Global Economy | Unit 4

What is the definition of globalization?

• The process of making a country more isolated

• The way in which individual nations are more connected and interdependent

• The increase in national boundaries

• The decline of international trade

Answer explanation

Globalization refers to the way in which individual nations become more connected and interdependent, facilitating trade, culture, and communication across borders, unlike isolation or increased national boundaries.

What has generally happened to globalization over recent years?

• It has decreased

• It has remained the same

• It has increased

• It has become irrelevant

Answer explanation

Globalization has generally increased in recent years due to advancements in technology, trade agreements, and international cooperation, leading to greater interconnectedness among countries.

Which of the following is a potential topic to discuss regarding globalization?

• The history of ancient civilizations

• Pros vs. Cons of Globalization

• The development of local markets

• The invention of the internet

Answer explanation

The topic 'Pros vs. Cons of Globalization' directly addresses the impacts and implications of globalization, making it a relevant discussion point. The other options do not specifically relate to globalization.

What is one of the main reasons nations trade with each other?

• Equal distribution of resources

• Unequal distribution of Factors of Production

• Similar government policies

• Equal demand for products

Answer explanation

Nations trade primarily due to the unequal distribution of factors of production, such as land, labor, and capital. This disparity encourages countries to exchange goods and services to meet their needs and maximize efficiency.

Which of the following is a reason for international trade?

• Differences in climate

• Differences in technology

• Similar cultural practices

• Equal population sizes

Answer explanation

Differences in technology drive international trade as countries specialize in producing goods where they have a technological advantage, leading to more efficient production and innovation. This is a key reason for trade.

What factor can influence a nation's decision to trade?

• Differences in demand

• Equal technological advancement

• Similar production costs

• Equal government policies

Answer explanation

Differences in demand drive trade as countries seek to import goods that are in high demand domestically but not produced locally. This creates opportunities for trade, unlike equal technological advancement or similar production costs.

Which of the following is NOT a reason for trade mentioned in our notes?

• Government policies

• Production advantages

• Cultural similarities

• Differences in technology

Answer explanation

Cultural similarities are not typically a reason for trade, as trade usually arises from differences in production, technology, and government policies that create comparative advantages.

What is the definition of free trade?

• The exchange of goods between countries with minimal restrictions

• The restriction of goods between countries

• The taxation of foreign goods

• The protection of local markets from foreign competition

Answer explanation

Free trade is defined as the exchange of goods between countries with minimal restrictions, allowing for a more efficient and competitive market. The other options describe trade restrictions, which contradict the concept of free trade.

What is protectionism?

• A tax on foreign goods

• The exchange of goods with minimal restrictions

• When trade is restricted to give the local economy an advantage

• The removal of all trade barriers

Answer explanation

Protectionism refers to policies that restrict international trade to benefit the local economy. This includes tariffs and quotas, aimed at making local products more competitive against foreign goods.

What is a tariff?

• A subsidy for local businesses

• A tax placed on foreign goods (imports)

• A restriction on local goods

• A free trade agreement

Answer explanation

A tariff is specifically defined as a tax imposed on foreign goods (imports) to regulate trade and protect local industries. This distinguishes it from subsidies, restrictions, or trade agreements.