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POL101 Practice Midterm 2 Questions

POL101 Practice Midterm 2 Questions - POL 101 Midterm#2...

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POL 101 Midterm #2 – PRACTICE QUESTIONS Why do countries restrict trade? a. Some influential interest groups may benefit from tariffs. b. Trade restrictions are always the best way to improve a country’s overall economy. c. Trade restrictions usually are the best way to improve a country’s overall economy. d. Free trade hurts industries that make use of the most abundant factor in a country. e. Trade restrictions are more important to consumers than to producers of products. Which of the following is the most important international trade institution? a. the Organization of the Petroleum Exporting Countries (OPEC) b. North American Free Trade Area (NAFTA) c. European Union (EU) d. World Trade Organization (WTO) e. the Common Market of the South (Mercosur) What is trade liberalization? a. being tolerant of imports from other countries b. increasing taxes on manufacturers of exports c. strengthening government oversight of imports d. reducing barriers to trade between countries e. imposing controls on the free flow of goods Which of the following statements best describes the opinion of most economists about trade? a. Trade barriers are bad for economic growth and well-being. b. Trade barriers have no discernible effect on domestic production. c. Trade barriers have no long-term effect on exports. d. Trade barriers are “a rising tide that lifts all boats.” e. Trade barriers disproportionately hurt low-skilled labor. Why does division of labor make international trade profitable? a. Countries can always trade with other countries. b. Every country can produce all the products it needs. c. Products are created by the countries that are most efficient at producing them. d. Countries can learn to create products that they are inefficient at producing. e. Workers always benefit when their labor is divided. What is comparative advantage? a. the ability of countries to benefit from specializing in what they do best b. the capacity of some countries to produce everything better than other countries c. the advantage that countries which export many products have over more specialized economies d. the fact that the industrialized countries have advanced economies that are comparably similar e. the benefit that workers in an industrialized country have over workers in less developed countries Which of the following would be expected by the Heckscher-Ohlin trade theory? a. a country with abundant fertile land exporting agricultural products b. a country with abundant capital importing manufactured goods c. a country with abundant coastal areas exporting ships d. a country with abundant labor exporting agricultural products e. a country with abundant capital exporting agricultural goods All of the following are factors of production EXCEPT: a. land b. coastal ocean waters c. unskilled labor d. skilled labor e. investment capital
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Which of the following would be a country’s endowment?
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