EC 310, Multiple Choice Questions all Chapters -...

Multiple-Choice Questions for International Economics
by
Dr. Bob Carbaugh
Department of Economics
Central Washington University
Chapter 1: The International Economy and Globalization
A primary reason why nations conduct international trade is because:
a. Some nations prefer to produce one thing while others produce another
*b. Resources are not equally distributed to all trading nations
c. Trade enhances opportunities to accumulate profits
d. Interest rates are not identical in all trading nations
A main advantage of specialization results from:
*a. Economics of large scale production
b. The specializing country behaving as a monopoly
c. Smaller production runs resulting in lower unit costs.
d. High wages paid to foreign workers
International trade in goods and services is sometimes used as a substitute for all of the following
except :
a. International movements of capital.
b. International movements of labor.
c. International movements of technology
*d. Domestic production of different goods and services
If a nation has an open economy it means that the nation:
a. Allows private ownership of capital.
b. Has flexible exchange rates
c. Has fixed exchange rates
*d. Conducts trade with other countries

International trade forces domestic firms to become more competitive in terms of:
a. The introduction of new products
b. Product design and quality
c. Product price
*d. All of the above
The movement to free international trade is most likely to generate short-term unemployment in
which industries:
a. Industries in which there are neither imports nor exports
*b. Import-competing industries.
c. Industries that sell to domestic and foreign buyers
d. Industries that sell to only foreign buyers
International trade is based on the idea that:
a. Exports should exceed imports
b. Imports should exceed exports
c. Resources are more mobile internationally than are goods
*d. Resources are less mobile internationally than are goods
Arguments for free trade are sometimes disregarded by politicians because:
a. Maximizing domestic efficiency is not considered important
*b. Maximizing consumer welfare may not be a chief priority
c. There exist sound economic reasons for keeping one’s economy isolated fr om other
economies.
d. Economists tend to favor highly protected domestic markets
Which American industry has least been affected by import competition in recent years
a. Automobiles
b. Steel
c. Radios and TVs
*d. Computer software
The largest amount of trade with the United States in recent years has been conducted by:
*a. Canada
b. Germany
c. Mexico
d. United Kingdom
Increased foreign competition tend to
a. Intensify inflationary pressure at home
b. Induce falling output per worker-hour for domestic workers
*c. Place constraints on the wages of domestic workers
d. Increase profits of domestic import-competing industries

For the United States, exports plus imports are about ______ of its gross national product:
a. 5 percent b. 10 percent
*c. 25 percent d. 55 percent