Deck 9: Globalization

Question 1

On average immigration results in

A) A large rise in unemployment amongst native-born workers
B) A rise in wages of native born workers
C) A net reduction in government spending minus revenue as immigrants receive more in government spending/transfers than they pay in taxation
D) A rise in the average age of the population
E) A fall in wages of native born workers

Answer 1

A fall in wages of native born workers

Question 2

Regressing GDP per capita on a measure of openness to trade across countries may give biased estimation results because

A) each country measures openness differently
B) without further restrictions, the regression coefficient for openness could be negative
C) openness may capture the effects of omitted variables such as financial reform
D) openness is an index measure, but GDP per capita is measured in monetary units
E) regression is an appropriate econometric methodology only for time series, not for cross-sectional data

Answer 2

openness may capture the effects of omitted variables such as financial reform

Question 3

Which is not generally true of Foreign Direct Investment by Multinational Enterprises?

A) It tends to increase overall investment in the recipient country
B) They tend to pay higher wages than local firms
C) It tends to result in a transfer of technology to the recipient country
D) It tends to be more volatile than other foreign financing
E) They tend to undertake more research and development than local firms

Answer 3

It tends to be more volatile than other foreign financing

Question 4

In regressing GDP on openness,a potential solution to the simultaneity problem is to

A) use geographical proximity to foreign markets to predict trade flows
B) use tariffs as an inverse measure of openness
C) run a limited-dependent variables regression
D) exclude financial reform as an independent variable
E) lag the dependent variable

Question 5

Which of the following has not been suggested as a benefit of free trade?

A) consumers gain from low import prices
B) the labor force gains from outsourcing of production
C) trade partners are less likely to engage in warfare
D) international trade promotes both short run and long run economic growth
E) international trade reduces poverty rates

Question 6

Trade liberalization

A) reduces poverty wherever it increases real GDP per capita
B) increases inequality in theory but not in practice
C) reduces inequality and poverty if the poor work in expanding sectors
D) has no effect on the distribution of income within a country
E) redistributes income from the rich to the poor even as overall GDP declines

Question 7

Which of the following has not been proposed as a rationale for promoting import substitution?

A) The Prebisch-Singer hypothesis
B) The belief that technological progress occurs mainly in manufacturing
C) The infant industry argument
D) The idea that imports can be a source of TFP growth
E) The fear that reliance on imports makes the economy vulnerable to external forces

Question 8

When did average Tariff protection peak amongst the major nations?

A) Directly after World War II
B) Just before World War I
C) In the 1950's
D) In the late Nineteeth Century
E) In the 1930's

Question 9

The first wave of globalization,in the 19^th century,was facilitated by all of the following except

A) the building of larger, faster, and more reliable ships
B) the development of steam power
C) the introduction of refrigeration
D) the construction of canals
E) the development of safe, reliable airplanes

Question 10

In theory,we would expect immigration to result in

A) Lower wages and lower GDP
B) Lower wages and higher GDP
C) Higher wages and lower GDP
D) Higher wages and higher GDP
E) No impact on wages of GDP

Question 11

Over the past century,the pace of world trade has been

A) steadily declining
B) steadily increasing
C) relatively constant
D) procyclical-rising during booms and declining during recession
E) counter-cyclical: rising during recessions and declining during expansions

Question 12

Which of the following is not assumed by those who believe in the race to the bottom?

A) Corporate taxes would be at appropriate levels without subsidizing MNEs
B) MNEs are easily induced to relocate by government subsidies
C) FDI has spillover benefits that offset subsidies to MNEs
D) Government subsidies to MNEs will force cutbacks n the social safety net
E) Employment at MNEs involves reduced job security

Question 13

In general Globalization has resulted in

A) Increased global inequality
B) Increased inequality in poorer nations
C) Increased inequality in richer nations
D) Decreased inequality in richer nations
E) No impact on inequality

Question 14

Foreign Direct Investment (FDI) is defined as

A) Significant investment by a foreign entity
B) Direct purchases of stocks and/or bonds by foreigners
C) Any investment undertaken by a multinational Enterprise (MNE)
D) Government to Government Loans
E) A Foreign firm taking a controlling interest in local firm

Question 15

Which of the following is not an observed response of Multinational Enterprises (MNEs) to higher corporation tax in one country

A) Lowering wages in that location
B) Internal restructuring to shift profits to lower tax locations
C) Altering investment plans so as to expand into new, lower tax, locations
D) Altering investment plans so as to scale back in the higher tax location
E) Altering investment plans so as to expand in existing plants that are in a lower tax location

Question 16

Generally speaking,net migration into OECD countries has

A) Fallen over the last twenty years due to increased emigration by OECD nationals
B) Fallen over the last twenty years due to decreased immigration by non-OECD nationals
C) Risen over the last twenty years due to decrease emigration by OECD nationals
D) Risen over the last twenty years due to increased immigration by non-OECD nationals
E) Stayed roughly unchanged over the last twenty years

Question 17

When did India undertake a significant Liberalization of its economy?

A) In the early 1990's
B) In the early 1980's
C) In the early 2000's
D) In the late 1990's
E) India has not undertaken any significant liberalization

Question 18

The competition between nations to cut corporate taxes so as to attract MNEs has been called

A) the gravity model approach to trade
B) the simultaneity problem
C) strategic trade policy
D) comparative advantage in the terms of trade
E) the race to the bottom

Question 19

The second wave of globalization is distinct from the first in all of the following respects except

A) the second wave has been characterized by liberalization of trade policies
B) value is now added to a single product in several different countries before it reaches its final destination
C) nearly one-third of all trade is now conducted by multi-national enterprises
D) the opening of capital markets has occurred on a much larger scale in the second wave
E) the second wave has been less influenced by immigration than the first wave

Question 20

,the simultaneity problem refers to

A) the possible correlation between openness and financial reform
B) the time lag between increasing openness and its effect on GDP per capita
C) the possibility that GDP influences openness at the same time that openness affects GDP
D) the fact that cross-country data may not be available for the same years
E) the likely correlation between the error terms associated with successive observations

Question 21

In a global environment,governments may need to perform all of the following except

A) restrict industrial pollution
B) enforce antitrust laws to curb monopoly power
C) redirect the allocation of resources to their most effective uses
D) establish social safety nets to offset insecurity
E) adopt international standards for protecting labor and the environment

Question 22

Which of the following provides short term loans of foreign currency to governments?

A) IMF
B) WTO
C) World Bank
D) GATT
E) Grameen Bank

Question 23

The Doha round of trade negotiations

A) Was completed in 2005
B) Focused solely on manufactured goods
C) Was narrower in focus that previous trade rounds
D) Could have significant benefits for global GDP
E)Was abandoned at the Seattle meeting

Question 24

Which of the following is not among the primary operations of the IMF?

A) monitoring governments to determine which are in danger of experiencing a balance of payments crisis
B) establishing conditions on a country's economic policies as prerequisites for loans
C) lending funds on a short-term basis to countries in crisis
D) providing technical assistance to governments, to help implement economic reforms
E)arbitrating balance-of-payments disputes among member nations

Question 25

Which of the following is not alleged to be a problem associated with globalization?

A) environmental degradation
B) inefficient production
C) loss of national sovereignty
D) loss of job security
E) inequitable income redistribution

Question 26

The IMF has been criticized for each of the following except

A) forcing repayment on short term loans
B) encouraging structural reforms that adversely affect the poor
C) favoring the interests of lenders over those of borrowers
D) interfering in the economies of sovereign nations
E)excluding nations from membership for political reasons