Global Trade Exam Questions Payne Ch.8

Chapter 8

Global Trade

Multiple-Choice

1. The theory that states that each country should specialize in producing specific products that will improve its trade with other states is known as __________ advantage.
   1. complete
   2. mercantilist
   3. comparative
   4. competitive

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The support of government subsidies of private industry is elaborated in which theory?
   1. Free trade theory
   2. Strategic trade theory
   3. Subsidual theory
   4. Fair trade theory

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The stressed role of government in trade is found in
   1. the reciprocal model.
   2. autarky.
   3. the state-centric model.
   4. the mercantilist model.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The International Monetary Fund (IMF) was created in order to
   1. supplement private capital for international investment.
   2. manage exchange rates and payment imbalances between nations.
   3. promote free trade and to reduce tariffs.
   4. enforce limits on products that each country could produce.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The Maastricht Treaty established the
   1. limits of Germany’s economy following WWI.
   2. barriers on creating free trade areas in Europe.
   3. European monetary system.
   4. European Union.

Topic/Concept: Regional Trade Blocs

8.8: Review the functionalities of different trade blocs

Skill Level: Understanding

Difficulty Level: Easy

1. Which of the following is NOT a reason behind the decline of trade unions?
   1. Globalization of individualism
   2. Public perceptions of unions
   3. Growth in the power of the manufacturing economy
   4. Political change

Topic/Concept: Labor Unions and Global Trade

8.5: Identify the contributing factors to the decline of labor unions

Skill Level: Analysis

Difficulty Level: Moderate

1. The manufacturing system that stressed mass production of standardized products is known as
   1. Fordism.
   2. McLeanism.
   3. capitalism.
   4. standardism.

Topic/Concept: Global Companies and Global Factories

8.2: Recognize how corporations became more global in both their outlook and their operations after the mid-1970s

Skill Level: Understanding

Difficulty Level: Easy

1. A _____________ occurs when the value of imported goods and services is less than the value of exported goods and services.
   1. trade deficit
   2. trade surplus
   3. market deficit
   4. market surplus

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The _____________ is the amount at which one country’s currency can be bought by another country’s currency.
   1. reciprocal rate
   2. currency exchange
   3. exchange rate
   4. currency rate

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The control that people and corporations have over artistic, creative, scientific, industrial, and educational inventions is known as
   1. intellectual property rights.
   2. patents.
   3. intellectual control.
   4. intellectual property control.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. Which of the following is NOT an example of trade protectionism?
   1. Smoot-Hawley Tariff Act
   2. Corn Laws
   3. Navigation Acts
   4. Reciprocal Trade Agreement Act

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Analysis

Difficulty Level: Moderate

1. Which of the following was NOT a premise of the General Agreement of Tariffs and Trade (GATT)?
   1. Bilateral negotiations are preferable to multilateral negotiations.
   2. Free trade benefits global society.
   3. Governments should minimize their involvement in the market.
   4. Private economic actors are preferable to governments for conducting and managing international trade.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Analysis

Difficulty Level: Moderate

1. The Doha Agreement
   1. reflected the great power of Western states.
   2. demonstrated the growing power of developing nations.
   3. replaced the GATT with the WTO.
   4. added agriculture to the global trade framework.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The never-ending search for lower production costs is known as
   1. mercantilism.
   2. capitalism.
   3. the race to the bottom.
   4. strategic trade theory.

Topic/Concept: Global Trade and Low Wages

8.3: Report the phenomenon of the race to the bottom to be the cause for the loss of manufacturing jobs in the developed nations

Skill Level: Understanding

Difficulty Level: Easy

1. An arrangement under which countries prevent their currencies from rising against the dollar is called
   1. the Doha Agreement.
   2. Bretton Woods 2.
   3. the Uruguay Round.
   4. Most-Favored Nation Clause.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

True/False

1. The mercantilist model of trade stressed the role of government in trade and emphasized the importance of balance-of-payment surpluses in trade with other countries.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The Reciprocal Trade Agreement Act authorized the president to negotiate trade routes with other countries.

Explanation: It allowed for the negotiation of tariff reductions.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The 2008–2009 global financial crisis and economic recession strengthened labor unions.

Explanation: It weakened labor unions.

Topic/Concept: Labor Unions and Global Trade

8.5: Identify the contributing factors to the decline of labor unions

Skill Level: Understanding

Difficulty Level: Easy

1. There are no longer any governments that put up barriers to free trade.

Explanation: Barriers to free trade still exist.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The trade deficit is the difference between the value of goods and services that a country buys from overseas and the value of goods and services it sells to other countries.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Easy

1. The relentless search by transnational companies for lower production costs in politically stable countries has led to what is known as a race to the bottom.

Topic/Concept: Global Trade and Low Wages

8.3: Report the phenomenon of the race to the bottom to be the cause for the loss of manufacturing jobs in the developed nations

Skill Level: Understanding

Difficulty Level: Easy

1. The public perception of unions is that they are not responsible for economic problems, and this has contributed to their growth.

Explanation: They are perceived as being responsible for economic problems, which has led to their decline.

Topic/Concept: Labor Unions and Global Trade

8.5: Identify the contributing factors to the decline of labor unions

Skill Level: Understanding

Difficulty Level: Easy

1. Large young populations in developing countries reinforce economic growth by providing relatively inexpensive labor.

Topic/Concept: Global Trade and Low Wages

8.3: Report the phenomenon of the race to the bottom to be the cause for the loss of manufacturing jobs in the developed nations

Skill Level: Understanding

Difficulty Level: Easy

1. NAFTA stands for North American Fair Tariffs Association.

Explanation: It stands for the North American Free Trade Agreement.

Topic/Concept: Regional Trade Blocs

8.8: Review the functionalities of different trade blocs

Skill Level: Understanding

Difficulty Level: Easy

1. Tariffs are used for both economic and political reasons.

Topic/Concept: Global Trade Disputes

8.6 Recount controversies related to global trade

Skill Level: Understanding

Difficulty Level: Easy

Fill in the Blank

1. As early as the third century B.C., various nomadic groups and Chinese merchants established a trading route, known as the _____________________.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The_______________ stressed the role of government in trade and emphasized the importance of balance-of-payment surpluses in trade with other countries.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The __________________________ manages exchange rates and payment imbalances among nations.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The control people have over their artistic, creative, scientific, industrial, and educational inventions are called ____________________.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The ___________________ for a currency is how much of one country’s money can be bought with a specified amount of another country’s currency.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The ______________________is the difference between the value of goods and services that a country buys from overseas and the value of goods and services it sells to other countries.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The shift toward production of goods and services based on cost considerations, arbitrary specialization, and government and corporate policies is known as ___________________.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. The __________________ was created to supplement private capital for international investment, originally with the intent of reconstructing Europe.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. Free-Trade Areas are characterized by the removal of ________________ among members.

Topic/Concept: Regional Trade Blocs

8.8: Review the functionalities of different trade blocs

Skill Level: Understanding

Difficulty Level: Moderate

1. The __________________________ established the European Monetary System to stabilize monetary affairs in Western Europe.

Topic/Concept: Regional Trade Blocs

8.8: Review the functionalities of different trade blocs

Skill Level: Understanding

Difficulty Level: Moderate

Matching

Answers to Matching:

1) C) World Bank

2) D) strategic trade

3) A) iron triangle

4) E) trade surplus

5) B) Most-Favored Nation Clause

Essay Questions

1. What exactly is the mercantilist model? Give examples.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. Do you think that globalization contributes to improving living standards around the world? Why or why not? Give examples.

Topic/Concept: Global Companies and Global Factories

8.2: Recognize how corporations became more global in both their outlook and their operations after the mid-1970s

Skill Level: Analysis

Difficulty Level: Moderate

1. What are the premises and principles of GATT addressed in this chapter? Discuss the major trade disputes. Give examples.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Understanding

Difficulty Level: Moderate

1. What are intellectual property rights? Do intellectual property rights potentially violate principles of free trade? Please explain.

Topic/Concept: The Globalization of Free Trade

8.1: Evaluate the different aspects of the globalization of free trade

Skill Level: Analysis

Difficulty Level: Moderate

1. What factors discussed in this chapter have helped environmental issues become a concern in global trade?

Topic/Concept: Global Trade Disputes

8.6 Recount controversies related to global trade

Skill Level: Understanding

Difficulty Level: Moderate