Type:
Test Bank
Resource:
International Economics Theory and Policy
Edition:
12th Edition
Author(s):
Paul R. Krugman Maurice Obstfeld Marc Melitz
International Economics: Theory and Policy, 12e, Global edition (Krugman) Chapter 1 Introduction 1.1
What Is International Economics About?
1) Historians of economic thought often describe ________ written by ________ and published in ________ as the first real exposition of an economic model. A) "Of the Balance of Trade"; David Hume; 1776 B) "Wealth of Nations"; David Hume; 1758 C) "Wealth of Nations"; Adam Smith; 1758 D) "Wealth of Nations"; Adam Smith; 1776 E) "Of the Balance of Trade"; David Hume; 1758 Answer: E Difficulty: Easy AACSB: Application of knowledge 2) From 1960 to 2019 A) the U.S. economy roughly tripled in size. B) U.S. imports roughly tripled in size. C) the share of U.S. trade in the global economy roughly tripled in size compared with the economy as a whole. D) U.S. imports roughly tripled as compared to U.S. exports. E) U.S. exports roughly tripled in size. Answer: C Difficulty: Easy AACSB: Application of knowledge 3) From 1960 to 2019, both U.S. imports and exports have increased, ________ have grown more, leading to a large excess of ________. A) imports; imports over exports B) exports; exports over imports C) imports; exports over imports D) exports; imports over exports Answer: A Difficulty: Easy AACSB: Application of knowledge 4) The facts that U.S. imports and exports plunged in 2009 during the global economic crisis and in 2020 during the Covid-19 pandemic demonstrated the close links between A) world trade and the overall state of the world economy. B) crisis and unemployment. C) the pandemic and shortage of goods and services. D) the business cycle and trade policies. Answer: A Difficulty: Easy AACSB: Application of knowledge 1 .
5) The United States is less dependent on trade than most other countries because A) the United States is a relatively large country with diverse resources. B) the United States is a "Superpower." C) the military power of the United States makes it less dependent on anything. D) the United States invests in many other countries. E) many countries invest in the United States. Answer: A Difficulty: Easy AACSB: Application of knowledge 6) Theories of international economics from the 18th and 19th centuries are A) not relevant to current policy analysis. B) only of moderate relevance in today's modern international economy. C) highly relevant in today's modern international economy. D) the only theories that are actually relevant to modern international economy. E) not well understood by modern mathematically oriented theorists. Answer: C Difficulty: Easy AACSB: Application of knowledge 7) International economics ________ use the same fundamental methods of analysis as other branches of economics, because ________. A) does not; the level of complexity of international issues is unique B) does not; the interactions associated with international economic relations is highly mathematical C) does not; international economics takes a different perspective on economic issues D) does; international economists must reach an agreement with other economists on every economic issue E) does; the motives and behavior of individuals are the same in international trade as they are in domestic transactions Answer: E Difficulty: Easy AACSB: Application of knowledge 8) Because the Constitution forbids restraints on interstate trade A) the U.S. may not impose tariffs on imports from NAFTA countries. B) the U.S. may not affect the international value of the $ U.S. C) the U.S. may not put restraints on foreign investments in California if it involves a financial intermediary in New York State. D) the U.S. may not impose export duties. E) the U.S. may not disrupt commerce between Florida and Hawaii. Answer: E Difficulty: Easy AACSB: Application of knowledge
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9) An important insight of international economics is that when countries sell goods and services to each other, A) the exchange is almost always mutually beneficial. B) one country always benefits at the expense of the other. C) it only benefits the low wage country. D) it only benefits the high wage country. E) it is almost never beneficial to both countries. Answer: A Difficulty: Easy AACSB: Application of knowledge 10) "Trade is generally harmful if there are large disparities between countries in wages." A) This is generally true. B) This is generally false. C) Trade theory has nothing to say about this issue. D) This is true if the trade partner ignores child labor laws. E) This is true if the trade partner uses prison labor. Answer: B Difficulty: Easy AACSB: Application of knowledge 11) If there are large disparities in wage levels between countries, then A) trade is likely to be harmful to both countries. B) trade is likely to be harmful to the country with the high wages. C) trade is likely to be harmful to the country with the low wages. D) trade is likely to be harmful to neither country. E) trade is likely to have no effect on either country. Answer: D Difficulty: Easy AACSB: Application of knowledge 12) If there are large disparities in productivity between countries, then A) trade is likely to be harmful to neither country. B) trade is likely to be harmful to the country with the high wages. C) trade is likely to be harmful to the country with the low wages. D) trade is likely to be harmful to both countries. E) trade is likely to have no effect on either country. Answer: A Difficulty: Easy AACSB: Application of knowledge
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13) Which of the following statements is TRUE? A) Trade is mutually beneficial when countries exchange goods and services. B) Trade is harmful if large disparities exist between countries in productivity. C) Trade is harmful if large disparities exist between countries in wages. D) Trading with less-advanced, lower-wage countries will drag down a country's standard of living. Answer: A Difficulty: Easy AACSB: Application of knowledge 14) The benefits of international trade are derived from trade in A) tangible goods only. B) intangible goods only. C) goods but not services. D) services but not goods. E) anything of value. Answer: E Difficulty: Easy AACSB: Application of knowledge 15) Which of the following statements is NOT TRUE? A) International trade will have no effects on income distribution. B) International trade may hurt particular groups within nations. C) International trade can adversely impact owners of resources that are specific to industries that compete with imports. D) International trade can alter the distribution of income between broad groups, such as workers and the owners of capital. Answer: A Difficulty: Moderate AACSB: Application of knowledge 16) Who sells what to whom A) has been a major preoccupation of international economics. B) is not a valid concern of international economics. C) is not considered important for government foreign trade policy since such decisions are made in the private competitive market. D) is determined by political rather than economic factors. E) is less important than international economic theory. Answer: A Difficulty: Easy AACSB: Application of knowledge
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17) The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by A) David Ricardo. B) David Hume. C) Adam Smith. D) Eli Heckscher. E) Lerner and Samuelson. Answer: A Difficulty: Easy AACSB: Application of knowledge 18) International economists cannot discuss the effects of international trade or recommend changes in government policies toward trade with any confidence unless they know A) their theory is the best available. B) their theory is internally consistent. C) their theory passes the "reasonable person" legal criteria. D) their theory is good enough to explain the international trade that is actually observed. E) their theory accounts for China's unique position in international trade. Answer: D Difficulty: Easy AACSB: Application of knowledge 19) Which of the following is NOT a major concern of international economic theory? A) protectionism B) the balance of payments C) exchange rate determination D) bilateral trade relations with China E) the international capital market Answer: D Difficulty: Easy AACSB: Application of knowledge 20) Which of the following does NOT belong? A) NAFTA B) Uruguay Round C) World Trade Organization D) non-tariff barriers E) major free trade agreements of the 1990s Answer: D Difficulty: Easy AACSB: Application of knowledge
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21) In 1998 an economic and financial crisis in South Korea caused it to experience A) a surplus in their balance of payments. B) a deficit in their balance of payments. C) a balanced balance of payments. D) an unbalanced balance of payments. E) a lull in international trade. Answer: A Difficulty: Easy AACSB: Application of knowledge 22) In 1998, countries that ran large trade surpluses include A) China and South Korea. B) U.S. and Japan. C) China and U.S. D) U.S. and South Korea. Answer: A Difficulty: Easy AACSB: Application of knowledge 23) After World War II, the United States has pursued a broad policy of A) strengthening "Fortress America" protectionism. B) removing barriers to international trade. C) isolating Iran and other members of the "axis of evil." D) protecting the U.S. from the economic impact of oil producers. E) restricting trade of manufactured goods. Answer: B Difficulty: Easy AACSB: Application of knowledge 24) Cost-benefit analysis of international trade A) is basically useless. B) is empirically intractable. C) focuses attention primarily on conflicts of interest within nations. D) focuses attention on conflicts of interest between nations. E) never leads to government intervention in international trade. Answer: C Difficulty: Moderate AACSB: Application of knowledge
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