Question 1

In the United States globalization has played:

Accepted Answer

A)  a significant role in growing income disparity because some sectors have benefited and others have not. 
B)  little role in growing income disparity because all Americans are consumers who have enjoyed lower prices. 
C)  a significant role in growing income disparity because foreign workers' incomes have risen. 
D)  little role in growing income disparity because while some jobs were lost, the gain in jobs balanced out those that were lost. 
A)  a significant role in growing income disparity because some sectors have benefited and others have not. 
B)  little role in growing income disparity because all Americans are consumers who have enjoyed lower prices. 
C)  a significant role in growing income disparity because foreign workers' incomes have risen. 
D)  little role in growing income disparity because while some jobs were lost, the gain in jobs balanced out those that were lost. A

Question 2

The decline in the price of American goods is due in part to:

Accepted Answer

A)  agglomeration effects of firms. 
B)  declines in productivity. 
C)  trade barriers that allow domestic firms to lower prices. 
D)  globalization and increased trade. 
A)  agglomeration effects of firms. 
B)  declines in productivity. 
C)  trade barriers that allow domestic firms to lower prices. 
D)  globalization and increased trade. D

Question 3

If a country's exchange rate depreciates,

Accepted Answer

A)  the world price level rises. 
B)  the world price level falls. 
C)  the world price level remains unchanged. 
D)  exchange rates have no impact on world prices. 
A)  the world price level rises. 
B)  the world price level falls. 
C)  the world price level remains unchanged. 
D)  exchange rates have no impact on world prices. A

Question 4

When considering outsourcing, most laypeople:

Accepted Answer

A)  recognize its benefits to raising foreign wages. 
B)  oppose it because of the visible loss of jobs. 
C)  support it because they enjoy lower consumer prices. 
D)  recognize it frees resources for other jobs for which the U.S. has a comparative advantage. 
A)  recognize its benefits to raising foreign wages. 
B)  oppose it because of the visible loss of jobs. 
C)  support it because they enjoy lower consumer prices. 
D)  recognize it frees resources for other jobs for which the U.S. has a comparative advantage.

Question 5

In the United States, globalization has caused workers in the education, health care, and government sectors to face:

Accepted Answer

A)  lower wages. 
B)  higher prices on consumer goods. 
C)  little or no downward pressure on their wages. 
D)  longer hours to compete with the higher production levels abroad. 
A)  lower wages. 
B)  higher prices on consumer goods. 
C)  little or no downward pressure on their wages. 
D)  longer hours to compete with the higher production levels abroad.

Question 6

What economists call the law of one price depends on:

Accepted Answer

A)  government action. 
B)  people seeking to exploit profit opportunities. 
C)  random chance. 
D)  the inertia effect. 
A)  government action. 
B)  people seeking to exploit profit opportunities. 
C)  random chance. 
D)  the inertia effect.

Question 7

Transferable comparative advantages are:

Accepted Answer

A)  based on factors that are relatively unchangeable. 
B)  based on factors that can change relatively easily. 
C)  becoming more like inherent comparative advantages with technological innovations. 
D)  rarely eroded over time. 
A)  based on factors that are relatively unchangeable. 
B)  based on factors that can change relatively easily. 
C)  becoming more like inherent comparative advantages with technological innovations. 
D)  rarely eroded over time.

Question 8

Refer to the table shown.   Botswana's opportunity cost of producing nickel (in terms of gold) is:

Accepted Answer

A)  3/5. 
B)  5/3. 
C)  60. 
D)  100. 
A)  3/5. 
B)  5/3. 
C)  60. 
D)  100.

Question 9

The recent discovery of a significant amount of shale oil in the U.S. that can be exported will shift the:

Accepted Answer

A)  supply of U.S. currency to the right and lead to a currency depreciation. 
B)  supply of U.S. currency to the right and lead to a currency appreciation. 
C)  demand for U.S. currency to the left and lead to a currency depreciation. 
D)  demand for U.S. currency to the right and lead to a currency appreciation. 
A)  supply of U.S. currency to the right and lead to a currency depreciation. 
B)  supply of U.S. currency to the right and lead to a currency appreciation. 
C)  demand for U.S. currency to the left and lead to a currency depreciation. 
D)  demand for U.S. currency to the right and lead to a currency appreciation.

Question 10

If the United States were to stop trading with other nations, economists would predict that in the long run the United States would end up with:

Accepted Answer

A)  more jobs. 
B)  lower prices. 
C)  a higher standard of living. 
D)  a lower standard of living. 
A)  more jobs. 
B)  lower prices. 
C)  a higher standard of living. 
D)  a lower standard of living.

Question 11

The supply of euros on the foreign exchange market slopes:

Accepted Answer

A)  upward because European consumers buy fewer foreign goods when the value of the euro decreases. 
B)  upward because European consumers buy more foreign goods when the value of the euro decreases. 
C)  downward because European consumers buy fewer foreign goods when the value of the euro decreases. 
D)  downward because European consumers buy more foreign goods when the value of the euro decreases. 
A)  upward because European consumers buy fewer foreign goods when the value of the euro decreases. 
B)  upward because European consumers buy more foreign goods when the value of the euro decreases. 
C)  downward because European consumers buy fewer foreign goods when the value of the euro decreases. 
D)  downward because European consumers buy more foreign goods when the value of the euro decreases.

Question 12

Refer to the graph shown.   We would expect that if the two countries trade with each other (and neither trades with the rest of the world):

Accepted Answer

A)  Norstrilia will export manufactured goods and Graustark will export agricultural goods. 
B)  Norstrilia will export agricultural goods and Graustark will export manufactured goods. 
C)  Norstrilia will export both goods to Graustark, which will have a permanent trade deficit. 
D)  Graustark will export both goods to Norstrilia, which will have a permanent trade deficit. 
A)  Norstrilia will export manufactured goods and Graustark will export agricultural goods. 
B)  Norstrilia will export agricultural goods and Graustark will export manufactured goods. 
C)  Norstrilia will export both goods to Graustark, which will have a permanent trade deficit. 
D)  Graustark will export both goods to Norstrilia, which will have a permanent trade deficit.

Question 13

The balance of trade measures the:

Accepted Answer

A)  difference between the value of imports and that of exports. 
B)  share of U.S. imports coming from various regions of the world. 
C)  share of U.S. exports going to various regions of the world. 
D)  exchange rate needed to make imports equal exports. 
A)  difference between the value of imports and that of exports. 
B)  share of U.S. imports coming from various regions of the world. 
C)  share of U.S. exports going to various regions of the world. 
D)  exchange rate needed to make imports equal exports.

Question 14

On average, globalization has:

Accepted Answer

A)  been insignificant. 
B)  left Americans no better or not worse off. 
C)  hurt Americans. 
D)  benefited Americans. 
A)  been insignificant. 
B)  left Americans no better or not worse off. 
C)  hurt Americans. 
D)  benefited Americans.

Question 15

If the world supply curve is SW1,

Accepted Answer

A)  there is a trade surplus of Q2 − Q1. 
B)  there is a trade deficit of Q2 − Q1. 
C)  there is a trade deficit of Q1 − Q2. 
D)  there is a trade surplus of Q1 − Q2. 
A)  there is a trade surplus of Q2 − Q1. 
B)  there is a trade deficit of Q2 − Q1. 
C)  there is a trade deficit of Q1 − Q2. 
D)  there is a trade surplus of Q1 − Q2.

Question 16

Smaller countries tend to get a larger share of the gains from trade than do larger countries.

Accepted Answer

A) True 
 B)False

Question 17

If the world supply curve is SW0, and the country discovers a significant natural resource that can be exported, the world supply curve will shift:

Accepted Answer

A)  down and the trade balance will become a deficit. 
B)  down and the trade balance will become a surplus. 
C)  up and the trade balance will become a deficit. 
D)  up and the trade balance will become a surplus. 
A)  down and the trade balance will become a deficit. 
B)  down and the trade balance will become a surplus. 
C)  up and the trade balance will become a deficit. 
D)  up and the trade balance will become a surplus.

Question 18

Globalization represents:

Accepted Answer

A)  a return to isolationism. 
B)  the opposite of isolationism. 
C)  the economic complement of political isolationism. 
D)  the political complement of economic isolationism. 
A)  a return to isolationism. 
B)  the opposite of isolationism. 
C)  the economic complement of political isolationism. 
D)  the political complement of economic isolationism.

Question 19

Refer to the table shown.   A comparative advantage in the production of gold is held by:

Accepted Answer

A)  Zimbabwe. 
B)  Botswana. 
C)  neither country. 
D)  both countries. 
A)  Zimbabwe. 
B)  Botswana. 
C)  neither country. 
D)  both countries.

Question 20

The foreign exchange rate is the rate at which:

Accepted Answer

A)  taxes are imposed on foreign imports. 
B)  foreign goods are traded between domestic consumers. 
C)  one country's currency can be traded for another country's currency. 
D)  immigrants are exchanged between countries. 
A)  taxes are imposed on foreign imports. 
B)  foreign goods are traded between domestic consumers. 
C)  one country's currency can be traded for another country's currency. 
D)  immigrants are exchanged between countries.

Exam 9: Comparative Advantage, Exchange Rates, and Globalization

In the United States globalization has played:

The decline in the price of American goods is due in part to:

If a country's exchange rate depreciates,

When considering outsourcing, most laypeople:

In the United States, globalization has caused workers in the education, health care, and government sectors to face:

What economists call the law of one price depends on:

Transferable comparative advantages are:

Refer to the table shown. Botswana's opportunity cost of producing nickel (in terms of gold) is:

The recent discovery of a significant amount of shale oil in the U.S. that can be exported will shift the:

If the United States were to stop trading with other nations, economists would predict that in the long run the United States would end up with:

The supply of euros on the foreign exchange market slopes:

Refer to the graph shown. We would expect that if the two countries trade with each other (and neither trades with the rest of the world):

The balance of trade measures the:

On average, globalization has:

If the world supply curve is SW1,

Smaller countries tend to get a larger share of the gains from trade than do larger countries.

If the world supply curve is SW0, and the country discovers a significant natural resource that can be exported, the world supply curve will shift:

Globalization represents:

Refer to the table shown. A comparative advantage in the production of gold is held by:

The foreign exchange rate is the rate at which:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

If the world supply curve is S_W1,

If the world supply curve is S_W0, and the country discovers a significant natural resource that can be exported, the world supply curve will shift: