International Economics Practice Exam
Course Introduction
International Economics explores the fundamental principles and dynamics of economic relations among nations. The course covers topics such as theories of international trade, the benefits and costs of globalization, trade policy and its effects on economic growth, balance of payments, exchange rate determination, and the international monetary system. Students will examine the impact of international economic policies, exchange rate fluctuations, and global economic institutions on both developed and developing economies. Through case studies and analytical models, the course develops an understanding of the challenges and opportunities presented by global economic integration.
Recommended Textbook
International Political Economy 5th Edition by Thomas Oatley
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16 Chapters
720 Verified Questions
720 Flashcards
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Page 2
Chapter 1: International Political Economy
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45 Verified Questions
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Sample Questions
Q1) The study of the global economy does<u> NOT </u>usually include the study of
A) the international trade system.
B) the international monetary system.
C) multinational corporations.
D) economic development.
E) scientific development.
Answer: E
Q2) The international monetary system primarily facilitates
A) the international exchange of national currencies.
B) the national exchange of international currencies.
C) the interest rates of national currencies.
D) the international regulation of economic foreign aid.
E) the international regulation of foreign direct investment.
Answer: A
Q3) Multinational corporations together account for about half of the world's trade.
A)True
B)False
Answer: False
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Chapter 2: The World Trade Organization and the World Trade System
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Sample Questions
Q1) The history of hegemonic transitions provides some support that
A) world trade has flourished during periods of hegemonic leadership and floundered during periods without it.
B) world trade has floundered during periods of hegemonic leadership and flourished during periods without it.
C) the British failed to reconstruct the world economy after WW II even though it had the resources to do so.
D) the United States reconstructed the world economy after WW II even though it didn't have resources to do so.
E) Japan will reconstruct the world economy in the coming decades because China will not have the resources to do so.
Answer: A
Q2) Internationalization has been brought about by the decisions governments have made about the rules and institutions that govern world trade.
A)True
B)False
Answer: True
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Chapter 3: The Political Economy of International Trade Cooperation
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Sample Questions
Q1) In tit for tat reciprocity strategies,each government plays the strategy that its partner played in the previous round of bargaining.
A)True
B)False
Answer: True
Q2) The ideal trade bargaining outcome for the US/EU countries
A) combines high barriers to their agricultural imports and low barriers to their manufactured goods exports.
B) combines high barriers to their agricultural imports and high barriers to their manufactured goods exports.
C) combines low barriers to their agricultural imports and high barriers to their manufactured goods exports.
D) combines low barriers to their agricultural imports and low barriers to their manufactured goods exports.
E) combines high barriers to their services and high barriers to their manufactured goods imports.
Answer: A
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Page 5
Chapter 4: A Society-Centered Approach to Trade Politics
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Sample Questions
Q1) The sector model assumes that
A) factors are not easily moved from one industry to another.
B) factors are easily moved from one industry to another.
C) factors are not specific to the sector in which they are currently employed.
D) geography of industry location does not mean workers have to physically relocate.
E) logistical obstacles to physical relocation are not insurmountable.
Q2) Explain the differences between the factor and sector models of trade policy preferences regarding factor mobility.
Q3) Explain the similarities between collective action and public goods problems.
Q4) Electoral systems that distribute legislative representation in accordance with the share of the popular vote are best called
A) majoritarian systems.
B) run-off systems.
C) proportional representation systems.
D) single party systems.
E) multi-party systems.
Q5) Explain the differences between the factor and sector models of trade policy preferences regarding income distributions.
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Chapter 5: A State-Centered Approach to Trade Politics
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Sample Questions
Q1) Strategic trade theory asserts that many high-tech industries are characterized by oligopolistic competition that often has a first-mover advantage.
A)True
B)False
Q2) In order to claim that a tariff and other forms of government intervention raise social welfare one must be able to demonstrate that
A) something prevents factors from shifting into industries that yield lower costs than are available in other sectors in the economy.
B) something prevents factors from shifting into industries that yield higher costs than are available in other sectors in the economy.
C) something prevents factors from shifting into industries that yield lower returns than are available in other sectors in the economy.
D) something prevents factors from shifting into industries that yield higher returns than are available in other sectors in the economy.
E) short term losses will be greater than long term gains.
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7
Chapter 6: Trade and Development I: Import Substitution
Industrialization
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Sample Questions
Q1) Developing governments' belief that industrialization would not occur in their countries if they participated in the GATT-based system played an important role in shaping their trade and development policies.
A)True
B)False
Q2) Import substitution industrialization (ISI)was based on the strategy of
A) substituting previously imported simple consumer goods with newly domestically produced ones.
B) substituting previously exported simple consumer goods with newly domestically produced ones.
C) substituting previously imported advanced consumer goods with newly domestically produced simple ones.
D) substituting previously exported advanced consumer goods with newly domestically produced advanced agricultural ones.
E) substituting previously imported agricultural goods with newly domestically produced manufacturing ones.
Q3) Explain how and why structuralism became the dominant theory of development economics.
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Chapter 7: Trade and Development II: Economic Reform
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Sample Questions
Q1) The adoption of neoliberal reforms in the developing world has
A) not altered the dynamics of global economic exchange.
B) resulted in the capital-intensive aspects of production now shifting to developing societies.
C) resulted in the labor-intensive aspects of production being shifted to developing societies.
D) brought substantially higher incomes to almost all groups.
E) resulted in larger incomes redistributed among structuralist groups.
Q2) How did ISI inefficiencies reinforce the tendency of most governments to maintain overvalued exchange rates?
Q3) The East Asian model was praised by those opposed to ISI trade strategies because
A) ISI trade deficits were declining in Latin America and sub-Saharan Africa.
B) per capita income grew almost three times faster than in Latin America.
C) the power of commodity exporters was reduced.
D) it reduced current account deficits caused by excessive imports.
E) it eliminated tariffs and non-tariff barriers.
Q4) What are the costs and benefits of the "Washington Consensus" model of development policy versus the "Beijing Consensus" model?
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Page 9
Chapter 8: Multinational Corporations in the Global Economy
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45 Flashcards
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Sample Questions
Q1) According to Oatley,the prevalence and organization of MNCs is puzzling to neoclassical economists.
A)True
B)False
Q2) Explain the concept of locational advantages and historically their three specific country characteristics.
Q3) Intangible assets are
A) not very important when cost advantages arise from horizontal administrative integration.
B) something whose value is not very important.
C) assets whose value is derived from locational advantages that are crucial to the production in a particular industry.
D) assets that are easy to sell or license to other firms at a price that accurately reflects their true value.
E) assets that are difficult to sell or license to other firms at a price that accurately reflects their true value.
Q4) Describe,explain and give examples of the differences between horizontal and vertical integration of the activities of MNCs.
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Chapter 9: The Politics of Multinational Corporations
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Sample Questions
Q1) Most developing countries entered the postwar period as primary-commodity exporters often controlled by MNCs who kept the profits the exports generated.
A)True
B)False
Q2) Explain and analyze the costs and benefits of locational incentives to attract jobs and FDI in advanced industrial states.What role do local versus national governments play?
Q3) The politics of MNCs emerge from the competing interests of A) host countries of MNCs.
B) home countries of MNCs.
C) the MNCs themselves.
D) host countries and home countries.
E) host countries and home countries and the MNCs themselves.
Q4) Explain the costs and benefits of Japan's unique experience with MNC regulation.How did it differ from other East Asian governments?
Q5) Explain the political dynamics in newly independent developing countries after WW II with MNCs that controlled most of their exports.
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Chapter 10: The International Monetary System
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Sample Questions
Q1) The sole purpose of the international monetary system is to
A) maximize the profits of MNCs.
B) protect the rights of home countries of MNCs.
C) protect the rights of host countries of MNCs.
D) control and regulate the currencies of countries.
E) facilitate international economic exchange.
Q2) The capital account of the balance of payments accounting system registers the financial flows between the United States and the rest of the world.Which of the following is <u>not </u>one of its subcategories?
A) Total US Owned Assets Abroad
B) Foreign assets in the United States
C) Balance of Trade
D) Balance on Capital Account
E) Overall Balance (statistical adjustment)
Q3) Because the dollar served as the Bretton Wood's system's primary reserve asset,reducing the number of dollars circulating in the global economy would reduce the liquidity that financed world trade.
A)True
B)False
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Page 12
Chapter 11: Cooperation, conflict and Crisis in the Contemporary International Monetary System
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Sample Questions
Q1) The 1970s had seen relatively small current-account imbalances in the major industrial countries generally adjust quickly.
A)True
B)False
Q2) China's emergence as a creditor country has placed an emerging market economy in the center of the international monetary system for the first time in its history
A)True
B)False
Q3) The current account imbalances in the United States during the Reagan administration were due to
A) cutting taxes and military spending.
B) raising taxes and military spending.
C) cutting taxes and raising military spending.
D) raising taxes and cutting military spending.
E) cutting taxes and greater exports.
Q4) Why did the U.S.international investment position stabilize after 2004 in spite of continued heavy borrowing?
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Chapter 12: A Society-Centered Approach to Monetary and Exchange-Rate Policies
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Sample Questions
Q1) Describe and explain the electoral model of monetary and exchange-rate politics.
Q2) Between 1995 and 2001 when the dollar rose in value against America' largest trading partners,American exporters found it increasingly easier to sell in foreign markets.
A)True
B)False
Q3) Governments in advanced industrial societies have consistently chosen domestic economic autonomy over exchange-rate stability only since the A) 1860s.
B) 1880s.
C) 1900s.
D) 1920s.
E) 1940s.
Q4) The sectoral model of monetary and exchange-rate politics assumes that all governments want to value monetary policy autonomy more than exchange-rate stability.
A)True
B)False
Page 14
Q5) Describe and explain the partisan model of monetary and exchange-rate politics.
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Chapter 13: A State-Centered Approach to Monetary and Exchange-Rate Policies
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Sample Questions
Q1) According to Oatley,
A) very little research energy has been devoted to considering why the behavior and policies of one independent central bank differs substantially from the behavior and policies of another.
B) a great deal of research energy has been devoted to considering why the behavior and policies of one independent central bank differs substantially from the behavior and policies of another.
C) most scholarship on central banks assumes that all independent central banks are fundamentally different.
D) freed from the pressures of electoral politics, independent central banks are generally assumed to pursue price flexibility.
E) freed from the pressures of electoral politics, independent central banks are generally assumed to pursue the minimum financial regulations possible.
Q2) How can the interaction between wage bargainers and the government have perverse consequences for social welfare?
Q3) Explain and discuss how the Keynesian policy revolution came to an end as a result of prolonged inflation in the 1970s and 1980s.
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Page 15
Chapter 14: Developing Countries and International
Finance I: the Latin American Debt Crisis
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Sample Questions
Q1) Describe and explain why and how debt service ratios rendered Latin American countries vulnerable to international economic shocks in the 1980s.
Q2) Explain how and why domestic politics in developing countries caused most governments to delay implementation of stabilization and structural adjustment programs.
Q3) By 1982,the thirty most heavily indebted developing countries owed more than $600 billion to foreign lenders.Creditors initially diagnosed the debt crisis as a
A) long-term liquidity problem.
B) medium-term liquidity problem.
C) short-term liquidity problem.
D) failure of ISI trade policies.
E) medium-term energy related problem.
Q4) In the late 1970s and early 1980s,Latin American countries were vulnerable to A) rising debt service ratios.
B) lower interest rates.
C) lower migrant remittances.
D) higher export revenues.
E) lower export revenues.
16
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Chapter 15: Developing Countries and International
Finance II: a Decade of Crises
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Sample Questions
Q1) The large debt burden reduced the incentive that governments have to undertake economic reform because
A) many of the economic gains from reform accrue to foreign lenders.
B) these societies suffer from geographical isolation.
C) these societies have adverse ecologies.
D) these societies have high fertility rates.
E) these societies have a recent history of civil or international war.
Q2) "Hot money" refers to
A) bond and derivative funds.
B) private capital that can be withdrawn at the first hint of trouble.
C) public capital that cannot be easily withdrawn.
D) money obtained through drugs and illegal activities.
E) money hidden in secret foreign bank accounts.
Q3) The ability for the United States to run deficits does not depend,in part,on the continued willingness of the Chinese government to acquire and hold U.S.government debt.
A)True
B)False
Q4) Explain how the roots of the 2008-2009 global financial crises lie in East Asia's governments' responses to the 1997 crisis.
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Chapter 16: Globalization: Consequences and Controversies
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Sample Questions
Q1) Explain and discuss how efforts to craft a fully inclusive global climate change regime have been stymied by conflicts between China and India on one hand and the United States on the other.
Q2) According to Oatley,the current consensus among globalization defenders and environmentalists suggests that globalization can have positive environmental consequences.
A)True
B)False
Q3) Oatley claims that global wage differences are not caused by different labor market regulations but by
A) desperate uneducated workers in developing countries who are easily manipulated.
B) corporate investors who want higher profits available in developing countries.
C) different levels of productivity.
D) different differentials of living costs compared to wage levels.
E) conservative governments who want to undermine labor movements in their own countries.
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