Test Bank for
An Introduction to International Economics:
New Perspectives on the World Economy
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Chapter 1: Introduction
MULTIPLE CHOICE
1. Which of the following is not an asset exchanged among counties?
a. Real estate
b. Equities
c. Insurance
d. Bonds
2. In which of the four windows on the world economy has technological change had the
largest impact?
a. International production
b. Trade
c. Finance
d. Development
3. Which of the following is most relevant to international production?
a. Architectural services
b. Preferential trade agreements
c. Capital flight
d. Global production networks
4. Which of the following measures of living standard is not included in the Human
Development Index?
a. Education
b. Income
c. Access to electricity
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I am very grateful to the late Tony Wallace for help in preparing the first draft of this test bank.
d. Life expectancy
1. In the world economy, GDP grows faster than trade.
2. Foreign direct investment involves the purchase of the bonds of a foreign country.
3. International production can only be accomplished by a firm through foreign direct
investment.
4. In order to be considered as foreign direct investment, an equity position must exceed a
minimum level indicating management influence.
5. Gross domestic product per capita and the human development index are both measures
of international development.
SHORT ANSWER
1. How has globalization affected the growth of world trade?
2. In what ways have multinational enterprises (MNEs) become a major component of the
world economy?
3. In recent years, what are the relevant magnitudes of foreign exchange turnover and total
exports in the world economy?
4. In addition to the four windows on the world economy (international trade, international
production, international finance and international development), what four additional
realms must we keep in mind?
5. What is capital flight and how can it affect a country?