreted with some caution?

A)U.S.imports of Chinese products may be produced by U.S.subsidiaries that generate profits for the U.S.parent
Firms (recorded as U.S.service export income).
B)U.S.imports of Chinese products may utilize material inputs that China imports from the United States.
C)U.S.imports of Chinese products may be produced with capital goods (e.g., machinery) that China imports from
The United States.
D)All of these are reasons for a cautious interpretation of the U.S.­Chinese bilateral trade balance.

Question 29

Which of the following countries was an original member of
The European Union when it was established in 1952?

A)Poland
B)Greece
C)the United Kingdom
D)Italy

Question 30

Which of the following statements explain(s) why Asian
Countries trade with industrialized countries?
I)Workers in Asian countries have low wages.
II)Workers are very productive in some Asian countries.
III)Asian countries have an abundant supply of raw
Materials.

A)I
B)I, II
C)1I
D)I, II, and III

Question 31

Which of the following economic groupings has the largest
Volume of trade among its member nations?

A)NAFTA
B)the European Union
C)the Trans­Pacific Partnership
D)the European Free­Trade Area

Question 32

What nations have the world's highest volume of internal
Trade with one another?

A)Canada, Mexico, and Japan
B)Japan, China, South Korea, and Thailand
C)nations in the European Union
D)Middle Eastern countries

Question 33

How many countries are members of the European Union?

A)5
B)12
C)22
D)27

Question 34

Which of the following statements about trade is TRUE?

A)In 2010, Canada was the largest exporter to the United States.
B)Trade volume among China, Japan, Thailand, and Taiwan is the world's largest.
C)Trade volume among Chile, Brazil, Argentina, and Mexico is the world's largest.
D)The combined trade volume of the United States and the European Union is the world's largest.

Question 35

How has China explained its growing bilateral imbalance
With the United States?

A)Current accounting practices make it very difficult to determine the value added and true national origin of
Goods.
B)If the United States would only improve its efficiency, there would be no gap.
C)Most Chinese imports are cheap consumer goods, and no firm in the United States wants to make those things
Anyway.
D)China continues to struggle with corrupt officials at the customs bureau.

Question 36

Europe and the United States accounted for ______ of
World exports in 2010.

A)20%
B)15%
C)80%
D)51%

Question 37

Merchandise trade among European countries accounted
For approximately what share of total world merchandise
(goods) trade in 2010?

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

Question 38

Recent bilateral trade figures alarm politicians who worry
About China's growing trade imbalance with the United
States.What do the authors of your textbook say?

A)The real figures are even more shocking.
B)It is not as bad as the numbers appear because China imports a large percentage of the value of its exports to
The United States from its other trading partners.
C)It depends on how you count imports and exports and on which currency is used.
D)Irresponsible governments, corruption, and greedy corporations are responsible for the widening gap.

Question 39

A bilateral trade balance is:

A)half the trade deficit.
B)the measure of imports only-not exports.
C)the difference between the value of imports and exports between two trading nations.
D)the sum of the value of imports and exports traded between two nations.

Question 40

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

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 41

If the trade­to­GDP ratio is 38% and the GDP is $500
Billion, then what is the overall value of trade?

A)$390 billion
B)190 billion
C)$100 billion
D)Not enough information is provided to answer the question.

Question 42

Suppose that a country has a low ratio of trade to GDP.Which of the
Following may be a possible explanation for this?
I)The country has high import tariffs on imports.
II)The country is geographically distant from the rest of the world.
III)The country is small.

A)I
B)II
C)III
D)I and III

Question 43

One way to gauge the impact of trade on a nation is to
Measure:

A)wage distortions and job loss.
B)the ratio of total imports and exports expressed as a percent of a nation's GDP.
C)shipping costs.
D)rises in national income due to trade.

Question 44

A tax on imported goods is called:

A)a luxury tax.
B)an excise tax.
C)an income tax.
D)a tariff.

Question 45

A tariff is:

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 46

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

A)its trade­to­GDP ratio is 10%.
B)its trade­to­GDP ratio is 15%.
C)its trade­to­GDP is 25%.
D)its trade­to­GDP is 400%.

Question 47

The "first golden age" of trade was:

A)the period from 1890 to 1913, when tariffs were increased between countries.
B)the period from 1890 to 1913, when steamships and railroads increased trade.
C)the period between 1919 and 1935.
D)the inter­war period.

Question 48

The U.S.trade­to­GDP ratio is:

A)the highest in the industrialized world.
B)greater than China's and Japan's.
C)smaller than that of Germany.
D)too high.

Question 49

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

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 50

What is the best measure of a country's openness to
International trade?

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 51

The Smoot­Hawley Tariff act:

A)was passed in response to World War II.
B)was passed as a reaction to the Great Depression in the United States.
C)was enacted by Germany.
D)greatly reduced the barriers to trade.

Question 52

Which of the following countries has the highest ratio of
International trade to GDP?

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

Question 53

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

A)1900-1909
B)1930-1939
C)1950-1959
D)1970-1979

Question 54

If we measure the ratio of total trade to GDP, which of the
Following nations had the highest ratio in 2010?

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

Question 55

What does a country's gross domestic product (GDP)
Measure?

A)the value of all intermediate goods produced in a year
B)the value of all exports produced in a year
C)the value of all final goods produced in a year
D)the value of all production in a year

Question 56

Which of the following is NOT included in the calculation of
A country's gross domestic product (GDP)?

A)the value of all its intermediate goods produced in a year
B)the value of all its exports produced in a year
C)the value of all its final consumption goods produced in a year
D)All of these are included in the calculation of a country's gross domestic product.

Question 57

What do economists call factors that influence (reduce) the
Total dollar volume of goods and services sold across
International borders?

A)trade factor issues
B)trade barriers
C)trade conditions
D)the ratio of total trade to GDP

Question 58

If we measure the ratio of total trade to GDP, which of the
Following nations had the lowest ratio in 2008?

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

Question 59

One factor mentioned as a reason for the first "golden age"
Of trade was:

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 60

If the trade­to­GDP ratio is 25% and the overall value of
Trade is $175 billion, then the GDP is:

A)$250 billion.
B)$700 billion.
C)$1 trillion.
D)$0.5 trillion.

Question 61

In general, migration is _____ than trade.

A)more free
B)more controlled and regulated
C)less desirable
D)more desirable

Question 62

The movement of people across borders is known as:

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

Question 63

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

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

Question 64

By 2010, the average worldwide tariff had fallen to about:

A)35%.
B)25%.
C)15%.
D)5%.

Question 65

What lesson was learned from the imposition of the
Smoot­Hawley tariff?

A)Nations can usually work out their differences without any structure or international organization.
B)Tariffs are often necessary to keep trade fair.
C)Retaliation and tariff escalation are not as harmful as many suppose.
D)A reduction of trade as a result of a tariff imposes large costs on the countries involved.

Question 66

Other nations responded to the Smoot­Hawley tariff by:

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

Question 67

During the 2008-2009 financial crisis, what happened to
The ratios of trade to GDP for most developed nations?

A)They rose.
B)They fell.
C)They did not change.
D)We do not have enough data yet to say what happened.

Question 68

What was an outcome of the Smoot­Hawley tariff enacted
By the United States?

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 low­income nations

Question 69

What ushered in the "second golden age" of trade?

A)the increase in trade among countries in the period after World War II
B)the introduction of the gold standard
C)the increase in trade restrictions as a reaction to the Smoot­Hawley tariff act
D)the decline in volume of trade among the industrialized countries

Question 70

Most immigration occurs:

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

Question 71

One form of import barrier is an import quota.What is it?

A)a limit on the quantity of a certain import
B)a tax on the value of an import or the imported quantity of a good
C)a health or safety precaution affecting goods that may cause long­term harm to humans or animals
D)a bureaucratic rule that can be overridden by the Secretary for International Trade

Question 72

Immigration issues are usually more intense in:

A)low­wage nations.
B)nations whose borders are not secured.
C)nations with open­door policies.
D)nations whose wages are higher than world averages.

Question 73

What was the short­lived import tariff enacted in 1930 that
Raised rates to an average of 60% on many imports?

A)Reaganomics principle
B)Smoot­Hawley tariff
C)Blair­Bush tariff
D)International equity tariff

Question 74

After 1945, world trade:

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 75

Which of the following countries is NOT a member of the
Organization for Economic Cooperation and Development?

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

Question 76

Despite hopes that migration between nations in the
European Union would be free, several nations have
Agreements to restrict it.Why?

A)They are afraid of disease.
B)Labor policies are very different, and new workers will expect the same benefits.
C)They are concerned that mass inflows of workers will lower wages and offer competition for their own domestic
Labor force.
D)Domestic workers are more productive.

Question 77

According to the article "A Sea Change in Shipping 50
Years Ago," what impact did container shipping have on
Global trade?

A)It increased the time taken to ship commodities.
B)It produced a decrease in the volume of trade.
C)It caused a reduction in the time at the port for ships delivering goods.
D)It increased tariffs between countries.

Question 78

The article "A Sea Change in Shipping 50 Years Ago"
States that the amount of cargo carried in a ship and the
Speed of the ship __________ from 1950 to 1976.

A)increased
B)decreased
C)stayed the same
D)were not related

Question 79

In 1956 an invention increased the volume of world trade
By lowering the cost of shipping.What was the invention?

A)the personal computer
B)the bar code
C)bubble wrap
D)the shipping container

Question 80

What caused the decline in trade during the 2008-2009
Financial crisis?

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