Unit 3/4 Economics Recap Quiz

What would limit the globalisation process among nations?

• Increase in the number of free trade agreements
• Increase in the flow of direct foreign investment
• Increase in the volume of trade flows
• Increase in tariffs

Which of the following best describes an effect of globalisation

• There has been a greater divergence in world economic systems

• There has been an increase in global poverty

• There has been an increasing trend towards regulations of markets

• There has been an increase in the flow of financial capital

Which of the following would increase Australia's international competitiveness?

• An increase in Australian tariffs
• An increase in Australian wage rates
• An increase in productivity
• An increase in inflation in Australia

If the purchasing power parity theory is true then

• the price of a traded good should be the same everywhere in the world

• exchange rates should be the same everywhere in the world when converted to a common currency

• interest rates should be the same around the world

• Inflation should be the same around the world

One possible argument against globalisation is that it may 

• lead to higher rates of domestic inflation
• create short term structural unemployment in less efficient industries
• result in increasing deficits in Australia's trade balance
• lead to lower rates of economic growth

A factor not facilitating the process of globalisation would be

• the reduction of tariffs in some manufacturing industries
• an improvement in telecommunications technology
• more free trade agreements
• an increase in rates of taxation paid by multinational firms

The infant industry argument for protection

• only applies to industries that have high wages
• can be derived from the application of the law of comparative advantage int the short term
• support from the government to survive the initial set-up phase
• only applies to industries that operate at a small scale

Which of the following would not tend to improve Australia's overall international competitiveness?

• An increase in productivity growth

• a decrease in the cash rate

• an increase in spending on education and training

• an increase in tariff protection for the domestic agricultural industry

A potential benefit of trade liberalisation is that it will 

• allow countries to specialise in goods in which they have the greatest opportunity cost
• tend to lead to greater diversity in domestic production
• reduce the level of the current account deficit in the short term
• lead to higher living standards for domestic consumers

Which of the following is likely to improve Australia's competitiveness in the global economy?

• Increased spending on transport infrastructure in Australia
• an appreciation of the Australian dollar
• deflation in the major countries in European Union
• A change in the industrial relations system in Australia towards more centralised wage determination