Quiz | Globalization101

Trade is a modern invention

True
False

When countries produce goods or services in amounts they are unable to use/consume at home, this is called a…

A. Production overstock.
B. Production excess.
C. Production surplus.
D. Production reserve.

Which of the following is NOT a reason why nations export?

A. Some nations produce more goods or services than can be consumed at home.
B. Some nations are able to sell goods or services to other nations at higher prices than they can obtain domestically.
C. For some nations, especially developing countries, export can serve the purpose of earning foreign currency with which they can buy essential imports.
D. For some nations, export can halt the fluctuation of the national currency.

The Economist magazine annually publishes what it calls the _____ Index, which has proven to be a fairly accurate predictor of exchange rate changes.

A. Whopper
B. Big Mac
C. Fast Food
D. French Fries

When the exchange rate is taken into consideration, prices do not vary among countries.

True
False

_____ countries tend to export a much wider range of products than _____ countries.

A. Developing, industrial
B. Industrial, developing

Which of the following is NOT a reason why countries import goods or services?

A. Essential goods or services are not naturally available or cannot be produced at home.
B. Essential goods or services can be produced cheaper or more efficiently in other countries and thus sold at lower prices.
C. Importing goods or services prevents the imposition of exchange controls by the importing country.
D. Some consumers prefer imported versions of certain goods (e.g. wine, cheese).

What, in essence, does the theory of competitive advantage state?

A. It states that all countries gain from trade with each other, regardless of how capacious they are in labor, capital and land, and regardless of how efficiently they can produce any particular good.
B. It states that only countries, which are well-endowed in labor, capital and land can gain from trade.
C. It states that only countries, which are lacking in labor, capital and land can gain from trade.

In economic terms, the amount of good or service that is sacrificed in order to produce an alternative good or service is known as…

A. Opening cost
B. Opportunity cost
C. Occurrence cost
D. Opportune cost

A country is said to have a comparative advantage in whichever good has the _____ opportunity cost.)

A. Highest
B. Lowest

Which of the following statements is UNTRUE?

A. A country’s trade balance is the difference between the amount of that country’s imports and exports of goods and services in a given year.
B. When a country’s total annual exports exceed its total annual imports, it is said to have trade surplus.
C. When a country’s total annual imports exceed its total annual exports, it is said to have trade surplus.
D. When a country’s total annual imports exceed its total annual exports, it is said to have trade deficit.

Which of the following is NOT a reason why trade deficits are often seen as harmful?

A. They represent an expenditure of future growth, since investment in future growth is being traded for consumption in the present.
B. They are often viewed as a sign of a country’s economic weakness, as they are said to reflect an excessive reliance on products made by others as a result of the home country’s inefficient economic output.
C. Large trade deficits create more favorable conditions for a financial crisis.
D. Major trade deficits lower a country’s living standards considerably.

Governments have traditionally tried to manage trade flows in two fundamental ways:

A. By encouraging exports and restricting imports.
B. By restricting exports and encouraging imports.

Tariffs are taxes that are traditionally imposed upon…

A. Exported goods upon their departure out of the country.
B. Imported goods upon their entry into a country.

Which of the following statements is UNTRUE?

A. The Uruguay Round witnessed the creation of two key agreements, which established new rules, liberalizing trade in services.
B. The Uruguay Round focused on reducing or eliminating tariffs.
C. The Uruguay Round created the World Trade Organization (WTO).
D. The Uruguay Round established new rules on protecting copyrights, trademarks and other forms of intellectual property.