economics topic 10

Marta can either produce four backpacks or two lamps in an hour. Robin can either produce six backpacks or two lamps in an hour.

In the above scenario, who has an absolute advantage in making backpacks, and what is that person’s opportunity cost for producing one lamp?

• Marta has an absolute advantage in making backpacks; opportunity cost is one backpack.

• Marta has an absolute advantage in making backpacks; opportunity cost is two backpacks.

• Robin has an absolute advantage in making backpacks; opportunity cost is three backpacks.

• Robin has an absolute advantage in making backpacks; opportunity cost is four backpacks.

Computerization has allowed investors around the world to watch the values of stocks in many different markets. They move quickly to buy the stock of promising companies in whatever country they find them—and sell just as quickly at any sign of trouble.

The text above is a description of the effect of

• the FOREX.

• globalization.

• comparative advantage.

• foreign direct investment

What key aspect of U.S. exports to China and other foreign countries does this poster illustrate?

• The U.S. has a growing trade deficit with China.

• One of the strongest U.S. exports is technologically sophisticated goods.

• The U.S. exports pop culture through music, television shows, and movies.

• Some U.S. exports provide goods that an importing country couldn’t produce alone.

A United Auto Workers labor union member puts this bumper sticker on his car. This bumper sticker reflects a protectionist view because it shows that

• he believes the American military is weakened when imports increase.

• he believes that American cars are of higher quality than foreign cars.

• he doesn’t want foreign companies to invest in the United States.

• he wants to support American companies and protect jobs in the United States.

According to this graph, in what year was the U.S. trade deficit largest?

• 1975

• 2005

• 2010

• 2012

In the global economy, companies may move parts of their operations to other countries. This practice is known as

• offshoring.

• franchising.

• telemarketing.

• foreign portfolio investment

In which place would a Mexican tourist need the most pesos to buy the local currency?

• a country in the European Union

• United Kingdom

• United States

• Canada

The humor in this cartoon depends on the dollar and the yuan being part of the

• Bretton Woods exchange-rate system.

• fixed exchange-rate system.

• international exchange-rate system.

• flexible exchange-rate system

According to this graph, which country has seen its exports of oil to the United States grow the most over the time period shown?

• Venezuela

• Saudi Arabia

• Canada

• Mexico

If an American invested in a foreign company, the capital he or she invested would be part of the monetary flow going overseas. Any returns from the investment would be part of the monetary flow coming into the country.

The sentences above describe how the circular flow model for the economy of the United States is affected by the rest of the world. Which of the following also describes a piece of the U.S. model?

• The United States government increases its oversight of U.S. investment firms.

• The United States government gives financial aid to the nation of Laos.

• The Swedish government invests in its own university system.

• The Costa Rican government buys machinery from China.