the international economy and globalization Mcqs
51. International trade in goods and services tends to ?
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A. Keep all domestic costs and prices at the same level

B. Increase all domestic costs and prices

C. Lessen the amount of competition facing home manufacturers

D. Increase the amount of competition facing home manufacturers
52. Output fell sharply in the transition economies because ?
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A. banks were unable to function

B. All of the above

C. there was little corporate control

D. vital infrastructure was missing

53. In a floating exchange rate system ?
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A. The Balance of payments will always equal the government budget

B. The exchange rate should adjust to equate the supply and demand of the currency

C. The government intervenes to influence the exchange rate

D. The Balance of payments should always be in surplus

54. Tariffs ?
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A. Increase the quantity of imports

B. Increase government earnings from tax

C. Decrease domestic production

D. Decrease the domestic price of a product

55. The level of the equilibrium exchange rate offsets international differences in ?
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A. relative costs

B. absolute advantage

C. opportunity cost

D. comparative advantage

56. If goods are exported for less than societys marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from?
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A. a quota

B. an import subsidy

C. an export subsidy

D. comparative advantage

57. International trade forces domestic firms to become more competitive in terms of ?
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A. Product price

B. The introduction of new products

C. Product design and quality

D. All of the above
58. An optimal tariff is one which reduces imports to the level at which ____ equals ____?
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A. imports, exports

B. The demand for currency the supply of currency

C. social marginal cost, social marginal benefit

D. the balance of trade, zero

59. A primary reason why nations conduct international trade is because ?
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A. interest rates are not identical in all trading nations

B. Trade enhances opportunities to accumulate profits

C. Some nations prefer to produce one thing while others produce another

D. Resources are not equally distributed to all trading nations
60. Which American industry has least been affected by import competition in recent years ?
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A. Radios and TVs

B. Steel

C. Computer software

D. Automobiles

61. Economic integration ?
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A. occurs when two or more nations join to form a free-trade zone

B. occurs when countries are granted most favored nation status

C. Occurs when countries develop an acquired comparative advantage that makes their industries more competitive in international markets

D. occurs when one country voluntarily agrees to reduce its exports to another country

62. A demand switching policy could be ?
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A. Higher income tax

B. Higher interest rates

C. Tariffs

D. Reduced government spending

63. Economic transition involves high inflation because _____ and ______?
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A. high monetary growth high wages

B. Prices surge from an artificially low level to their equilibrium level the inflation tax is required a source of government revenue

C. high monetary growth devaluation

D. high budget deficits devaluation

64. A sudden shift from import tariffs to free trade may induce short-term unemployment in ?
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A. industries that neither import nor export

B. Industries that are only exporters

C. Industries that sell domestically as well as export

D. Import-competing industries
65. For the United states, exports plus imports are about _____ of its gross national product?
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A. 5 percent

B. 25 percent

C. 55 percent

D. 10 percent

66. If a nation has an open economy it means that the nation ?
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A. Has fixed exchange rates

B. Has flexible exchange rates

C. Allows private ownership of capital

D. conducts trade with other countries