Course Introduction
International Trade Exam Review
International Trade explores the economic, political, and institutional factors that shape the exchange of goods and services across national borders. The course examines foundational theories such as comparative advantage, trade policy instruments like tariffs and quotas, and the role of international organizations in facilitating trade. Students will analyze the effects of globalization, trade agreements, and regional integration on both developed and developing economies, as well as the implications of trade on economic growth, income distribution, and labor markets. Practical case studies and current events are used to illustrate concepts and contemporary challenges in the field.
Recommended Textbook
International Economics 6th Edition by James Gerber
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17 Chapters
830 Verified Questions
830 Flashcards
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Page 2
Chapter 1: The United States in a Global Economy
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46 Verified Questions
46 Flashcards
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Sample Questions
Q1) What are some of the main advantages and disadvantages of the extensive financial and commercial networks linking nations today?
Answer: Some of the advantages are that buyers receive lower prices,more choice,and more access to innovative technology.The major disadvantage is that a crisis is more likely to spread from one part of the world to another.
Q2) Which region of the world experienced a decade-long crisis and stagnant or even negative growth rates during the 1980s?
A)Latin America
B)East Asia
C)The United States and Canada
D)Europe
E)The European Union
Answer: A
Q3) Which type of integration requires adapting domestic policies to coordinate with those of trading partners?
Answer: Deep integration
Q4) What do economists call movements of labor and capital between nations?
Answer: Factor flows
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Chapter 2: International Economic Institutions Since World War Ii
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50 Verified Questions
50 Flashcards
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Sample Questions
Q1) Which of the following is TRUE?
A)A country experiencing a debt or currency crisis would contact the World Trade Organization.
B)The World Trade Organization was formed at the Bretton Woods conference.
C)The General Agreement on Tariffs and Trade created the World Trade Organization in the negotiations and treaty known as the Uruguay Round.
D)The World Trade Organization has no power to resolve trade disputes and to enforce their resolution.
Answer: C
Q2) The World Bank formed the World Trade Organization when it became clear that to alleviate poverty in developing nations,agricultural trade barriers were going to have to be reduced.
A)True
B)False
Answer: False
Q3) Which round of GATT first addressed subsidies?
Answer: The Tokyo Round
Q4) Which round of GATT led to the formation of the WTO?
Answer: The Uruguay Round
Page 4
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Chapter 3: Comparative Advantage and the Gains From Trade
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54 Flashcards
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Sample Questions
Q1) All of the following are true EXCEPT
A)trade between two nations reduces their opportunity costs.
B)trade makes nations dependent on each other.
C)trade between nations will not benefit all citizens.
D)the principle of comparative advantage does not apply to countries with extremely limited resources.
E)specialization according to comparative advantage can make both countries better off.
Answer: D
Q2) The basis for free trade is the concept of A)absolute advantage.
B)differences in natural resources and climate.
C)differences in nominal wages.
D)comparative advantage.
Answer: D
Q3) The nation as a whole is better off from trade as long as the gains from the winners exceed the losses from the losers.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Comparative Advantage and Factor
Endowments
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Sample Questions
Q1) Offshoring by domestic firms causes job losses not job expansion in the home market.
A)True
B)False
Q2) What does research thus far suggest about job loss and offshoring?
Q3) Based on Table 4.1,according to the Heckscher-Ohlin Theorem,U.S.exports should be goods that
A)intensively use labor input.
B)intensively use capital input.
C)use capital and labor in about equal proportions.
D)use either labor or capital input,depending on the good.
E)Not enough information to tell.
Q4) After trade opens,the short run impact on the income of the variable factor will be A)a decrease.
B)an increase.
C)zero.
D)indeterminate,depending on the consumption pattern of the owners of the variable factor.
E)indeterminate,depending on the productivity of the variable factor.
Page 6
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Chapter 5: Beyond Comparative Advantage
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43 Verified Questions
43 Flashcards
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Sample Questions
Q1) Intraindustry trade tends to be more controversial than interindustry trade.
A)True
B)False
Q2) Intraindustry trade relies on
A)economies of scale.
B)the product cycle.
C)differences in factor endowments.
D)government industrial policies.
E)monopoly pricing.
Q3) Which of the following does NOT indicate intraindustry trade?
A)Trading Jeeps for Toyotas
B)Trading Boeing airplanes for Airbus airplanes
C)Trading Bush beer for Heineken beer
D)Trading Japanese-made films for Hollywood-made films
E)Trading oil for trucks
Q4) A substantial amount of trade between industrialized countries is intraindustry or intrafirm trade rather than interindustry trade.
A)True
B)False
Q5) Intraindustry trade is characterized by what two features?
Page 7
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Chapter 6: The Theory of Tariffs and Quotas
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Sample Questions
Q1) Consumer surplus is equal to the area
A)under the demand curve and above the supply curve.
B)above the supply curve and below the price line.
C)under the demand curve.
D)under the supply curve.
E)under the demand curve and above the price line.
Q2) Based on Scenario 6.1 above,if a tariff of 20 percent is placed on imports of dining room tables,and another tariff of 50 percent is placed on imports of wood and parts,then the effective rate of protection on tables made in the United States is
A)70 percent.
B)50 percent.
C)20 percent.
D)12.5 percent.
E)0 percent.
Q3) Since the mid-1980s tariff rates in most nations have risen.
A)True
B)False
Q4) What are the three major types of quotas?
Q5) What is the name of the agreement related to intellectual property rights?
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Chapter 7: Commercial Policy
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46 Verified Questions
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Sample Questions
Q1) Describe traditional knowledge and how it relates to current trade issues about intellectual property rights protection.
Q2) Trade barriers are an expensive and grossly inefficient way to reach most of the goals for which they are used.
A)True
B)False
Q3) "Cheap foreign wages" is a poor argument for protection because it fails to recognize the importance of productivity.Which of the following does NOT contribute to increasing productivity?
A)Education and training
B)Government subsidies
C)Infrastructure
D)Capital
Q4) Economic sanctions
A)usually work to create policy change in the targeted country.
B)are more likely to work if the international community supports them.
C)are more likely to work if military force is not used.
D)never work to create policy change in the targeted country.
E)Both A and C.
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Chapter 8: International Trade and Labor and Environmental Standards
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48 Verified Questions
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Sample Questions
Q1) Suppose two nations are seeking to expand their commercial relations.What options do they have in terms of addressing conflicts in standards? Describe each and what conditions might favor different approaches to setting standards.
Q2) Separate standards refers to
A)the elimination of tariffs and quotas by trading partners.
B)common product safety,environment,labor,and fair competition standards agreed upon by trading partners.
C)the acceptance or keeping of a trading partner's standards as valid and sufficient by another trading partner.
D)separate standards held by different trading partners which other partners refuse to recognize.
Q3) Most regional trade and WTO agreements practice
A)the harmonization standards only.
B)separate standards only.
C)mutual recognition standards only.
D)a combination of harmonization,mutual recognition,and separate standards.
E)only the standards set out by the WTO.
Q4) What does empirical research suggest about the existence of pollution havens?
Q5) Which region has the most children (total number)working?
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Chapter 9: Trade and the Balance of Payments
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Sample Questions
Q1) All of the following are true about foreign direct investment (FDI)and portfolio investment except
A)increases in the flow of portfolio investments increase the likelihood of financial crisis.
B)both portfolio investments and FDI are the same in that they both give their holders a claim on the future output of the foreign economy.
C)FDI is relatively illiquid compared to portfolio investment.
D)portfolio investments have been on the decline in recent years (or decades).
E)FDI investors must be willing to go through many ups and downs in order to benefit from their long-term investments.
Q2) Capital inflows that take the form of direct investment may be particularly beneficial if they bring new technologies,new management techniques,and new ideas to the host country.
A)True
B)False
Q3) What is the difference between the U.S.current account deficits of the 1980s and the 1990s?
Q4) How do recent current account deficits compare to GNP and to past ratios?
Q5) Describe how a sudden stop leads to a financial crisis.
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Chapter 10: Exchange Rates and Exchange Rate Systems
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Sample Questions
Q1) If the Costa Rican colone is expected to depreciate in the future,it will temporarily appreciate as people move to take advantage based on this expectation.
A)True
B)False
Q2) Would each of the following groups be happy or unhappy if the Mexican peso appreciates against the U.S.dollar? Answer the question for each of the following:
(a) The U.S.pension funds holding Mexican government bonds
(b) U.S.tourists planning a trip to Mexico
(c) Mexican exporting manufacturers
(d) A Mexican firm trying to buy properties overseas
Q3) If more European and Japanese firms want to build factories and expand their offshore investments in the United States,the supply of U.S.dollars on foreign exchange markets will increase as a result of this investment activity.
A)True
B)False
Q4) If the forward rate is greater than the spot rate,what are markets signaling about their expectations for the future spot rates for the home currency?
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Chapter 11: An Introduction to Open Economy
Macroeconomics
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Sample Questions
Q1) Intermediate inputs are
A)goods used for household consumption only.
B)goods used for government consumption only.
C)goods purchased by one business from another to use in production.
D)goods purchased by foreigners.
E)raw materials used in the production process.
Q2) Taxes,savings,and imports tend to magnify the effect of any spending change in the economy;that is,if investment spending initially increases,then spending will grow even more as taxes,savings,and imports increase,so the economic growth will accelerate.
A)True
B)False
Q3) How is an exchange rate depreciation likely to affect imports and exports in the short run and over a longer period of time?
Q4) What typically happens to imports as income and spending rise?
Q5) Expansionary monetary policy involves an increase in the money supply and a fall in interest rates,leading to a positive expansion in income.
A)True
B)False
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Chapter 12: International Financial Crises
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Sample Questions
Q1) What three critical factors or preconditions turned a national,U.S.problem into a global financial crisis in 2007.Be sure to address the role securitization played and how it affected regulators.
Q2) Tax systems in developing countries tend to be efficient and reliable.
A)True
B)False
Q3) All of the following are possible outcomes of a financial crisis except
A)bank failings and disintermediation.
B)decreases in investment.
C)a recession.
D)a sure competitive advantage accompanied by a comparative advantage.
E)depreciation or devaluation of a currency.
Q4) All of the following are symptoms of definite and indefinite macroeconomic imbalances except
A)large budget deficits.
B)an overvalued currency.
C)a current account deficit.
D)the discovery of emerging markets by financial investors who want to diversify their portfolios.
E)inflationary pressures.
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Chapter 13: The United States in the World Economy
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) One problem with NAFTA that is not shared by other trade blocs is that
A)national environmental laws differ greatly.
B)the countries are at very different stages of economic development.
C)the countries speak different languages.
D)the countries are not natural trading partners.
E)the United States and Mexico have a history of conflict.
Q2) U)S.opponents of NAFTA argued that the agreement will hurt the United States.In their view,NAFTA's greatest harm will be its
A)harmonization of labor policies.
B)harmonization of environmental policies.
C)harmonization of the use of pesticides and herbicides.
D)job destruction and downward pressure on U.S.wages.
E)harmonization of product safety standards.
Q3) Most Mexican workers can increase their wages if they migrate to the United States,a demand-pull factor for migration.
A)True
B)False
Q4) What is the significant feature of a preferential arrangement?
Q5) What is the main problem with rules of origin?
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Chapter 14: The European Union: Many Markets Into One
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Sample Questions
Q1) The roots of the European Union are in agreements within the coal and steel industries.
A)True
B)False
Q2) Describe the history and consequent deepening as the European Union developed.Which treaties created which level of economic integration? Do countries have the ability to participate in some levels of integration and not others? Give specific examples.
Q3) Other nations had tried economic union in the past,and since adopting a common currency had shown economic benefits for them,the nations of Europe decided to try it too.
A)True
B)False
Q4) Describe the criteria for membership in the European Union.Given the criteria,what are some of the major challenges with expanding the EU eastward? What are the potential problems of Turkey joining the EU?
Q5) What are the two largest expenditure categories in the EU budget?
Q6) What three sources of revenue finance the EU budget?
Q7) What challenges does the European Union face in the short,medium,and long run?
Q8) When did the European Union become a common market?
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Chapter 15: Trade and Policy Reform in Latin America
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Sample Questions
Q1) From 1900 to 1960,Latin America's real GDP grew
A)slower than Europe,Asia,and the U.S.
B)as fast or faster than Europe,Asia,and the U.S.
C)faster than Europe and the U.S.but slower than Asia.
D)faster than Asia,but slower than Europe and the U.S.
Q2) The Baker Plan emphasized renewed commercial bank loans as a way to restart capital flows to Latin America.
A)True
B)False
Q3) According to Prebisch and other ISI theoreticians,countries should begin to shift their comparative advantage away from primary commodity production by first producing
A)industrial goods such as pumps and generators.
B)complex consumer goods such as autos and appliances.
C)advanced industrial goods such as chemical and electronics.
D)simple consumer goods such as food products and textiles.
E)minerals and agricultural products.
Q4) Which four nations account for most of the population and economic activity in Latin America?
Q5) What is the primary reason exchange rates were overvalued under ISI?
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Chapter 16: Export-Oriented Growth in East Asia
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Sample Questions
Q1) All eight countries known as the High Performance Asian Economies are outwardly oriented for trade and investment,and all have experienced rapid growth by world standards.
A)True
B)False
Q2) The main contributor to growth in the HPAE according to empirical research was government industrial policies.
A)True
B)False
Q3) One of the functions of deliberation councils is to
A)coordinate foreign investment from different countries.
B)set educational policy for universities and colleges.
C)coordinate government policy and private investment.
D)broaden the economies base of exports.
E)ensure stability in the country's fiscal and monetary policies.
Q4) What types of government intervention did the World Bank determine was common in the HPAEs?
Q5) All of the Newly Industrializing Economies are in East Asia.
A)True
B)False
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Chapter 17: The Bric Countries in the World Economy
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Sample Questions
Q1) The percentage of world GDP represented by the G7 is ________ and the percentage of world GDP represented by the BRIC economies is ________.
A)falling,rising
B)falling,falling
C)rising,falling
D)rising,rising
Q2) Which primary trade partner of India suffered setbacks that ultimately helped lead India to embark on economic reform?
A)The United Kingdom
B)The United States
C)The Soviet Union
D)South Korea
Q3) China's economy was much more agricultural than Russia's,and observers believe this aided its economic transition.
A)True
B)False
Q4) China is not an important market for other nations' exports.
A)True
B)False
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