Deck 1: Introduction

Question 1

Which of the following does NOT belong?

A)non- tariff barriers
B)World Trade Organization
C)major free trade agreements of the 1990s
D)Uruguay Round
E)NAFTA

Answer 1

A

Question 2

After World War II,the United States has pursued a broad policy of

A)removing barriers to international trade.
B)restricting trade of manufactured goods.
C)strengthening "Fortress America" protectionism.
D)protecting the U.S.from the economic impact of oil producers.
E)isolating Iran and other members of the "axis of evil."

Answer 2

A

Question 3

For almost 70 years international trade policies have been governed

A)by the World.
B)by the World Trade Organization.
C)by the International Monetary Fund.
D)by the North American Free Trade Agreement (NAFTA).
E)by an international treaty known as the General Agreement on Tariffs and Trade (GATT).

Answer 3

E

Question 4

Which of the following is NOT a major concern of international economic theory?

A)the balance of payments
B)protectionism
C)bilateral trade relations with China
D)exchange rate determination
E)the international capital market

Question 5

Because the Constitution forbids restraints on interstate trade

A)the U.S.may not impose tariffs on imports from NAFTA countries.
B)the U.S.may not disrupt commerce between Florida and Hawaii.
C)the U.S.may not affect the international value of the $ U.S.
D)the U.S.may not impose export duties.
E)the U.S.may not put restraints on foreign investments in California if it involves a financial intermediary in New York State.

Question 6

Who sells what to whom

A)is determined by political rather than economic factors.
B)is less important than international economic theory.
C)is not considered important for government foreign trade policy since such decisions are made in the private competitive market.
D)is not a valid concern of international economics.
E)has been a major preoccupation of international economics.

Question 7

The balance of payments has become a central issue for the United States because

A)the U.S.economy cannot grow when the balance of payments is in deficit.
B)the U.S.has run huge trade deficits in every year since 1982.
C)the U.S.never experienced a surplus in its balance of payments.
D)when the balance of payments is not balanced,society is unbalanced.
E)the U.S.once ran a large trade surplus of about $40 billion.

Question 8

A fundamental problem in international economics is how to produce

A)an acceptable degree of harmony among the international trade policies of different countries.
B)a perfect degree of monetary harmony.
C)a world government that can harmonize trade and monetary policies
D)a worldwide form of currency.
E)a counter- cyclical monetary policy so that all countries will not be adversely affected by a financial crisis in one country.

Question 9

Historians of economic thought often describe written by and published in as the first real exposition of an economic model.

A)"Of the Balance of Trade," David Hume,1758
B)"Wealth of Nations," Adam Smith,1776
C)"Of the Balance of Trade," David Hume,1776
D)"Wealth of Nations," David Hume,1758
E)"Wealth of Nations," Adam Smith,1758

Question 10

Since 1994,trade rules have been enforced by

A)the WTO.
B)the European Union.
C)the GATT.
D)The U.S.Congress.
E)the G10.

Question 11

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by

A)Adam Smith.
B)David Hume.
C)Lerner and Samuelson.
D)David Ricardo.
E)Eli Heckscher.

Question 12

Theories of international economics from the 18th and 19th centuries are

A)highly relevant in today's modern international economy.
B)the only theories that are actually relevant to modern international economy.
C)not relevant to current policy analysis.
D)not well understood by modern mathematically oriented theorists.
E)only of moderate relevance in today's modern international economy.

Question 13

The United States is less dependent on trade than most other countries because

A)the United States is a relatively large country with diverse resources.
B)the United States invests in many other countries.
C)many countries invest in the United States.
D)the United States is a "Superpower."
E)the military power of the United States makes it less dependent on anything.

Question 14

If there are large disparities in wage levels between countries,then

A)trade is likely to be harmful to the country with the high wages.
B)trade is likely to have no effect on either country.
C)trade is likely to be harmful to both countries.
D)trade is likely to be harmful to the country with the low wages.
E)trade is likely to be harmful to neither country.

Question 15

The international capital market is

A)the arrangement where banks build up their capital by borrowing from the Central Bank.
B)exclusively concerned with the debt crisis that ended in the 1990s.
C)the place where you can rent earth moving equipment anywhere in the world.
D)the place where emerging economies accept capital invested by banks.
E)a set of arrangements by which individuals and firms exchange money now for promises to pay in the future.

Question 16

"Trade is generally harmful if there are large disparities between countries in wages."

A)This is generally false.
B)This is true if the trade partner ignores child labor laws.
C)This is generally true.
D)Trade theory has nothing to say about this issue.
E)This is true if the trade partner uses prison labor.

Question 17

International capital markets experience a kind of risk not faced in domestic capital markets,namely

A)the risk of political upheaval.
B)the risk of unexpected downgrading of assets by Standard and Poor.
C)the risk of exchange rate fluctuations.
D)"economic meltdown" risk.
E)Flood and hurricane crisis risk.

Question 18

The benefits of international trade are derived from trade in

A)goods but not services.
B)tangible goods only.
C)anything of value.
D)intangible goods only.
E)services but not goods.

Question 19

From 1950 to 2015

A)U)S.imports roughly tripled in size.
B)the share of U.S.trade in the global economy roughly tripled in size.
C)U)S.exports roughly tripled in size.
D)the U.S.economy roughly tripled in size.
E)U)S.imports roughly tripled as compared to U.S.exports.

Question 20

International economics use the same fundamental methods of analysis as other branches of economics,because .

A)does not,international economics takes a different perspective on economic issues
B)does not,the level of complexity of international issues is unique
C)does,the motives and behavior of individuals are the same in international trade as they are in domestic transactions
D)does not,international economic policy requires cooperation with other countries
E)does not,the interactions associated with international economic relations is highly mathematical

Question 21

The distinction between international trade and international money is NOT entirely clear because

A)trade models focus on real,or barter relationships.
B)most international trade involves monetary transactions.
C)the balance of payments includes only real measures.
D)real developments in the trade accounts do not have monetary implications.
E)developments caused by purely monetary changes have no real effects.

Question 22

The GATT is

A)a U.S.government agency.
B)an international agreement.
C)an international IMF agency.
D)an international U.N.agency.
E)a collection of tariffs.

Question 23

Trade theorists have proven that the gains from international trade

A)will always help "winners" by an amount exceeding the losses of "losers."
B)must raise the economic welfare of every country engaged in trade.
C)must raise the economic welfare of everyone in every country engaged in trade.
D)usually outweigh the benefits of protectionist policies.
E)must harm owners of "specific" factors of production.

Question 24

International monetary analysis focuses on

A)the international investment side of the international economy.
B)the issues of international cooperation between Central Banks.
C)the real side of the international economy.
D)the monetary side of the international economy,such as currency exchange.
E)the international trade side of the international economy.

Question 25

Cost- benefit analysis of international trade

A)focuses attention primarily on conflicts of interest within countries.
B)focuses attention on conflicts of interest between countries.
C)never leads to government intervention in international trade.
D)is empirically intractable.
E)is basically useless.

Question 26

In 1998 an economic and financial crisis in South Korea caused it to experience

A)a surplus in their balance of payments.
B)a lull in international trade.
C)an unbalanced balance of payments.
D)a deficit in their balance of payments.
E)a balanced balance of payments.

Question 27

An improvement in a country's balance of payments means a decrease in its balance of payments deficit,or an increase in its surplus.In fact we know that a surplus in a balance of payments

A)is always harmful.
B)is never harmful.
C)is always beneficial.
D)is usually beneficial.
E)is sometimes harmful.

Question 28

International economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know

A)their theory accounts for China's unique position in international trade.
B)their theory passes the "reasonable person" legal criteria.
C)their theory is internally consistent.
D)their theory is good enough to explain the international trade that is actually observed.
E)their theory is the best available.

Question 29

In September 2010,the finance minister of declared that the world was "in the midst of an international currency war" because of rapid appreciation in the value of the country's currency, the .

A)Japan; yen
B)Germany; euro
C)China; renminbi
D)England; pound sterling
E)Brazil; Real

Question 30

International economics can be divided into two broad sub- fields

A)monetary and barter.
B)developed and less developed.
C)international trade and international money.
D)macro and micro.
E)static and dynamic.

Question 31

The international financial crisis of 2007 was the result of

A)a deep global recession.
B)the collapse of global currency markets.
C)defaults on U.S.mortgage- backed securities.
D)failure of the Euro currency.
E)runaway inflation in the U.S.