Chapter 7 Practice QuizChapter 8 Practice QuizChapter 9 Practice QuizChapter 10 Practice QuizINR 2002 Exam 3 Practice TestsChapter 7 Practice Quiz1. What is the effect of trade barriers?a)They make imports cheaper.b)They make imports more expensive.c)They cause domestic economies to collapse.d)They force countries to withdraw from international institutions.2. As measured by percentage of GDP, how has the importance of trade to the U.S. economy changed over the last 45 years?a)Trade has become more important.b)Trade has become less important.c)Trade has remained constant as a percentage of GDP.d)It is impossible to measure what percentage of GDP is due to trade.3. Which would be an example of protectionism?a)putting taxes on goods that are manufactured in other countriesb)having the government purchase new goods on an open marketc)taxing a good to discourage consumption of it d)going to war with another country4. What does comparative advantage imply for countries?a)They should specialize in the goods they make most efficiently.b)They should try to increase the productivity of industries in which they are weak.c)They should develop nuclear capabilities.d)They should try to distribute income more equally within the country.5. If all the barriers to trade were removed in the United States, what is likely to occur?a)The United States economy would lose several billion dollars.b)Other countries will take advantage of U.S. markets.c)The U.S. economy would gain several hundred billiondollars. d)Consumers would have to pay much more for goods.6. What does the Stolper-Samuelson theory predict regarding a country’s economy?a)Trade will eventually lead domestic industries to collapse.b)Free trade benefits industries that use scarce factors of production.c)Countries will forgo their comparative advantage when facing international threats.d)Protectionism benefits industries that use scarce factors of production.7. In The Wealth of Nations, what does Adam Smith argue best promotes economic growth?a)socialismb)mercantilismc)specialization d)conservatism8. Which of the following is a nontariff barrier to trade?a)quotas on importsb)subsidies to domestic industriesc)regulations targeted at foreign goods d)all of the above9. Which of the following is typically considered a factor of production?a)agricultural productsb)human capitalc)instruction manuals d)access to factories10. What is comparative advantage?a)hegemonyb)having more nuclear weapons than neighboring countries havec)being financially self-sufficientd)the ability to produce one good more efficiently than other goods11. Which organization is the predecessor to the World Trade Organization?a)the United Nationsb)the World Bankc)the General Agreement on Tariffs and Trade d)the European Union12. During what time period were Germany’s exports the highest as a percentage of its GDP?a)the 19th centuryb)during World War Ic)between World War I and World War II d)the 1990s13. Due to quotas, how does the price of sugar in the United States compare to its price in the rest of the world?a)The price of sugar in the United States is higher.b)The price of sugar in the United States is relatively the same as in the rest of the world.c)The price of sugar in the United States is lower. d)It is impossible to compare sugar prices across countries.14. What is factor price equalization?a)when countries impose tariffsb)when wages become more similar across countries as trade increasesc)when countries leave trade institutions d)when countries settle trade disputes15. What is absolute advantage?a)military dominanceb)the ability to produce more of a good or service than other countries using the same effort and resourcesc)the ability to produce all of a good that you desire to consume internally d)being the first country to start producing a particular good16. In what industries did European countries form a common market in 1951?a)coal and steelb)bread and winec)automobiles and airplanes d)cloth and vegetables17. Which organization is an example of a regional trade agreement?a)NAFTA (North American Free Trade Agreement)b)WTO (World Trade Organization)c)GATT (General Agreement on Tariffs and Trade) d)IMF (International Monetary Fund)18. What is MERCOSUR?a)an information technologies corporationb)a military alliancec)a pharmaceutical company d)a trade agreement19. Which of the following groups within the United States tends to favor protectionism?a)laborb)owners of human capitalc)owners of capital d)corporate executives20. What does the Heckscher-Olin theory predict about exports?a)A country will export goods that use its scarce factors of production.b)A country will export goods that use its abundant factorsof production.c)A country will export only to its neighbors. d)A country will not export if it is geographically isolated.21. What is most-favored-nation status?a)when a country becomes president of the UN Security Councilb)when a country gives all signatories to an agreement thesame benefits of tradec)when a country builds an embassy in another country d)when a country invites another to join a military allianceChapter 8 Practice Quiz1. Most foreign direct investment is regulated bya)bilateral treaties.b)the World Bank.c)the International Monetary Fund. d)the World Trade Organization.2. Which of the following is an example of a multinational corporation?a)a company that exports its products internationallyb)a company that imports input goods from other countriesc)a company that owns production facilities in multiple countries d)a company that makes loans to other firms internationally3. How does the Heckscher-Olin theory explain increasing investment in emerging markets?a)Loans are made to countries where capital is abundant.b)Loans are made to countries where capital is scarce.c)Loans are
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