1. A primary reason why nations conduct international trade is because:
- Some nations prefer to produce one thing while others produce other things
- Resources are not equally distributed among all trading nations
- Trade enhances opportunities to accumulate profits
- Interest rates are not identical in all trading nations
|
2. A main advantage of specialization results from:
- Economies of large-scale production
- The specializing country behaving as a monopoly
- Smaller production runs resulting in lower unit costs
- High wages paid to foreign workers
|
3. International trade in goods and services is sometimes used as a substitute for all of the following except:
- International movements of capital
- International movements of labor
- Domestic production of the same goods and services
- Domestic production of different goods and services
|
4. The movement to free international trade is most likely to generate short-term unemployment in which industries?
- Industries in which there are neither imports nor exports
- Import-competing industries
- Industries that sell to domestic and foreign buyers
- Industries that sell to only foreign buyers
|
5. How much physical output a worker producers in an hour's work depends on:
- The worker's motivation and skill
- The technology, plant, and equipment in use
- How easy the product is to manufacture
- All of the above
|
6. The largest amount of trade with the United States in recent years has been conducted by:
- Canada
- Germany
- Chile
- United Kingdom
|
7. Increased foreign competition tends to:
- Intensify inflationary pressures at home
- Induce falling output per worker-hour for domestic workers
- Place constraints on the wages of domestic workers
- Increase profits of domestic import-competing industries
|
8. ____ 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.
- Competitiveness
- Protectionism
- Comparative advantage
- Absolute advantage
|
9. A firm's ____, relative to that of other firms, is generally regarded as the most important determinant of competitiveness.
- Income level
- Tastes and preferences
- Governmental regulation
- Productivity
|
10. Free traders maintain that an open economy is advantageous in that it provides all of the following except:
- Increased competition for world producers
- A wider selection of products for consumers
- The utilization of the most efficient production methods
- Relatively high wage levels for all domestic workers
|
11. Recent pressures for protectionism in the United States have been motivated by all of the following except:
- U.S. firms shipping component production overseas
- High profit levels for American corporations
- Sluggish rates of productivity growth in the United States
- High unemployment rates among American workers
|
12. A feasible effect of international trade is that:
- A monopoly in the home market becomes an oligopoly in the world market
- An oligopoly in the home market becomes a monopoly in the world market
- A purely competitive firm becomes an oligopolist
- A purely competitive firm becomes a monopolist
|
13. The real income of domestic producers and consumers can be increased by:
- Technological progress, but not international trade
- International trade, but not technological progress
- Technological progress and international trade
- Neither technological progress nor international trade
|
14. In the United States, automobiles are:
- Imported, but not exported
- Exported, but not imported
- Imported and exported
- Neither exported nor imported
|
15. Empirical research indicates that ____ best enhances productivity gains for firms and industries.
- Local competition
- Regional competition
- Global competition
- No competition
|
16. The dominant trading nation in the world market following World War II was:
- United Kingdom
- Germany
- South Korea
- United States
|
17. A closed economy is one in which:
- Imports exactly equal exports, so that trade is balanced
- Domestic firms invest in industries overseas
- The home economy is isolated from foreign trade
- Saving exactly equals investment at full employment
|
18. Relative to countries with low ratios of exports to gross domestic product, countries having high export to gross domestic product ratios are ____ vulnerable to changes in the world market.
- Less
- More
- Equally
- Any of the above
|
19. Which of the following is a fallacy of international trade?
- Trade is a zero-sum activity
- Exports increase employment in exporting industries
- Import restrictions increase employment in import-competing industries
- Tariffs and quotas reduce trade volume
|
20. Foreign ownership of U.S. financial assets:
- Has decreased since the 1960s
- Has increased since the 1960s
- Has made the U.S. a net borrower since the late 1980s
- Both a and c
|
21. Important trading partners of the United States include Canada, Mexico, Japan, and China.
- True
- False
|
22. Opening the economy to international trade tends to lessen inflationary pressures at home.
- True
- False
|
23. 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.
- True
- False
|
24. 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.
- True
- False
|
25. Restrictive trade policies have resulted in U.S. producers of minerals and metals supplying all of the U.S. consumers' needs.
- True
- False
|
