(Test Bank) International Economics

Carbaugh, 18

Business

Test Bank

18th Edition

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Test Bank for International Economics, The downloadable file consists of 976 pages, and the total size of the file is 15.05 MB. Purchase now only for highly discounted price.

Author(s): Carbaugh

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Chapter 01: The International Economy and Globalization Copyright Cengage Learning. Powered by Cognero. Page 1 1. Which of the following is a dimension of integration into the world economy? a. Fair labor standards. b. Flexible exchange rates. c. Decreased foreign competition. d. Dependence on imported materials. ANSWER: d FEEDBACK: a. b. c. d. Integration involves several dimensions, including the dependence on imported materials. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Understand 2. Which of the following is a disadvantage of globalization? a. Living standards can increase more rapidly. b. Global competition and cheap imports keep a constraint on prices. c. Easier access to foreign investment and low interest rates. d. Companies building state-of-the-art factories in low-wage countries. ANSWER: d FEEDBACK: a. b. c. d. American employees can lose their competitiveness when companies build state-of-the-art factories in low-wage countries, making them as productive as those in the United States. POINTS: 1 DIFFICULTY: Challenging QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Has Globalization Gone Too Far? KEYWORDS: BLOOM'S: Remember 3. Which statement about globalization is true? a. It has led to more quotas on trade around the world. b. It is a purely economic term used to describe interrelated global markets. Copyright Cengage Learning. Powered by Cognero. Page 2 c. It has been fueled by trade, immigration, and foreign investment. d. It is the process by which more countries are becoming economically self-sufficient around the globe. ANSWER: c FEEDBACK: a. b. c. Globalization consists of the increased interaction of product and resource markets across nations via trade, immigration, and foreign investment. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Globalization of Economic Activity KEYWORDS: BLOOM'S: Understand 4. Which statement is true about import restrictions? a. They decrease the volume of exports. b. They lead to more jobs for domestic workers. c. They decrease imports and increase exports. d. They are more conducive to prosperity than free trade. ANSWER: a FEEDBACK: a. Trade restrictions that decrease the volume of imports will also decrease exports. b. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Common Fallacies of International Trade KEYWORDS: BLOOM'S: Understand 5. Most of the world's population now lives in nations that are a. integrated or becoming integrated into world markets. b. trying to overcome economic isolation. c. cutting back on foreign investment. d. economically independent. ANSWER: a FEEDBACK: a. In today’s world, no nation exists in economic isolation. b. Copyright Cengage Learning. Powered by Cognero. Page 3 c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Introduction KEYWORDS: BLOOM'S: Understand 6. International trade generally a. decreases jobs. b. generates income. c. decreases productivity. d. reduces competition. ANSWER: b FEEDBACK: a. b. Producing goods for export generates jobs and income for domestic workers. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Is International Trade an Opportunity or Threat to Workers? KEYWORDS: BLOOM'S: Understand 7. The largest amount of trade with the United States in recent years has been conducted with a. China. b. Germany. c. Canada. d. the United Kingdom. ANSWER: a FEEDBACK: a. China heads the list of United States’ trading partners. b. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False Copyright Cengage Learning. Powered by Cognero. Page 4 NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Remember 8. What led to the sharp loss of market share in the example of the Eastman Kodak Company? a. increased desire for higher-quality product substitutes b. consumer concern over Eastman Kodak’s near monopoly in the U.S. markets c. lack of innovation in emerging digital technologies d. increased profits of domestic import-competing industries ANSWER: c FEEDBACK: a. b. c. Kodak provides a striking example of an industrial giant that faltered in the face of global competition and advancing technology. It was slow in launching the production of digital cameras and failed to understand that smartphones replaced cameras. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Understand 9. Which statement is true about international trade? a. It is zero-sum game. b. Imports always result in domestic unemployment. c. Tariffs on imports always protect domestic jobs. d. Imports and exports are connected; as one falls, the other generally rises. ANSWER: d FEEDBACK: a. b. c. d. The drag on an economy caused by rising imports tends to be offset by the stimulus on the economy caused by rising exports. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Common Fallacies of International Trade Copyright Cengage Learning. Powered by Cognero. Page 5 KEYWORDS: BLOOM'S: Understand 10. North Carolina produces sweet potatoes in its rich soil, but does not have the climate to grow oranges well. It is correct to say that, relative to Florida, North Carolina has which of the following? a. An absolute advantage in sweet potato production. b. A monopoly on sweet potato production. c. A comparative advantage in sweet potato production. d. A trade imbalance in sweet potato production. ANSWER: c FEEDBACK: a. b. c. According to the principle of comparative advantage, if countries specialize in what they are relatively best at producing, they will import products that their trading partners are most efficient at producing, yielding benefits for both countries. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Common Fallacies of International Trade KEYWORDS: BLOOM'S: Apply 11. According to human rights activists, which organization supports governments that permit sweatshops? a. The International Organization for Standardization b. The International Monetary Fund c. The World Health Organization d. The World Trade Organization ANSWER: b FEEDBACK: a. b. Human rights activists contend that the International Monetary Fund supports governments that allow sweatshops and pursues policies that bail out governmental officials at the expense of local economies. c. d. POINTS: 1 DIFFICULTY: Challenging QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Has Globalization Gone Too Far? KEYWORDS: BLOOM'S: Understand Copyright Cengage Learning. Powered by Cognero. Page 6 12. With globalization and import competition, U.S. prices generally a. increase. b. decrease. c. remain stable. d. fluctuate wildly. ANSWER: b FEEDBACK: a. b. Global competition and cheap imports keep a constraint on prices, so inflation is less likely to disrupt economic growth. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Has Globalization Gone Too Far? KEYWORDS: BLOOM'S: Remember 13. The United States was less open to international trade between a. 1870 and 1914. b. 1944 and 1980. c. 1890 and 1950. d. 1980 and the present. ANSWER: c FEEDBACK: a. b. c. Two world wars and the Great Depression of the 1930s caused the United States to reduce its dependence on trade, partly for national security reasons and partly to protect its home industries from import competition. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Remember 14. 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. Copyright Cengage Learning. Powered by Cognero. Page 7 d. industries that neither import nor export. ANSWER: a FEEDBACK: a. Cheap exports produced by lower-cost foreign workers threaten to eliminate jobs for some workers in industrial countries. b. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Is International Trade an Opportunity or Threat to Workers? KEYWORDS: BLOOM'S: Apply 15. Economic interdependence occurs through a. trade. b. protectionism. c. war. d. tariffs. ANSWER: a FEEDBACK: a. Economic interdependence occurs through trade. b. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Introduction KEYWORDS: BLOOM'S: Apply 16. 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. d. they are more economically diverse. ANSWER: b FEEDBACK: a. b. Large countries tend to be less reliant on international trade because many of their companies can attain an optimal production size without having to export to foreign nations. Therefore, small countries tend to have higher measures of Copyright Cengage Learning. Powered by Cognero. Page 8 openness than do large ones. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Understand 17. Following World War II, the U.S. a. became less open. b. helped construct a global economic order. c. negotiated increases in trade barriers. d. went through a period of economic isolationism. ANSWER: b FEEDBACK: a. b. During the late 1940s, the United States helped construct a global economic order that was governed by mutually accepted rules and overseen by multilateral institutions. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Waves of Globalization KEYWORDS: BLOOM'S: Remember 18. 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. ANSWER: a FEEDBACK: a. One misconception is that trade results in a zero-sum game: If one trading partner benefits, the other must suffer. It turns out that both partners can benefit from trade. b. c. d. Copyright Cengage Learning. Powered by Cognero. Page 9 POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Common Fallacies of International Trade KEYWORDS: BLOOM'S: Understand 19. 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. ANSWER: c FEEDBACK: a. b. c. The first wave of globalization was brought to an end by World War I. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Waves of Globalization KEYWORDS: BLOOM'S: Remember 20. Multilateral trade negotiations have led to a. continued liberalization of trade and investment. b. increased protectionism. c. higher tariffs. d. more expensive financing. ANSWER: a FEEDBACK: a. Continuing liberalization of trade and investment has resulted from multilateral trade negotiations. b. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic Copyright Cengage Learning. Powered by Cognero. Page 10 STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Globalization of Economic Activity KEYWORDS: BLOOM'S: Remember 21. The phrase “When the United States sneezes, the economies of other nations catch a cold” was first used to describe the impact of the economy of the United States on the rest of the world at the end of World War II. This phrase is now a. more true, due to the impact of growing economic interdependence. b. less true, due to the impact of growing economic interdependence. c. only true when followed by impacts in the European Union. d. all of these are only true in the case of an economic recession. ANSWER: b FEEDBACK: a. b. It is less true because the U.S. economy has become increasingly integrated into the activities of foreign countries. c. d. POINTS: 1 DIFFICULTY: Challenging QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC2: - The study of economics, and definitions in economics TOPICS: Introduction KEYWORDS: BLOOM'S: Evaluate 22. Why has the economy of the United States realized waves of globalization? a. The United States consistently increases tariffs. b. The United States economy has been consistently opening up since the 1920s. c. Technology, supported by American investors, drives productivity. d. The trade policy of the United States has been uneven, resulting in periods of more or less openness to international trade. ANSWER: d FEEDBACK: a. b. c. d. In recent history, there have been three major waves of globalization—first from 1870 to 1914, then from 1944 to 1980, and finally from 1980 to the present. During these waves, the trade policy of the United States has been uneven. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC3: - International trade and finance TOPICS: Waves of Globalization Copyright Cengage Learning. Powered by Cognero. Page 11 KEYWORDS: BLOOM'S: Evaluate 23. The decline of Kodak Inc. in the camera and film business is NOT explained by a. the rise of Japanese rivals such as Fuji Photo Film Co. b. the development of digital cameras and smartphones that operate as cameras. c. antimonopoly laws that broke Kodak up into small, competing companies. d. constant innovation and attention to changing trends in recreational photography. ANSWER: c FEEDBACK: a. b. c. Kodak faltered in the face of global competition and advancing technology, not antimonopoly laws. d. POINTS: 1 DIFFICULTY: Difficult QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC3: - International trade and finance TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Apply 24. Today, most Schwinn bicycles are manufactured in a. China. b. Canada. c. Mexico. d. Germany. ANSWER: a FEEDBACK: a. Most Schwinn bicycles today are built in Chinese factories. b. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC4: - Productivity and growth TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Remember 25. The natural gas turbine is considered a driver of globalization because the turbine a. increases efficiency, moving goods from place to place. b. was developed in the United States. c. is associated with increased transportation costs. Copyright Cengage Learning. Powered by Cognero. Page 12 d. increases the labor input and decreases unemployment. ANSWER: a FEEDBACK: a. Diesels and turbines have become important movers of goods and people throughout the world. They have reduced transportation costs to such an extent that distance to the market is a much smaller factor affecting the location of manufacturers or the selection of the origin of imported raw materials b. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC4: - Productivity and growth TOPICS: Introduction KEYWORDS: BLOOM'S: Remember 26. Economists who suggest that the United States is losing its competitive edge cite that a. more American firms are choosing to manufacture overseas. b. the quality of education in Western countries is declining. c. the United States is ambivalent about technology. d. the Asian continent contains more raw materials than the United States. ANSWER: a FEEDBACK: a. American employees can lose their competitiveness when companies build state-of-the-art factories in low-wage countries, making them as productive as those in the United States. b. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC4: - Productivity and growth TOPICS: Has Globalization Gone Too Far? KEYWORDS: BLOOM'S: Remember 27. Exporting firms in the United States typically a. have less overall productivity. b. offer higher wages to workers. c. rely on an unskilled labor force. d. do not rely on capital. ANSWER: b Copyright Cengage Learning. Powered by Cognero. Page 13 FEEDBACK: a. b. For Americans working for exporting firms, average wages are about 18 percent higher than average wages in nonexporting firms. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Is International Trade an Opportunity or a Threat to Workers? KEYWORDS: BLOOM'S: Understand 28. The slogans "Buy American" and "American goods create American jobs" reflect a. concern over the number of exports leaving the country. b. concern about the threat of foreign competition. c. a desire for fewer import restrictions. d. a lack of job security within exporting firms. ANSWER: b FEEDBACK: a. b. Trade with low-wage developing countries is particularly threatening to unskilled workers in the import-competing sectors of industrial countries. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Is International Trade an Opportunity or a Threat to Workers? KEYWORDS: BLOOM'S: Understand 29. As an economy opens up to international trade, domestic prices a. decrease. b. increase. c. become stable over time. d. align more with international prices. ANSWER: d FEEDBACK: a. b. c. d. Global competition and cheap imports keep a constraint on prices, so inflation is less likely to disrupt economic growth. Copyright Cengage Learning. Powered by Cognero. Page 14 POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Has Globalization Gone Too Far? KEYWORDS: BLOOM'S: Remember 30. The openness ratio is measured by a country's a. exports as a percent of gross domestic product. b. imports as a percent of gross domestic product. c. exports minus imports as a percent of gross domestic product. d. exports plus imports as a percent of gross domestic products. ANSWER: d FEEDBACK: a. b. c. d. As a rough measure of the importance of international trade in a nation’s economy, we can look at that nation’s exports and imports as a percentage of its gross domestic product. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC3: - International trade and finance TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Remember 31. How has technology impacted the globalization of economic activity? a. Technological innovation has led to decreased mechanization of economic activities. b. Increased information flows have influenced production location decisions. c. The rise of the internet has increased communication costs in the service industry. d. Technology has led to a greater separation between people and enterprises. ANSWER: b FEEDBACK: a. b. On the technology side, increased information flows and the greater tradability of goods and services have influenced production location decisions. Businesses are able to locate different components of their production processes in various countries and regions and still maintain a single corporate identity. c. d. POINTS: 1 DIFFICULTY: Moderate Copyright Cengage Learning. Powered by Cognero. Page 15 QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Globalization of Economic Activity KEYWORDS: BLOOM'S: Understand 32. In recent decades, the United States has become tied to other nations through a rise in a. capital flows. b. labor mobility. c. domestic ownership of financial assets. d. production as compared to consumption. ANSWER: a FEEDBACK: a. Besides the trade of goods and services, movements in factors of production are a measure of economic interdependence. Labor and capital move more freely across nations. b. c. d. POINTS: 1 DIFFICULTY: Moderate QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: The United States as an Open Economy KEYWORDS: BLOOM'S: Remember 33. All of the following have been criticisms of globalization and trade policies EXCEPT a. environmental concerns. b. disadvantages for corporations. c. unfair competition from countries that lack labor standards. d. support of countries with human rights violations such as sweatshops. ANSWER: b FEEDBACK: a. b. Critics maintain that U.S. trade policies primarily benefit large corporations. c. d. POINTS: 1 DIFFICULTY: Easy QUESTION TYPE: Multiple Choice HAS VARIABLES: False NATIONAL STANDARDS: United States - BUSPROG: - Analytic STATE STANDARDS: United States - PA - DISC1: - Gains from trade, specialization, and trade TOPICS: Has Globalization Gone Too Far?