WorksheetsInternational Economic & Trade Exam
Total questions: 62
Worksheet time: 31mins
From 1950 to 2015...
The U.S. economy roughly tripled in size
U.S. imports roughly tripled in size
The share of U.S trade in the global economy roughly tripled in size
U.S. imports roughly tripled as compared to U.S exports
U.S. exports roughly tripled in size
The United States is less dependent on trade than most other countries because...
the United States is a relatively large country with diverse resources
the United States is a 'Superpower'
the military power of the United States makes it less dependent on anything
the United States invests in many other countries
many countries invest in the United States
An important insight of international trade theory is that when two countries engage in voluntary trade...
one country always benefits at the expense of the other
it is almost always beneficial to both countries
it only benefits the low wage country
it only benefits the high wage country
it is almost never beneficial to both countries
If there are large disparities in wage levels between countries, then...
trade is likely to be harmful to both countries
trade is likely to be harmful to the country with the high wages
trade is likely to be harmful to the country with the low wages
trade is likely to be harmful to neither country
trade is likely to have no effect on either country
The benefits of international trade are derived from trade in...
tangible goods only
intangible goods only
goods but not services
services but not goods
anything of value
International economics _______ use the same fundamental methods of analysis as other branches of economics, because ______
does not, the level of complexity of international issues is unique
does not, the interactions associated with international economic relations is highly mathematical
does not, international economics takes a different perspective on economic issues
does not, international economic policy requires cooperation with other countries
does, the motives and behavior of individuals are the same in international trade as they are in domestic transactions
The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by...
Adam Smith
David Hume
David Ricardo
Eli Heckscher
Lerner and Samuelson
After World War II, the United States has pursued a broad policy of...
strengthening 'Fortress America' protectionism.
removing barriers to international trade
isolating Iran and other members of the 'axis of evil'
protecting the U.S. from the economic impact of oil producers
restricting trade of manufactured goods
The balance of payments has become a central issue for the United States because...
when the balance of payments is not balanced, society is unbalanced
the U.S. economy cannot grow when the balance of payments is in deficit
the U.S. has run huge trade deficits every year since 1982
the U.S. never experienced a surplus in its balance of payments
the U.S. once ran a large trade surplus of about $40 billion
The study of exchange rate determination is a relatively new part of international economics, since...
for much of the past century, exchange rates were fixed by government action
the calculations required for this were not possible before modern computers became available
economic theory developed by David Hume demonstrated that real exchange rates remain fixed over time
dynamic overshooting asset pricing models are a recent theoretical development
the exchange rate never fluctuates
A fundamental problem in international economics is how to produce...
a perfect degree of monetary harmony
an acceptable degree of harmony among the international trade policies of different countries
a world government that can harmonize trade and monetary policies
a counter-cyclical monetary policy so that all countries will not be adversely affected by a financial crisis in one country
a worldwide form of currency
The international capital market is...
the place where you can rent earth moving equipment anywhere in the world
a set of arrangements by which individuals and firms exchange money now for promises to pay in the future
the arrangement where banks build up their capital by borrowing from the Central Bank
the place where emerging economies accept capital invested by banks
exclusively concerned with the debt crisis that ended in the 1990s
International capital markets experience a kind of risk not faced in domestic capital markets, namely...
"economic meltdown" risk
Flood and hurricane crisis risk
the risk of unexpected downgrading of assets by Standard and Poor
the risk of exchange rate fluctuations
the risk of political upheaval
The international financial crisis of 2008 was the result of...
failure of the Eurocurrency
runaway inflation in the U.S
a deep global recession
the collapse of the housing market
defaults on U.S. mortgage-backed securities
International economics can be divided into two broad subfields...
macro and micro
developed and less developed
monetary and barter
international trade and international money
static and dynamic
International monetary analysis focuses on...
the real side of the international economy
the international trade side of the international economy
the international investment side of the international economy
the issues of international cooperation between Central Banks
the monetary side of the international economy, such as currency exchange
The distinction between international trade and international money is NOT entirely clear because...
real developments in the trade accounts do not have monetary implications
the balance of payments includes only real measures
developments caused by purely monetary changes have no real effects
trade models focus on real, or barter relationships
most international trade involves monetary transactions
Approximately what percent of all world production of goods and services is exported to other countries?
10%
30%
50%
100%
90%
The gravity model offers a logical explanation for the fact that...
trade between Asia and the U.S. has grown faster than NAFTA trade
Trade in services has grown faster than trade in goods
trade in manufactures has grown faster than in agricultural products
Intra-European Union trade exceeds international trade by the European Union
the U.S. trades more with Western Europe than it does with Canada
The gravity model suggests that over time...
trade between neighboring countries will increase
trade between all countries will increase
world trade will eventually be swallowed by a black hole
trade between Earth and other planets will become important
the value of trade between two countries will be proportional to the product of the two countries' GDP
The gravity model explains why...
trade between Sweden and Germany exceeds that between Sweden and Spain
countries with oil reserves tend to export oil
capital rich countries export capital intensive products
intra-industry trade is relatively more important than other forms of trade between neighboring countries
European countries rely most often on natural resources
According to the gravity model, a characteristic that tends to affect the probability of trade existing between any two countries is...
their cultural affinity
the average weight/value of their traded goods
their colonial-historical ties
the distance between them
the number of different product varieties produced by their industries
In general, which of the following do NOT tend to increase trade between two countries?
linguistic and/or cultural affinity
historical ties
larger economies
mutual membership in preferential trade agreements
the existence of well controlled borders between countries
Why does the gravity model work?
Large economies became large because they were engaged in international trade
Large economies have relatively large incomes, and hence spend more on government promotion of trade and investment
Large economies have relatively larger areas, which raises the probability that a productive activity will take place within the borders of that country
Large economies tend to have large incomes and tend to spend more on imports
Large economies tend to avoid trading with small economies
We see that the Netherlands, Belgium, and Ireland trade considerably more with the United States than with many other countries...
This is explained by the gravity model, since these are all large countries
This is explained by the gravity model, since these are all small countries
This fails to be consistent with the gravity model, since these are small countries
This fails to be consistent with the gravity model, since these are large countries
This is explained by the gravity model, since they do not share borders
The two neighbors of the United States do a lot more trade with the United States than European economies of equal size...
This contradicts predictions from gravity models
This is consistent with predictions from gravity models
This is irrelevant to any inferences that may be drawn from gravity models
This is because these neighboring countries have exceptionally large GDPs
This relates to Belgium's trade record with the U.S
Which of the following does NOT explain the extent of trade between Ireland and the U.S.?
historical ties
cultural Linguistic ties
Gravity Model
multinational corporations
large numbers of Irish-Americans
Since the early 1970s, world's trade as a share of world production has...
remained constant
increased
decreased
fluctuated widely with no clear trend
increased slightly before dropping off
In the current Post-Industrial economy, international trade in services (including banking and financial services)...
dominates world trade
does not exist
is an increasingly important component of global trade
is relatively stagnant
far surpasses the predictions of economist Alan Blinder
In the early 20th century, the United Kingdom exported mainly...
manufactured goods
services
primary products including agriculture
technology intensive products
livestock
In the early 20th century, the United Kingdom imported mainly...
manufactured goods
services
primary products including agriculture
technology intensive products
livestock
In the present, most of the exports from China are
manufactured goods.
services
primary products including agriculture
technology intensive products
overpriced by world market standards
If a firm's output more than doubles when all inputs are doubled, production is said to occur under conditions of...
intra-industry equilibrium
decreasing returns to scale
imperfect competition
increasing returns to scale
constant returns to scale
One advantage of the specialization that results from international trade is that countries can take advantage of...
scale economies
taste reversals
production diversification
smaller countries
lower transport costs
If a firm's output doubles when all inputs are doubled, production is said to occur under conditions of...
increasing returns to scale
imperfect competition
intra-industry equilibrium
constant returns to scale
decreasing returns to scale
If a firm's output less than doubles when all inputs are doubled, production is said to occur under conditions of...
increasing returns to scale
imperfect competition
intra-industry equilibrium
constant returns to scale
decreasing returns to scale
The existence of external economies of scale...
tends to result in large profits for each firm
may be associated with a perfectly competitive industry
cannot be associated with a perfectly competitive industry
tends to result in one huge monopoly
focuses more on individual firms than the industry as a whole
The existence of internal economies of scale...
may be associated with a perfectly competitive industry
is associated only with sophisticated products such as aircraft
cannot be associated with a perfectly competitive industry
cannot form the basis for international trade
focuses more on the industry than individual firms
When there are external economies of scale, an increase in the size of the market will...
not affect the number of firms, but will lower the price per unit
decrease the number of firms and lower the price per unit
decrease the number of firms and raise the price per unit
increase the number of firms and raise the price per unit
increase the number of firms and lower the price per unit
If some industries exhibit internal increasing returns to scale in each country, we should not expect to see...
intra-industry trade between countries.
high levels of specialization in both countries.
inter-industry trade between countries.
perfect competition in these industries.
increased productivity in both countries.
External economies of scale arise when the cost per unit...
rises as the industry and the average firm grows larger
remains constant over a broad range of output
falls as the industry and the average firm grows larger
falls as the industry grows larger and rises as the average firm grows larger
rises as the industry grows larger and falls as the average firm grows larger
Internal economies of scale arise when the cost per unit...
falls as the industry grows larger
remains constant over a broad range of output
rises as the industry grows larger
falls as the average firm grows larger
rises as the average firm grows larger
Where there are internal economies of scale, the scale of production possible in a country is constrained by...
the size of the country
the size of the domestic market
the size of the trading partner's country
the size of the foreign market
the size of the domestic plus the foreign market
Internal economies of scale will _____ average cost when output is _____ by _____.
reduce; increased; a firm
reduce; increased; the industry
increase; increased; a firm
reduce; reduce; the industry
increase; increased; the industry
External economies of scale _____ will average cost when output is _____ by _____.
reduce; increased; the industry
reduce; increased; a firm
increase; increased; a firm
increase; increased; the industry
reduce; reduce; the industry
External economies scale often arise because similar firms...
have excellent internal logistics
locate in the same geographic region
collude to fix prices and increase profits
agree to cooperate to expand global trade
have economies of scale in production
The Internet has made transactions between businesses (B2B trading) fast and easy. Any business any location can access specialized knowledge, labor, and materials. It is likely that these virtual economic communities will result in...
consolidation of industries into a small number of powerful firms
internal economies of scale
suppression of innovations and collusive behavior, driving up prices
government intervention and regulation
external economies of scale
The long-run market supply curve in the presence of internal economies of scale is _____ and in the presence of external economies of scale, it is _____.
horizontal; upward sloping
downward sloping; downward sloping
upward sloping; downward sloping
upward sloping; horizontal
downward sloping; horizontal
If output is increased in the long run, average production costs in the presence of internal economies of scale will _____ and in the presence of external economies of scale, will _____.
increase; decrease
increase; remain constant
remain constant; increase
decrease; decrease
decrease; remain constant
If the firms in a market have constant returns to scale internally while there are external economies of scale for the industry, a firm's long-run supply curve will be _____ and the long-run market supply curve will be _____.
downward sloping; downward sloping
upward sloping; horizontal
horizontal; downward sloping
downward sloping; horizontal
upward sloping; downward sloping
If output is increased in the long run, then in the presence of internal economies of scale the number of firms will _____ and in the presence of constant external returns to scale the number of firms will _____.
decrease; decrease
increase; remain constant
remain constant; increase
decrease; remain constant
increase; decrease
If output is increased in the long run, average production costs in the presence of internal diseconomies of scale will _____ and in the presence of external diseconomies of scale, will _____.
decrease; decrease
increase; remain constant
remain constant; increase
decrease; remain constant
increase; decrease
If two countries begin trade and both produce a product subject to external economies of scale, then the country with the rate of production will _____ production until it controls _____ of the market.
higher; increase; 100%
higher; increase; 50%
lower; increase; 100%
lower; increase; 50%
higher; decrease; 0%
In the presence of external economies of scale, trade...
will unambiguously improve welfare in both countries
will unambiguously worsen welfare in the exporting country and improve welfare in the importing country
may or may not improve welfare in both countries
will unambiguously improve welfare in the exporting country and worsen welfare in the importing country
will unambiguously worsen welfare in both countries
A learning curve relates _____ to _____ and is a case of _____ returns.
unit cost; cumulative production; dynamic increasing
output per time period; long-run marginal cost; dynamic decreasing
output per time period; long-run marginal-cost; dynamic increasing
unit cost; cumulative production; dynamic decreasing
labor productivity; education; increasing marginal
The learning curve describes the ______ relationship between _____ and _____.
inverse; education; annual income
direct; education; annual income
direct; education; labor productivity
inverse; unit cost; cumulative output
direct; unit cost; cumulative output
If two countries begin trade and both produce a product subject to internal economies of scale, then the country with the _____ rate of production will _____ production until it controls _____ of the market.
higher;increase;50%
higher;increase;100%
higher;decrease;0%
lower;increase;50%
lower;increase;100%
Restaurant meals are an example of a _____ good and clothing is an example of a _____ good. The pattern of interregional trade is determined primarily by _____.
durable;nondurable;natural resources
consumer;style;population
nontraded;traded;external economies
nondurable;durable;natural resource
traded;nontraded;internal economies
The share of _____ goods in employment is _____ across the country. The share of _____ goods in employment is _____ across the country.
nontraded;uniform;traded;variable
nondurable;uniform;durable;variable
durable;uniform;nondurable;variable
traded;uniform;nontraded;variable
nontraded;variable;traded;uniform
Patterns of interregional trade are primarily determined by _____ rather than _____ because factors of production are generally _____.
external economies;population;immobile
external economies;natural resources;mobile
internal economies;population;immobile
population;external economies;immobile
internal economies;external economies;mobile
The primary determinant of patterns of interregional trade is...
accidents of history
centralized optimization
resource allocations
weather
factor abundance
The study of factors that influence both international and interregional trade is referred to as...
accidents of history
economic geography
factor abundance theory
weather analysis
centralized optimization
