SS7E6 and SS7E7

Why is specialization important?

• it increases trade

• It makes production of goods and services more efficient

• It results in more choices and lower prices for consumers

• All of the options listed contribute to the importance of specialization.

Although voluntary trade is good, there are situations where trade barriers are needed. Some trade barriers are used to help protect domestic producers. Some are used to for political reasons. Which trade barrier is a tax on imported goods?

• Quota

• Embargo

• Tariff

• Mountains and Deserts

After the Persian Gulf War, the U.N. imposed an embargo on Iraq. What would be a reason why an embargo was used by the U.N.?

• To control the Iraqi economy after the war

• To restrict trade with Iraq until they met U.N. requirements

• To increase the cost of Iraqi products to help Iraq’s economy

• To protect Iraq’s domestic industry so it would grow after the war.

Which of the following countries does NOT benefit from large oil reserves?

• Iran

• Saudi Arabia

• Israel

• Kuwait

Oil is the major export of Saudi Arabia to many different countries. Saudi Arabia’s international trade in oil is made much easier by

• Use of a world-wide currency

• A system to exchange currency between countries

• Trading only with countries that have the same currency

• Trade of oil for other needed goods so currency is not needed.

Saudi Arabia’s literacy rate has grown from 49% in 1980 to 79% in 2010. This may indicate that investments have been made in which category?

• Natural resources

• Entrepreneurship

• Capital

• Human Capital

If a country wants to increase its GDP, what actions could be taken?

• Invest in human capital

• Invest in capital

• Create an environment conducive for entrepreneurs

In Iran, the economy is highly centralized and there are a lot of regulations about private individuals opening and operating businesses. However, Saudi Arabia has made owning and operating a business very easy compared to the world average. What impact does this have on the role of entrepreneurs in both countries?

• Entrepreneurs are not affected by government regulations.

• It will limit efforts of entrepreneurs in both Iran and Saudi Arabia.

• Entrepreneurs will be able to make significant contributions to Saudi Arabia’s economy but not to Iran’s economy.

• Both Iran and Saudi Arabia will benefit greatly from the efforts of entrepreneurs.

What role does OPEC play in the world oil market?

• It controls the price of oil

• It donates oil to countries that don’t have any

• It makes sure that all countries get an equal amount of oil

• It makes sure that oil reserves will never run out

Which of the following statements about oil and the Middle East is true?

• Countries with oil reserves have a higher GDP

• Countries without oil reserves have a lower GDP

• Countries without oil reserves must specialize in other industries.