International Economics

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Multiple-Choice Questions for International Economics

by

Dr. Bob Carbaugh Department of Economics Central Washington University

Chapter 1: The International Economy and Globalization

A primary reason why nations conduct international trade is because: a. Some nations prefer to produce one thing while others produce another *b. Resources are not equally distributed to all trading nations c. Trade enhances opportunities to accumulate profits d. Interest rates are not identical in all trading nations A main advantage of specialization results from: *a. Economics of large scale production b. The specializing country behaving as a monopoly c. Smaller production runs resulting in lower unit costs. d. High wages paid to foreign workers International trade in goods and services is sometimes used as a substitute for all of the following except: a. International movements of capital. b. International movements of labor. c. International movements of technology *d. Domestic production of different goods and services If a nation has an open economy it means that the nation: a. Allows private ownership of capital. b. Has flexible exchange rates c. Has fixed exchange rates *d. Conducts trade with other countries International trade forces domestic firms to become more competitive in terms of: a. The introduction of new products b. Product design and quality

c. *d.

Product price All of the above

The movement to free international trade is most likely to generate short-term unemployment in which industries: a. Industries in which there are neither imports nor exports *b. Import-competing industries. c. Industries that sell to domestic and foreign buyers d. Industries that sell to only foreign buyers International trade is based on the idea that: a. Exports should exceed imports b. Imports should exceed exports c. Resources are more mobile internationally than are goods *d. Resources are less mobile internationally than are goods Arguments for free trade are sometimes disregarded by politicians because: a. Maximizing domestic efficiency is not considered important *b. Maximizing consumer welfare may not be a chief priority c. There exist sound economic reasons for keeping one’s economy isolated from other economies. d. Economists tend to favor highly protected domestic markets Which American industry has least been affected by import competition in recent years a. Automobiles b. Steel c. Radios and TVs *d. Computer software The largest amount of trade with the United States in recent years has been conducted by: *a. Canada b. Germany c. Mexico d. United Kingdom Increased foreign competition tend to a. Intensify inflationary pressure at home b. Induce falling output per worker-hour for domestic workers *c. Place constraints on the wages of domestic workers d. Increase profits of domestic import-competing industries For the United States, exports plus imports are about ______ of its gross national product: a. 5 percent b. 10 percent *c. 25 percent d. 55 percent Major trading partners of the United States including all of the following countries except: a. Canada b. Mexico c. China *d. North Korea

Free traders maintain that an open economy is advantageous in that it provides all of the following except: a. Increased competition for world producers b. A wider selection of products for consumers c. The utilization of the most efficient production methods *d. Relatively high wages levels for all domestic workers Recent pressures for protectionism in the United States have been motivated by all of the following except: a. U.S. firms shipping component production overseas *b. High profit levels for American corporations c. Sluggish rates of productivity growth in the United States d. High unemployment rates among American workers International trade tends to cause welfare losses to at least some groups in a country *a. The less mobile the country’s resources b. The more mobile the country’s resources c. The lower the...
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