1. A primary reason why nations conduct international trade is because:
a.
Some nations prefer to produce one thing while others produce other things
b.
Resources are not equally distributed among all trading nations
c.
Trade enhances opportunities to accumulate profits
d.
Interest rates are not identical in all trading nations
2. A main advantage of specialization results from:
a.
Economies 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
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United States – BUSPROG: Diversity
specialization and trade
Why is Globalization Important?
BLOOM’S: Comprehension
3. 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.
Domestic production of the same goods and services
d.
Domestic production of different goods and services
d
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United States – BUSPROG: Diversity
specialization and trade
Globalization of Economic Activity
BLOOM’S: Comprehension
4. If a nation has an open economy, it means that the nation:
a.
b.
c.
b
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Globalization of Economic Activity
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d.
5. International trade forces domestic firms to become more competitive in terms of:
a.
The introduction of new products
b.
Product design and quality
c.
Product price
d.
All of the above
d
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United States – BUSPROG: Diversity
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The United States as an Open Economy
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6. 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
b
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United States – BUSPROG: Diversity
specialization and trade
Globalization and Competition
BLOOM’S: Comprehension
7. 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
d
1
d
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United States – BUSPROG: Diversity
The United States as an Open Economy
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8. Most of the world’s population now lives in countries that are:
a.
integrated into world markets
b.
becoming integrated into world markets
c.
near poverty
d.
a and b
d
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
BLOOM’S: Comprehension
9. International trade benefits:
a.
all workers
b.
most workers
c.
many workers
d.
None of these is correct
c
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
BLOOM’S: Comprehension
10. The largest amount of trade with the United States in recent years has been conducted by:
a.
Canada
b.
Germany
c.
Chile
d.
United Kingdom
a
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Easy
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
United States – BUSPROG: Diversity
specialization and trade
Globalization of Economic Activity
BLOOM’S: Comprehension
11. Increased foreign competition tends to:
a.
Intensify inflationary pressures 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
c
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
Globalization and Competition
BLOOM’S: Comprehension
12. ____ is the ability of a firm/industry, under free and fair market conditions, to design, produce, and market goods and
services that are better and/or cheaper than those of other firms/industries.
a.
Competitiveness
b.
Protectionism
c.
Comparative advantage
d.
Absolute advantage
a
1
Moderate
United States – BUSPROG: Diversity
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Globalization and Competition
BLOOM’S: Comprehension
13. A firm’s ____, relative to that of other firms, is generally regarded as the most important determinant of
competitiveness.
a.
Income level
b.
Tastes and preferences
c.
Governmental regulation
d.
Productivity
d
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
Globalization and Competition
BLOOM’S: Comprehension
14. Free traders maintain that an open economy is advantageous in that it provides all of the following except:
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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 wage levels for all domestic workers
15. Regarding the applicability of free trade to cigarettes, it is correct to say:
a.
the rules of free trade apply to cigarettes
b.
the rules of free trade should not apply to cigarettes
c.
a and b are the topic of current debate
d.
there are special rules applying to cigarettes world-wide
1
United States – BUSPROG: Diversity
specialization and trade
BLOOM’S: Comprehension
16. Human rights activists contend that this organization supports governments that permit sweatshops:
a.
The International Organization for Standardization
b.
The International Monetary Fund
c.
The World Health Organization
d.
All of these
b
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United States – BUSPROG: Diversity
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Backlash Against Globalization
BLOOM’S: Comprehension
17. For a nation to maximize its productivity in a global economy:
a.
Only imports are necessary
b.
Only exports are necessary
c.
Both imports and exports are necessary
d.
Neither imports nor exports are necessary
d
1
United States – BUSPROG: Diversity
specialization and trade
Why is Globalization Important?
BLOOM’S: Comprehension
18. Economists have generally found that economic growth rates have a close relation to:
a.
openness to trade
b.
education
c.
communications infrastructure
d.
all of these
d
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
Why is Globalization Important?
BLOOM’S: Comprehension
19. With globalization and import competition, U.S. prices have generally:
a.
increased
b.
decreased
c.
remained stable
d.
all of these at various times
b
1
Easy
United States – BUSPROG: Diversity
specialization and trade
Why is Globalization Important?
BLOOM’S: Comprehension
20. Open economies have more:
a.
competition
b.
firm turnover
c.
new firms entering the market
d.
all of these
d
1
United States – BUSPROG: Diversity
c
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
BLOOM’S: Comprehension
21. The United States was less open to international trade between:
a.
1890 and 1910
b.
1930 and 1950
c.
1890 and 1950
d.
1950 and 2013
c
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Knowledge
22. Producing goods for export produces:
a.
jobs
b.
income
c.
tariffs
d.
a and b
d
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
BLOOM’S: Comprehension
23. A sudden shift from import tariffs to free trade may induce short-term unemployment in:
a.
Import-competing industries
b.
Industries that are only exporters
c.
Industries that sell domestically as well as export
d.
Industries that neither import nor export
a
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
BLOOM’S: Comprehension
specialization and trade
Why is Globalization Important?
BLOOM’S: Comprehension
24. As an economy opens up to international trade, domestic prices:
a.
become lower
b.
become more aligned with international prices
c.
stabilize
d.
none of the above; what will happen cannot be predicted
25. Studies have shown that there is an inverse relationship between
a.
Local competition and regional competition
b.
Regional competition and global competition
c.
level of trade barriers and economic growth
d.
level of education and communications infrastructure
c
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
Why is Globalization Important?
BLOOM’S: Knowledge
26. Economic interdependence occurs through
a.
trade
b.
labor migratin
c.
capital flows
d.
all of these
d
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
Waves of Globalization
BLOOM’S: Knowledge
27. Small countries tend to have higher measures of openness than larger countries because:
a.
their productivity is higher
b.
they are more reliant on international trade
c.
they are less reliant on international trade
b
Moderate
United States – BUSPROG: Diversity
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BLOOM’S: Comprehension
d.
they are more diverse
28. Following World War II, The U.S.:
a.
became less open
b.
negotiated reductions in trade barriers with other countries
c.
passed a number of protective tariffs
d.
concentrated on armament production
b
1
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Knowledge
29. A closed economy is one in which:
a.
Imports exactly equal exports, so that trade is balanced
b.
Domestic firms invest in industries overseas
c.
The home economy is isolated from foreign trade
d.
Saving exactly equals investment at full employment
1
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Knowledge
30. During the last century, the relative importance of international trade for the U.S. has:
a.
significantly increased
b.
slightly increased
c.
significantly decreased
d.
slightly decreased
1
b
1
United States – BUSPROG: Diversity
The United States as an Open Economy
BLOOM’S: Comprehension
31. Which of the following is a fallacy of international trade?
a.
Trade is a zero-sum activity
b.
Exports increase employment in exporting industries
c.
Import restrictions increase employment in import-competing industries
d.
Tariffs and quotas reduce trade volume
1
United States – BUSPROG: Diversity
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Common Fallicies of International Trade
BLOOM’S: Comprehension
32. Foreign ownership of U.S. financial assets
a.
Has decreased since the 1960‘s
b.
Has increased since the 1960’s
c.
Has made the U.S. a net borrower since the late 1980’s
d.
Both a and c
d
1
United States – BUSPROG: Diversity
specialization and trade
The United States in an Open Economy
BLOOM’S: Knowledge
33. The first wave of globalization was brought to an end by
a.
The Great Depression
b.
The Second World War
c.
The First World War
d.
The Smoot-Hawley Act
1
United States – BUSPROG: Diversity
specialization and trade
Waves of Globalization
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Knowledge
34. Important trading partners of the United States include Canada, Mexico, Japan, and China.
a.
True
b.
False
True
1
Easy
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Knowledge
35. Multilateral trade negotiations have led to
a.
Continued trade liberalization
b.
Financial liberalization
c.
Increased investment
d.
All of the above
d
1
Easy
United States – BUSPROG: Diversity
specialization and trade
Globalization of Economic Activity
BLOOM’S: Knowledge
36. The United States exports a larger percentage of its gross domestic product than Japan, Germany, and Canada.
a.
True
b.
False
False
1
Easy
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Knowledge
37. Opening the economy to international trade tends to lessen inflationary pressures at home.
a.
True
b.
False
True
1
Moderate
BLOOM’S: Knowledge
38. The benefits of international trade accrue in the forms of lower domestic prices, development of more efficient
methods and new products, and a greater range of consumption choices.
a.
True
b.
False
True
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
Why is Globalization Important?
BLOOM’S: Comprehension
39. In an open trading system, a country will import those commodities that it produces at relatively low cost while
exporting commodities that can be produced at relatively high cost.
a.
True
b.
False
False
1
Moderate
United States – BUSPROG: Diversity
specialization and trade
The United States as an Open Economy
BLOOM’S: Comprehension
40. Although free trade provides benefits for consumers, it is often argued that import protection should be provided to
domestic producers of strategic goods and materials vital to the nation’s security.
a.
True
b.
False
True
1
Moderate
United States – BUSPROG: Diversity
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Globalization of Economic Activity
41. In the long run, competitiveness depends on an industry’s natural resources, its stock of machinery and equipment, and
the skill of its workers in creating goods that people want to buy.
United States – BUSPROG: Diversity
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Why is Globalization Important?
BLOOM’S: Comprehension
a.
True
b.
False
42. If a nation has an open economy, it means that the nation allows private ownership of capital.
a.
True
b.
False
False
1
Moderate
43. Increased foreign competition tends to increase profits of domestic import-competing companies.
a.
True
b.
False
False
1
Challenging
44. Current trade rules permit countries to enact measures to protect the health and safety of their citizens as long as all
goods are treated equally, the tobacco companies argue.
a.
True
b.
False
True
1
Moderate
True
1
Challenging
45. What is the most important factor which contributes to competitiveness?
46. What are the challenges of the international trading system?
47. Does exposure to competition with the world leader in a particular industry improve a firm’s productivity?
48. What are the essential arguments in favor of free trade?