Question 1

If a country can produce home appliances three times more efficiently than it can produce any other good, its position in international trade is based on

Accepted Answer

comparative advantage.

Answer

absolute advantage.

Answer

competitive advantage.

Answer

complementarity.

Answer

protectionism.

Question 2

Which of the following trends is illustrated by the global financial crisis of 2007–2008?

Accepted Answer

financialization of the world economy

Answer

rising global GDP

Answer

increasing protectionism

Answer

the growth of regional trade agreements

Answer

increased regulation of financial institutions

Question 3

Tariffs are considered trade barriers because they

Accepted Answer

increase the costs of imports.

Answer

encourage import substitution industrialization.

Answer

inhibit investment.

Answer

favor developing countries.

Answer

none of the above

Question 4

Which of the following would NOT be considered a neoliberal policy?

Accepted Answer

government ownership of railroads

Answer

removal of tariffs

Answer

privitization of public utilities

Answer

creating a free trade agreement

Answer

reducing government regulation of banks

Question 5

When one or more countries cannot meet their external loan repayment schedule, it is known as

Accepted Answer

a debt crisis.

Answer

bankruptcy.

Answer

underdevelopment.

Answer

financial capital.

Answer

a trade barrier.

Question 6

Which of the following best explains a benefit of membership in the European Union?

Accepted Answer

Member states form a single market, which creates a powerful economic bloc.

Answer

Member states are eligible to receive loans from the European Union, which protects states against recession.

Answer

Member states receive equal numbers of international migrants, which ensures even distribution of resources.

Answer

Member states receive annual payments from the European Union, which boosts gross national income.

Answer

Member states have more secure borders, which guards against conflict.

Question 7

Which of the following concepts explains the decision to relocate market-oriented factories in the United States from the Midwest and Northeast to locations in the southern United States or Mexico?

Accepted Answer

Comparative advantage, because products can be made more efficiently in the southern United States and Mexico. Operating costs and wages are lower, and the manufactured products are easily transported to major United States markets.

Answer

Growth poles, because governments in southern United States cities and Mexico strive to stimulate economic development by providing a guaranteed market for all products manufactured at these locations.

Answer

Just-in-time delivery, because the United States population is shifting to the south and west, and the Mexican population is growing. It is critical to produce goods closer to the consumer base to reduce shipping times.

Answer

Complementarity, because the regional economy of the midwestern and northeastern United States is shifting to the service sector. There is little interest in maintaining manufacturing at these locations.

Answer

Post-Fordist production, because traditional midwestern and northeastern manufacturing centers in the United States are unable to keep up with the technological changes of modern industry.

Question 8

Economic complementarities between two places tend to

Accepted Answer

occur when each place specializes in commodities demanded by the other

Answer

reflect only differences in resource base

Answer

occur when the places specialize in the same commodities

Answer

reflect the minimization of distance

Answer

reflect the maximization of scale

Question 9

Which of the following has fostered the most significant economic growth by eliminating import tariffs between member states?

Accepted Answer

European Union (EU)

Answer

Organization of Petroleum Exporting Countries (OPEC)

Answer

North Atlantic Treaty Organization (NATO)

Answer

Association of Caribbean States (ACS)

Answer

United Nations (UN)

Question 10

The state of Florida earns greater revenues from the export of oranges than does the state of Georgia. This can be attributed to which of the following?

Accepted Answer

Florida has a comparative advantage as a producer of oranges.

Answer

Georgia has a comparative advantage as a producer of oranges.

Answer

Florida’s economy is primarily based on agricultural production.

Answer

Georgia’s economy is focused on tourism and manufacturing.

Answer

Unlike Florida, Georgia has no coastal port facilities.

Question 11

Free-trade zones such as the countries of the North American Free Trade Agreement (NAFTA) are established to increase the ease and volume of international trade by

Accepted Answer

eliminating tariffs on goods that cross borders between member states

Answer

increasing diplomatic relations between member states

Answer

opening borders to migrant guest workers from member states

Answer

establishing a common monetary unit among member states

Answer

offering large economic-development loans to poorer member states

Question 12

Which of the following best explains a trading relationship between two countries based on comparative advantage?

Accepted Answer

Each country specializes in the type of good for which it has the lowest opportunity cost, resulting in a higher global output of both types of goods.

Answer

One country exports raw materials and the other country exports manufactured goods, resulting in a global economic balance.

Answer

One country implements tariffs on goods that are imported from another country because the importing country will benefit from profits on the sale of the goods.

Answer

Two countries trade in luxury items, but the volume of trade is limited by the highest cost of long-distance trade.

Answer

Each country exports the same type of good because the countries are similar in terms of natural resources and labor costs.

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