Question 1

A ___________ is relatively expensive for others to buy, and other currencies are cheap in comparison to it.

Accepted Answer

A strong currency is relatively expensive for others to buy, and other currencies are cheap in comparison to it.

Question 2

Approximately what percentage of the clothing sold in the United States is manufactured elsewhere?

Accepted Answer

Approximately 95 percent of the clothing sold in the United States is manufactured in other countries, due to factors like lower labor costs and established manufacturing infrastructure abroad.

Question 3

China's economy now ranks as what number in terms of size?

Accepted Answer

According to the International Monetary Fund (IMF), China's economy is currently ranked as the world's second largest in terms of nominal GDP, with the United States in first place.

Question 4

The theory of comparative advantage has been closely associated with which theory of international relations?

Accepted Answer

The theory of comparative advantage is closely associated with Liberalism, as it argues that free trade can benefit all countries through specialization and efficiency gains. Liberalism emphasizes the importance of free-market principles and economic cooperation in promoting international stability and prosperity.

Question 5

China has accumulated approximately how many U.S. dollars in its foreign currency reserves?

Accepted Answer

China has accumulated approximately 4 trillion U.S. dollars in its foreign currency reserves, making it one of the largest holders of foreign exchange reserves in the world.

Question 6

International political economy can be defined as

Accepted Answer

International political economy is the study of the interrelationship between politics and economics at an international level. It considers how political and economic factors interact with each other in the international arena, including issues such as trade, investment, international finance, development, and globalization. It looks at how economic policies, regulations, and institutions are influenced by politics and how, in turn, economic policies affect politics.

Question 7

China's economy has grown by what factor each year since 1980?

Accepted Answer

The answer of China's economy has grown by what factor...

Question 8

Liberalism and comparative advantage are closely associated because both argue that

Accepted Answer

Liberalism is a political and economic doctrine that emphasizes individual freedom, equal opportunity, and the free market system. One of the central tenets of liberal theory is the idea of cooperation between nations. In trade, for example, if a country can produce a good at a lower cost than another country, it is said to have a comparative advantage in that good. According to liberal theory, countries should specialize in producing goods in which they have a comparative advantage, and then trade with other countries to obtain goods they cannot produce efficiently.

Comparative advantage argues that when countries specialize in producing goods in which they have a comparative advantage, and then trade with other countries to obtain goods they cannot produce efficiently, both can benefit at the same time. Therefore, the correct answer is B: when states cooperate, both can benefit simultaneously.

Question 9

The rise in the amount of cross-border movements of goods, money, people, and ideas is known as

Accepted Answer

The rise in the amount of cross-border movements of goods, money, people, and ideas is referred to as globalization. This phenomenon has brought about significant changes in the world economy, politics, culture, and society.

Question 10

The theory of comparative advantage illustrates that specialization can lead to

Accepted Answer

The theory of comparative advantage states that when countries specialize in producing goods and services in which they have a lower opportunity cost, and then trade with each other, it can lead to an increase in overall consumption and efficiency. This is because specialization allows countries to produce the goods they can produce most efficiently, while importing those that they cannot produce as efficiently, leading to a more efficient allocation of resources and greater overall consumption. The theory does not imply any relationship with poverty, equality, or the rise of international organizations.

Question 11

Why did global firms not reject China's demand for investing in Chinese companies, so that China could move up the value chain?

Accepted Answer

Global firms did not reject China's demand for investing in Chinese companies because they wanted to gain access to China's sizeable market, as well as take advantage of China's cheap labor force. Additionally, by investing in Chinese companies, global firms could also potentially partner with Chinese companies to expand their business and increase their profits. At the same time, China would buy billions of dollars' worth of U.S. government bonds that fund the U.S. budget deficit, which benefits the U.S. economy. Therefore, both options A and B are true, making D the best choice.

Question 12

In economic terms, the balance of trade is

Accepted Answer

The balance of trade measures the difference between a country's total exports and total imports of goods and services. It is calculated by subtracting the total value of imports from the total value of exports. Therefore, the correct answer is D - total exports minus total imports.

Question 13

In contrast to the liberal emphasis on cooperation, realism highlights the situation in which one side can gain only at the expense of another. This relationship is called

Accepted Answer

Realism emphasizes the zero-sum game, in which one side's gain can only come at the expense of another. This is in contrast to the liberal emphasis on cooperation and positive-sum games, where both sides can gain mutual benefits. Rational action and comparative advantage are not directly related to this specific concept of international relations theory.

Question 14

By implementing policies called for by the theory of comparative advantage, what is meant to happen between the two countries?

Accepted Answer

The theory of comparative advantage suggests that countries should specialize in producing goods and services that they can produce at a lower opportunity cost and import goods and services that they can produce at a higher opportunity cost. By implementing policies based on this theory, both countries should see an increase in overall consumption as they are able to access a wider variety of goods and services at a lower cost than if they tried to produce everything themselves. Thus, choice D, where consumption increases in both countries, is the best choice.

Question 15

In a county with a trade deficit,

Accepted Answer

A trade deficit occurs when a country imports more goods and services than it exports. This can lead to higher unemployment and lower wages as domestic industries are unable to compete with foreign imports.

Question 16

Which Chinese leader recognized that market forces were needed to foster economic growth in China?

Accepted Answer

Deng Xiaoping recognized that market forces were needed to foster economic growth in China, and implemented economic reforms that opened up the Chinese economy to foreign investment and allowed for private enterprise. Mao Zedong, on the other hand, held more socialist beliefs and implemented policies that centralized the economy and limited private enterprise. Chiang Kai-shek and Sun Yat-sen were leaders of the Nationalist Party before the founding of the People's Republic of China, and did not implement significant economic reforms.

Question 17

Which of the following countries is not one of the world's largest oil exporters?

Accepted Answer

The answer of Which of the following countries is not...

Question 18

When the trade balance is zero,

Accepted Answer

When the trade balance is zero, it means that a country is importing exactly as much as it exports. This indicates that there is no surplus or deficit in the international trade of goods and services. It does not mean that no foreign countries wish to purchase your exports, nor does it mean that the country is always exporting more than it is importing. It also does not necessarily mean that countries that owe you money for your exports still need to pay up.

Question 19

Who developed the theory of comparative advantage?

Accepted Answer

David Ricardo developed the theory of comparative advantage in 1817.

Question 20

In a country with a trade surplus,

Accepted Answer

A trade surplus means that a country is exporting more than it is importing. This creates demand for the country's goods and services, which leads to increased production and employment. With higher production and employment, wages are likely to increase as well, leading to overall economic growth. Lower prices (choice B) might occur if the country is able to produce goods or services more efficiently than other countries, but this is not directly related to a trade surplus. Higher prices (choice A) are not typically associated with a trade surplus. The economy would not be damaged (choice C) by a trade surplus, but the benefits (such as increased employment and wages) might not be evenly distributed across all sectors of the economy.

Quiz 10: Fundamentals of International Political Economy