Econ Chapters 1 and 2

1) The trade-to-GDP ratio for a nation that had $600 million in exports, $400 million in imports, and GDP of $2,000 million would be

0.2

0.1

-0.1

0.5

2) The trade-to-GDP ratio is calculated by

Exports minus imports divided by GDP.

Imports divided by GDP.

Exports divided by GDP.

Exports plus imports divided by GDP.

3) One important difference between the international economy of today and the economy of 100 years ago is

That labor is much more mobile.

For the first time, technological innovations have reduced the barrier of distance.

The presence of international bodies such as the IMF and World Bank.

For the first time, capital is mobile.

One of the distinguishing characteristics of capital mobility today is that

Currency markets play a less significant role than they did in the past.

The bulk of foreign capital flows are tied to labor flows.

There are far more kinds of financial instruments than there were 100 years ago.

Nations are no longer dependent on their own national savings for their investment funds.

Institutions are

A set of rules governing behavior, whether written or not.

The same thing as organizations.

Associations of individuals or groups.

Always embodied in a written set of rules.

One of the strongest motivations for holding the Bretton Woods Conference was to design new international institutions that would

Contain communism.

Provide a collective defense security for Western Europe and North America.

Ensure that world prices were not rising too rapidly.

Help countries avoid the mistakes of the 1920s and 1930s.

The international organization that serves as a forum for trade discussions and the development of trade rules is called

The IMF.

The World Bank.

The United Nations.

The WTO.

Deep integration

Is less controversial than shallow integration.

Requires cooperation with other national governments or international bodies.

Does not require changing domestic policies unrelated to tariffs and quotas.

Is easier to achieve than shallow integration.

One of the most important and most visible roles of the IMF is to

Investigate countries that are charged with being unfair traders.

Intercede by invitation when countries cannot pay their international debts.

Hold regular negotiations over tariff reductions.

Provide loans to countries that need capital to develop their economies.

The primary mission of the World Bank today is to

Provide financial assistance for the reconstruction of war-damaged nations.

Provide capital to underdeveloped countries.

Help countries manage their exchange rates.

Provide capital to firms around the world.

From the late 1940s until the creation of the WTO, the organization that was primarily responsible for conducting rounds of trade negotiations was the

United Nations.

World Bank.

GATT.

IMF.

A free trade agreement plus a common set of tariffs toward non-members is called

A customs union.

A common market.

A free trade area.

An economic union.

Which of the following is true?

A common market is more deeply integrated than a customs union.

NAFTA is an example of a customs union.

The European Union is a shallower and broader form of integration than NAFTA.

Customs unions require the creation of a common currency.

An important function of international institutions during times of crisis is to

Prevent nondiscrimination.

Prevent free riding.

Make goods nonexcludable.

Make goods nonrival.

The economic philosophy that favors strict limits on imports and strong support for exports is called

Mercantilism.

Comparative advantage.

Absolute advantage.

Zero sum.

The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music) the

Absolute cost of production is less in the United States.

Absolute cost of production is less in Japan.

Opportunity cost of production is less in Japan.

Opportunity cost of production is less in the United States.

If one nation is able to produce a good at a lower opportunity cost than another, it has

A comparative advantage in that good.

An absolute advantage in that good.

A technological advantage in that good.

A productivity advantage in that good.

If two countries agree to specialize and trade based on comparative advantage, which of the following is most likely to be true?

One of the countries will both consume and produce on its production possibilities curve.

Only one of the countries will produce on and consume outside its production possibilities curve.

One of the countries will end up receiving all of the gains from trade.

Both of the countries will consume outside their respective production possibilities curves.

Unlock and Upgrade

Remove all limits from your Quizzes

Econ Chapters 1 and 2

More Quizzes