the international economy and globalization MCQs

Practise focused the international economy and globalization questions with marked answers for exam preparation and subject revision.

the international economy and globalization Mcqs
1. The most wave of globalization which began in the 1980s has emphasized the outsourcing of ?
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A. natural resource extraction and mining jobs

B. services and white-collar jobs

C. manufacturing and blue-collar jobs

D. agriculture and farming jobs

2. Major trading partners of the United States including all of the following countries except ?
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A. Canada

B. Mexico

C. North Korea

D. China

3. For the United States automobiles are ?
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A. Imported, but not exported

B. Neither imported not exported

C. Exported, but not imported

D. Exported and imported
4. A tariff causes domestic firms to ________ and consumers to?
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A. underproduce, under consume

B. underproduce, overconsume

C. overproduce, under consume

D. Overproduce, overconsume

5. If there is a balance of payments deficit then in a floating exchange rate system ?
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A. Aggregate demand is increasing

B. The injections from trade are greater then the withdrawals

C. The external value of the currency would tend to rise

D. The external value of the currency would tend to fall
6. International trade is based on the idea that ?
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A. imports should exceed exports

B. Exports should exceed imports

C. Resources are more mobile internationally than are goods

D. Resources are less mobile internationally than are goods
7. Arguments for free trade are sometimes disregarded by politicians because ?
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A. Maximizing consumer welfare may not be a chief priority

B. Maximizing domestic efficiency is not considered imports

C. Economists tend to favor high protected domestic markets

D. There exist sound economic reasons for keeping ones economy isolated from other economies

8. Recent pressures for protectionism in the United States have been motivated by all of the following except ?
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A. High profit levels for American corporations

B. U.S firms shipping component production overseas

C. Sluggish rates of productivity growth in the United States

D. High unemployment rates among America workers

9. The theory that states that a country has a comparative advantage in the production of a product if that country is relatively well endowed with inputs used intensively in the production of that product is the?
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A. Heckscher Ohlin theorem

B. Friedman Samuelson theorem

C. Lucas-Laffer theorem

D. Ricardo Malthus theorem

10. The term tariff, as used in international trade refers to ?
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A. The price of goods when they leave the producing country

B. a government payment to encourage exports

C. a limit on the quantity of a good that can be imported into a country

D. a tax on imports
11. When countries from large trading blocs like the EU, the size of the bloc has the effect of improving them ?
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A. terms of trade

B. balance of trade

C. balance of payments

D. comparative advantage

12. The movement to free international trade is most likely to generate short-term unemployment in which industries ?
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A. Imports competing industries

B. Industries that sell to only foreign buyers

C. Industries that sell to domestic and foreign buyers

D. Industries in which there are neither imports nor exports

13. The largest amount of trade with the United States in recent years has been conducted by ?
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A. Mexico

B. Germany

C. Canada

D. United Kingdom

14. Free traders maintain that an open economy is advantageous is that it provides all of the following except ?
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A. A wider selection of products for consumers

B. Increased competition for world producers

C. Relatively high wages levels for all domestic workers

D. The utilization of the most efficient production methods

15. David Ricardos theory in favor of free trade uses the ideal of ?
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A. multilateral advantage

B. mutual advantage

C. absolute advantage

D. comparative advantage
16. International trade in goods and services is sometimes used as a substitute for all of the following except ?
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A. Domestic production of different goods and services

B. International movements of technology

C. International movements of capital

D. International movements of labor

17. If a group of countries abolish trade barriers between them and set same tariffs on goods coming in from other countries they are a ?
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A. customs union

B. federation

C. common market

D. free trade area

18. A significant portion of actual world trade patterns results from ?
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A. the different tastes and preferences of people in different countries

B. different factor endowment between countries

C. different sizes of the countries

D. The industrial policies of governments

19. Government payments made to domestic firms in order to encourage exports are called ?
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A. Side payments

B. Tariffs

C. export quotas

D. subsidies
20. Technological improvements are similar to international trade since they both ?
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A. Reduce unemployment for all domestic workers

B. Ensure that industries can operate at less than full capacity

C. Provide benefits for all producers and consumers

D. Increase the nations aggregate income
21. Free trade is based on the principle of ?
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A. Comparative scale

B. Production possibility advantage

C. Economies of advantage

D. Comparative advantage
22. LDCs often have a comparative advantage in the production of ?
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A. financial services

B. primary products

C. intermediate products

D. manufactured products

23. If the Uk placed a limit on the amount of steel that could be imported into the UK in a particular period this would be an example of ?
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A. a quota

B. a tariff

C. an export subsidy

D. dumping

24. The main cause of different relative costs between countries are ?
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A. relative factor competition

B. relative factor mobility

C. relative factor substitution

D. relative factor endowments
25. The real income of domestic producers and consumers can be increased by ?
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A. Technological progress, but not international trade

B. Neither technological progress nor international trade

C. Technological Progress and international trade

D. International trade but not technological progress

26. Which of the following is not an argument for protectionism ?
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A. To improve the balance of payments

B. To protect infant industries

C. To Protect strategic industries

D. To increase the level of imports
27. A main advantage of specialization results from ?
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A. Economies of large-scale production

B. The specializing country behaving as a monopoly

C. High wages paid to foreign workers

D. Smaller production runs resulting in lower unit costs

28. Term of trade for a country are the ratio of _______________ to _____________?
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A. export prices; import prices

B. its currency; other currencies

C. its opportunity costs; world opportunity costs

D. Value of exports; value of imports

29. For the United States, commercial jetliners are ?
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A. Exported, but not imported

B. Imported, but not exported

C. Imported and exported

D. Neither exported nor imported

30. One of the main advantages of trade economists suggest is ?
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A. lower tariffs

B. development of tourism

C. technological change

D. competitions with foreign suppliers
31. To prevent the external value of the currency from falling the government might ?
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A. Sell its own currency

B. Reduce interest rates

C. Buy its own currency with foreign reserves

D. Increase its own spending

32. A feasible effect of international trade is that a (an) ?
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A. Monopoly in the home market becomes an oligopoly in the world market

B. Purely competitive firm in the home market becomes an oligopolist

C. Oligopoly in the home market becomes a monopoly in the world market

D. purely competitive firm in the home market becomes a monopolist

33. Tariffs are used to protect infant industries these industries are those which ?
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A. use a new technology

B. are not yet large enough to achieve economies of scale

C. are competing with well-established overseas firms

D. employ many young or untrained workers

34. LDCs are reluctant to pursue development through the export of primary products because of ____ and _____ ?
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A. The upward trend in commodity prices, the volatility of primary products real prices

B. The downward trend in commodity prices the stability of primary products real prices

C. The upward trend in commodity prices the stability of primary products real prices

D. The downward trend in commodity prices the volatility of primary products real prices
35. If a country has a burden of debt it cannot sustain it can ?
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A. any of the above

B. default on the loan

C. reschedule debt

D. get a loan from an international organization

36. What is not a feature of the EU as a single market ?
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A. Common security arrangements

B. Elimination of border controls

C. Each country can retain its own technical standards

D. No import taxes on goods bought in another members country

37. All of the following represent obstacles to LDC development except ?
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A. low levels of investment

B. poor infrastructure

C. poor human capital

D. resource scarcity

E. low population
38. The imposition of a tariff causes consumption to _____ and imports to _________?
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A. rise, rise

B. fall, fall

C. rise, fall

D. fall, rise

39. The marginal propensity of consume is equal to ?
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A. Change in consumption / change in income

B. Total spending / total consumption

C. Change in consumption / change in savings

D. Total consumption / total income

40. A reduced share of the world export market for the United States would be attributed to?
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A. High levels of investment by American corporations

B. High incomes of American households

C. Decreased productivity in U.S manufacturing

D. Relatively low interest rates in the United States

41. The terms of trade measure ?
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A. Export prices compared to import prices

B. The GDP of one country compared to another

C. The quantity of exports of one country compared to another

D. The income of one country compared to another

42. Import substitution is the replacement of ____ by domestic production _____ protection of ________?
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A. exports, patents

B. exports, subsidies

C. imports, subsidies

D. imports, high tariffs or import quotas
43. International difference is opportunity costs lead to countries acquiring ?
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A. Comparative advantage

B. trade quotas

C. trade barriers

D. High exchange rates

44. A country has a comparative advantage in the production of a product if the goods _____ cost in different from the goods _____ cost in another country ?
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A. money; opportunity

B. foreign exchange money

C. opportunity; opportunity

D. resource; resource

45. International trade tends to cause welfare losses to at least some groups in a country ?
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A. The less mobile the countrys resources

B. higher the countrys initial living standard

C. The more mobile the countrys resources

D. The lower the countrys initial living standard

46. International specialization takes place because of______________?
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A. All of the above

B. differences in technology

C. differences in factor endowments

D. scale economies

47. Economists suggest that an optimum tariff would be one which reduce imports to a point where___________?
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A. import prices are the same as export prices

B. Price elasticity of imports is unity and tariff revenue is maximized

C. Comparative advantage is achieved

D. marginal social cost equals marginal social benefit
48. Increased foreign competition tend to ?
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A. Intensify inflationary pressure at home

B. Place constraints on the wages of domestic workers

C. Increase profits of domestic import competing industries

D. Induce falling output per worker-hour for domestic workers

49. When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ?
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A. trade creation and trade diversion

B. trade creation

C. trade diversion

D. trade channeling

50. If a country can produce 10 of product A or 4 of product B the opportunity cost of 1B is ?
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A. 1B

B. 0.4A

C. 2.5A

D. 10A