front 1 In order for a country to specialize its production, what must there be? A. A global economy B. A free-market system C. Government subsidies D. An international division of labor | back 1 Answer: D |
front 2 The existence of an international division of labor among countries enables those countries to have what? A. A gross domestic product B. Social welfare programs C. Specialized production D. Protectionist policies | back 2 Answer: C |
front 3 The global economy can have specialized production because of what? A. Trade sanctions B. World Bank loans C. The free-market system D. The international division of labor | back 3 Answer: D |
front 4 Country X would have an absolute advantage over Country Y in the production of automobiles under what conditions? A. Country X's workers earn higher wages. B. Country Y subsidizes its automobile industry. C. Country X can manufacture cars more cheaply. D. Country Y has a protective tariff on car imports. | back 4 Answer: C |
front 5 Country A would have an absolute advantage over Country B in the production of computers under what circumstance? A. Companies in Country A can produce computers at a lower cost B. Country B was the target of a trade embargo by Country A. C. The government of Country B subsidizes its computer industry. D. Country A had a higher minimum wage than Country B. | back 5 Answer: A |
front 6 Country X would enjoy an absolute advantage in the production of clothing under what circumstance? A. Its production costs for clothing were the lowest in the world. B. Its tariffs on clothing were the highest in the world. C. It had the largest clothing industry in the world. D. It had the lowest minimum wage in the world. | back 6 Answer: A |
front 7 What gives a country a comparative advantage? A. When its trade barriers are higher than the world average B. When its infrastructure is more advanced than in other countries C. When its workers don't need to be paid as much as other workers D. When it gives up less than others to engage in a particular type of production | back 7 Answer: D |
front 8 Under what circumstance would a country have a comparative advantage in the production of a certain good? A. It has a more highly skilled work force. B. It has well-developed industrial capacities. C. It uses an assembly line to produce that good. D. It has a lower opportunity cost for production of that good. | back 8 Answer: D |
front 9 Country X would have a comparative advantage in the production of cotton under what circumstance? A. Country X was able to impose a high tariff on cotton imported from other countries. B. Country X had a large domestic textile and apparel industry that could use the cotton. C. Country X didn't have to give up a more profitable form of production in order to grow cotton. D. Country X could sell cotton more cheaply in the international marketplace than any other country. | back 9 Answer: C |
front 10 Why does interdependence bring economic growth? A. Interdependence strengthens governments, allowing great tax revenues. B. Interdependence enables specialized production, which is more efficient. C. Interdependence increases international competition, which leads to lower prices. D. Interdependence creates greater protection for domestic producers, which enables them to raise prices. | back 10 Answer: B |
front 11 Why do some countries fear increasing economic interdependence? A. Interdependence increases the power of developing countries. B. Interdependence leads to higher prices for goods and services. C. Interdependence leads countries to commit human rights violations. D. Interdependence involves a loss of control over the national economy. | back 11 Answer: A |
front 12 Why does the growth of international trade lead to a rising global standard of living? A. International trade enables specialization, which brings increased efficiency and greater competition. B. International trade creates profitable investment opportunities for currency speculators. C. International trade leads to trade wars that require countries to increase their productive capabilities. D. International trade results in a gain of comparative advantage for developing countries. | back 12 Answer: A |
front 13 Which of these best characterizes the flow of wealth during the period of colonization? A. There was a one-way flow of investment from Europe to Asia. B. There was uneven industrialization in favor of the underdeveloped colonies. C. There was a one-way flow of wealth from the colonies to their colonial masters. D. There was mutual benefit from the flow of goods back and forth between colonies and their colonizers. | back 13 Answer: C |
front 14 What was the result of developed countries extracting resources from their colonies? A. There was a one-way flow of wealth favoring the colonizers. B. Developed countries lost jobs to the colonies because labor was cheaper there. C. The colonizers used these resources to help the colonies build their infrastructure. D. Trade wars began among the colonies to attract investment from developed countries. | back 14 Answer: A |
front 15 How did the colonizers benefit from the colonies they controlled? A. Workers in the colonizing countries were able to push for higher wages. B. The colonizers used the resources of their colonies to grow their own economies. C. Luxury goods manufactured in the colonies brought tariff revenues to the colonizers. D. The revenues generated from running colonies helped the colonizers lower their tariffs. | back 15 Answer: B |
front 16 Why do high tariff levels restrict international trade? A. There is a decreasing marginal return on sales when tariff levels are high. B. It is more difficult to protect domestic producers when there are high tariffs. C. Traded goods cost more when there are high tariffs, and this limits their sale. D. High tariff levels make it difficult for countries to enforce consumer-protection regulations. | back 16 Answer: C |
front 17 Why do protective tariffs lead to reduced international trade? A. There is a decreasing marginal return on sales when imports are protected. B. Protective tariffs increase the price of goods and limit the sale of those goods. C. Other countries usually respond to protective tariffs with boycotts and embargoes. D. Domestic producers have less incentive to increase production when they're protected. | back 17 Answer: B |
front 18 Why does reducing trade barriers promote increased international trade? A. Free trade leads to lower prices and greater sales. B. The reduction of tariffs also lowers workers' wages. C. The loss of subsidies causes businesses to increase profits. D. The free market gives domestic producers an absolute advantage. | back 18 Answer: A |
front 19 Match each current trend in the global economy with one of its economic effects: A. Improved communication B. Trade liberalization C. Infrastructure development D. Industrialization Cheaper transportation Greater productivity Easier outsourcing Increased trade | back 19 C. Cheaper transportation D. Greater productivity A. Easier outsourcing B. Increased trade |
front 20 Match each current trend with one of its economic effects. A. Improved communication B. Trade liberalization C. Infrastructure development D. Industrialization Facilitates less expensive international trade Provides an incentive for countries to export more goods Increases productivity and lowers prices Makes it easier for international businesses to operate efficiently | back 20 C. Facilitates less expensive international trade B. Provides an incentive for countries to export more goods D. Increases productivity and lowers prices A. Makes it easier for international businesses to operate efficiently |
front 21 Match each current trend in the global economy with the benefit it provides. A. Improved communication B. Free-trade policies C. Development of infrastructure D. Industrialization Helps developing countries Reduces distribution costs Increases the mobility of goods and labor Facilitates international trade | back 21 D. Helps developing countries C. Reduces distribution costs B. Increases the mobility of goods and labor A. Facilitates international trade |
front 22 Why does globalization give countries an incentive to reduce wages for their workers? A. Lower production costs help lure foreign investment. B. Multinational corporations don't have to bargain collectively. C. Increased international trade reduces the demand for skilled labor. D. Globalization reduces the cost of goods and services for consumers. | back 22 Answer: A |
front 23 Why does globalization lead to a reduction in wages in developed countries? A. Labor unions have moved their operations to developing countries. B. A high volume of international trade reduces the demand for skilled labor. C. Increased mobility allows producers to move jobs to lower-cost labor markets. D. Globalization results in lower prices that give workers greater purchasing power. | back 23 Answer: C |
front 24 Why does globalization lead to a reduction in prices for goods and services? A. Consumers buy less when there are more goods available on the market. B. Globalization increases both supply and demand for all goods and services. C. There is a decreasing marginal utility to goods produced in developing countries. D. Competition for jobs drives down wages, which helps companies lower their prices. | back 24 Answer: D |
front 25 Why do central banks play an important role in the global economy? A. They are able to limit capital mobility. B. They set each country's monetary policies. C. They regulate the currency exchange market. D. They print all of the money used for international trade. | back 25 Answer: B |
front 26 Why do the actions of central banks have an important effect on the global economy? A. Monetary policy is an important tool for protecting domestic industries. B. Interest rates on government bonds are responsible for foreign investment. C. The amount of capital mobility is dependent on regulations enforced by central banks. D. Control of the money supply determines how *D. much money is available for international trade. | back 26 Answer: D |
front 27 Why do central banks play an important role in the global economy? A.They charge tariffs on trades that take place in the currency exchange market. B. They control the foreign currency reserves that are used for international trade. C. They prevent foreign companies from removing profits from their national economy. D. They have control over the interest rates charged on the debts owed by their governments. | back 27 Answer: B |
front 28 Which of these is a gift of money from one government to another? A. Foreign aid B. Trade sanctions C. No-interest loans D. Agricultural subsidies | back 28 Answer: A |
front 29 Why is foreign aid given? A. In order to help needy countries B. In order to grow the global economy C. In order to protect domestic industries D. In order to stimulate foreign investment | back 29 Answer: A |
front 30 What is the main purpose of foreign aid? A. Eliminate colonization B. Stabilize the currency market C. Retaliate against trade sanctions D. Alleviate poverty and underdevelopment | back 30 Answer: D |
front 31 Match each international organization with its purpose: A. Bank for International Settlements (BIS) B. International Monetary Fund (IMF) C. World Bank D. World Trade Organization (WTO) Reduce poverty Promote free trade Create financial stability Prevent economic crises | back 31 C. Reduce poverty D. Promote free trade A. Create financial stability B. Prevent economic crises |
front 32 Match each international organization with one of its functions: A. Bank for International Settlements (BIS) B. International Monetary Fund (IMF) C. World Bank D. World Trade Organization (WTO) Generate multilateral trade agreements Coordinate banking regulations Provide long-term development loans Provide short-term emergency loans | back 32 D. Generate multilateral trade agreements A. Coordinate banking regulations C. Provide long-term development loans B. Provide short-term emergency loans |
front 33 Match each international organization with one of its purposes: A. Bank for International Settlements (BIS) B. International Monetary Fund (IMF) C. World Bank D. World Trade Organization (WTO) Make economic policy recommendations Provide a forum for coordinating banking regulations Mediate and resolve trade disputes Promote sustainable development | back 33 B. Make economic policy recommendations A. Provide a forum for coordinating banking regulations D. Mediate and resolve trade disputes C. Promote sustainable development |
front 34 Why does the IMF impose conditionality on countries that accept its loans? A. The IMF wants to get all countries to accept free- trade policies. B. The IMF wants to help fix the economies of countries that need its help. C. The IMF wants to impose uniform regulations on the international banking system. D. The IMF wants to make sure that the money it loans results in sustainable development. | back 34 Answer: B |
front 35 Why does the IMF require countries that accept its loans to follow its policy recommendations? A. The IMF wants to control the global money supply. B. The IMF wants to rid the world of command economies. C. The IMF wants to help struggling countries better manage their economies. D. The IMF wants to help governments in developing countries to eliminate poverty. | back 35 Answer: C |
front 36 Why does the IMF impose conditions on its loans? A. To promote the free-market system B. To rid the world of command economies C. To help manage the economies of struggling countries D. To impose uniform regulations on the international banking system | back 36 Answer: C |
front 37 What is the main purpose of the loans made by the World Bank? A. To help countries achieve sustainable development B. To make profits for its shareholders C. To help create multilateral trade agreements D. To prevent future economic crises | back 37 Answer: A |
front 38 Why does the World Bank charge little or no interest on the loans it makes? A. Its main purpose is to promote development, not make profits. B. It gives only short-term emergency loans to very needy countries. C. It wants to get countries to accept its loans along with its policy recommendations. D. Its loans are for such large amounts that no country could afford to pay interest on them. | back 38 Answer: A |
front 39 What does the World Bank hope will result from the loans it makes to developing countries? A. Increased ability to profit from exports B. An improved climate for foreign investment C. A reduction in the taxes charged to their citizens D. Stabilized exchange rates for their national currencies | back 39 Answer: B |
front 40 How does the WTO help stabilize the global economy? A. By preventing large swings in currency exchange rates B. By providing money to bail countries out of emergency situations C. By keeping central banks from enacting radical monetary policies D. By assuring that producers will have open access to necessary resources | back 40 Answer: D |
front 41 How does the WTO promote global free trade? A. By enforcing strict banking regulations B. By creating multilateral trade agreements C. By providing loans for sustainable development D. By helping developing countries build their infrastructure | back 41 Answer: B |
front 42 What is the main goal of the WTO? A. To enable governments to give out less foreign aid B. To help developing countries build their industrial capacity C. To assure that international trade flows smoothly and freely D. To prevent multinational corporations from exploiting workers | back 42 Answer: C |
front 43 Match each economic activity with one of its purposes: A. World Bank loans B. Foreign aid C. Trade embargo D. Outsourcing Reduce production costs Punish an offending government Provide emergency relief Eliminate poverty | back 43 D. Reduce production costs C. Punish an offending government B. Provide emergency relief A. Eliminate poverty |
front 44 Match each economic activity with its main purpose: A. IMF loans B. Foreign aid C. Boycott D. Offshoring Help needy governments Reduce production costs Influence economic decisions Stabilize the global economy | back 44 B. Help needy governments D. Reduce production costs C. Influence economic decisions A. Stabilize the global economy |
front 45 Match each economic activity with its main purpose: A. WTO agreements B. Boycott C. Offshoring D. Foreign aid Help needy governments Reduce production costs Punish unfair practices Promote free trade | back 45 D. Help needy governments C. Reduce production costs B. Punish unfair practices A. Promote free trade |
front 46 Why has globalization led to an increasing income gap between rich and poor countries? A. Countries with well-established infrastructure and productive capacities have more competitive industries. B. The reduced production costs provided by low wages in developing countries enable companies to make larger profits. C. Reduced transportation costs have enabled developed countries to extract more natural resources from their colonies. D. Laborers from developing countries migrate to developed countries in search of better-paying jobs | back 46 Answer: A |
front 47 Why are the majority of the world's countries left on the margins of globalization? A. Many countries are too underdeveloped to take advantage of the opportunities presented by increasing international trade. B. Many countries don't have sufficient natural resources to fuel high levels of industrial production. C. Many countries continue to rely on protectionist policies that limit their imports and exports. D. Many countries have laws requiring such high wages that foreign producers don't want to invest. | back 47 Answer: A |
front 48 Why hasn't globalization benefited the majority of the world's underdeveloped countries? A. Underdeveloped countries rely on exporting agricultural goods to developed countries. B. Underdeveloped countries use protectionist policies to isolate themselves from international trade. C. Underdeveloped countries don't have the natural resources needed to fuel high levels of industrial production. D. Underdeveloped countries don't have the productive capacities necessary to take advantage of increasing international trade. | back 48 Answer: D |
front 49 Match each type of country with one of its central features. A. Developed B. Developing C. Underdeveloped D. New globalizer Rapid economic growth Little infrastructure or industry Low standard of living High level of productive capacity | back 49 D. Rapid economic growth C. Little infrastructure or industry B. Low standard of living A. High level of productive capacity |
front 50 Match each type of country with one of its central features: A. Developed B. Developing C. Underdeveloped D. New globalizer Rapidly increasing levels of exports Little infrastructure or industry Low standard of living High level of productive capacity | back 50 D. Rapidly increasing levels of exports C. Little infrastructure or industry B. Low standard of living A. High level of productive capacity |
front 51 Match each type of country with one of its central features: A. Developed B. Developing C. Underdeveloped D. New globalizer High level of productive capacity Low levels of industrial capacity High levels of foreign investment Low standard of living | back 51 A. High level of productive capacity C. Low levels of industrial capacity D. High levels of foreign investment B. Low standard of living |
front 52 Why don't developing countries usually benefit from free-trade policies? A. The only way they can collect revenues is through tariffs. B. They rely primarily on agricultural exports for their income. C. They have little economic power to influence the global economy. D. Their industries are too weak to compete in the international market. | back 52 Answer: D |
front 53 Why don't many developing countries benefit from the spread of free trade? A. They have large trade deficits. B. They have weak domestic industries. C. They cannot afford to give foreign aid. D. They don't possess important natural resources. | back 53 Answer: B |
front 54 Because most developing countries have weak domestic industries, they do not benefit from what? A. Foreign aid B. IMF advice C. World Bank loans D. Free-trade policies | back 54 Answer: D |
front 55 Why has globalization contributed to the rise of international terrorism? A. Money laundering is easy in the chaotic international banking system. B. There are environmental problems that result from ruthless global competition. C. Globalization can bring about dislocation and inequality. D. Weakened national security results from foreign ownership. | back 55 Answer: C |
front 56 How has globalization contributed to the recent increase in international terrorism? A. The downsides of globalization affect many people who often feel they have nowhere to turn other than violence. B. The lack of centralized banking regulations makes it possible for terrorists to profit from foreign investment. C. Increased labor migration makes it possible for terrorists to infiltrate critical infrastructure points. D. Globalization requires ruthless competition that can usually only be accomplished through force and coercion. | back 56 Answer: A |
front 57 Why do many people object to globalization? A. They object because of the reductions in wages brought about by globalization. B. They want to protect the domestic industries that are vital to their homelands. C. They understand how much environmental damage can be caused by international competition. D. They feel that globalization mainly serves the interests of the United States at the expense of other countries. | back 57 Answer: D |
front 58 Why don't companies doing business in countries with repressive governments object to the human rights abuses? A. New technologies enable repressive governments to censor the news more effectively. B. The lack of a world government makes it C. Companies taking advantage of low labor costs don't make trouble for repressive governments. D. Increased interdependence means that democratic countries rely on repressive governments for political support. | back 58 Answer: C |
front 59 Why don't companies that do business in countries where human rights are violated tend to fight against these abuses? A. They tend to care more about a safe investment climate than about human rights. B. They lack the political influence to do anything about the problems. C. They must obey the laws of the countries where they invest. D. They don't directly benefit from the abusive policies. | back 59 Answer: A |
front 60 How has globalization helped work against human rights violations around the world? A. Improved global communications brings these abuses to the world's attention. B. Companies have boycotted abusive governments as a punishment for these practices. C. Revolutions against abusive governments have made the investment climate insecure. D. Violating human rights is too costly to be profitable in the competitive international marketplace. | back 60 Answer: A |
front 61 Why is globalization potentially damaging to the environment? A. Future production relies on safeguarding the earth's limited natural resources. B. Most governments can't afford to enforce environmental-protection regulations. C. Protecting the environment increases production costs and reduces competitiveness. D. Technology has improved to the point where environmental protection is unnecessary. | back 61 Answer: C |
front 62 What is the primary reason that globalization leads to greater global pollution? A. Environmental protection is expensive, and B. Increased carbon monoxide output results from both industrialization and infrastructure development. C. Environmental regulations are enforced by nations rather than an international organization. D. Companies that outsource and offshore their production have to use more energy to transport their finished goods. | back 62 Answer: A |
front 63 Why does globalization lead to increasing environmental damage? A. Sustainable development relies on the increasing use of non-renewable energy sources. B. Environmental-protection regulations increase compliance costs and decrease economic competitiveness. C. Technological development leads to less pollution but greater consumption of non-renewable energy. D. Consumer boycotts and government regulations undermine companies' attempts to reduce their output of waste. | back 63 Answer: B |
front 64 Match each practice with an example of its use. A. Offshoring B. Boycott C. Trade sanctions D. Conditionality The IMF requires a loan recipient to privatize its oil industry. Japan imposes a 100% tariff on cars coming from Europe and the United States. Consumers refuse to buy goods from companies that use child labor. A U.S. car company begins making certain car parts in Bangladesh. | back 64 D. The IMF requires a loan recipient to privatize its oil industry. C. Japan imposes a 100% tariff on cars coming from Europe and the United States. B. Consumers refuse to buy goods from companies that use child labor. A. A U.S. car company begins making certain car parts in Bangladesh. |
front 65 Match each global business practice with an example of its use. A. Outsourcing B. Boycott C. Conditionality A U.S. computer company buys its memory chips from a company in Taiwan. The IMF asks a government to cut its taxes before receiving an emergency loan. A group of consumers refuses to buy clothing made in Indonesian sweatshops. | back 65 A. A U.S. computer company buys its memory chips from a company in Taiwan. C. The IMF asks a government to cut its taxes before receiving an emergency loan. B. A group of consumers refuses to buy clothing made in Indonesian sweatshops. |
front 66 Match each global business practice with an example of its use. A. Embargo B. Insourcing C. Conditionality The IMF requires a government receiving a loan to balance its budget. The United States forbids its citizens from doing business with a government that has ties to terrorist groups. A South Korean car company opens a factory in the United States. | back 66 C. The IMF requires a government receiving a loan to balance its budget. A. The United States forbids its citizens from doing business with a government that has ties to terrorist groups. B. A South Korean car company opens a factory in the United States. |
front 67 Which of these would cause job loss in the United States? A. A high minimum wage in another country B. Insourcing by a Japanese company C. Inexpensive imported televisions D. A tariff-reduction agreement | back 67 Answer: C |
front 68 Why has globalization led to some job loss in the United States? A. Excessive spending by U.S. consumers has led to a budget deficit. B. Protective tariffs prevent the United States from having a trade surplus. C. Foreign investment has shifted to developing countries. D. Labor costs are lower in other countries. | back 68 Answer: D |
front 69 Why do lower labor costs in other countries lead to job loss in the United States? A. Workers migrate in search of better-paying jobs. B. It enables foreign producers to undersell domestic producers. C. Foreign producers are able to insource and make higher profits. D. Foreign governments can charge higher tariffs and make more revenues. | back 69 Answer: B |
front 70 What has been the main benefit of globalization for the United States? A. Economic growth B. Increased wages C. Increased exports D. Greater job security | back 70 Answer: A |
front 71 What has been the main drawback of globalization for the United States? A. Higher prices B. Wage reductions C. Lost tariff revenues D. Slow economic growth | back 71 Answer: B |
front 72 Which of these is a problem that globalization poses for the U.S. government? A. Loss of tariff revenues B. Increased security concerns C. Migration of U.S. workers abroad D. Opposition to its human rights abuses | back 72 Answer: B |
front 73 All of the following have been negative effects of globalization except what? A. A greater gap between rich and poor countries B. Great damage to the environment C. Increased international terrorism D. Higher prices for consumers | back 73 Answer: D |
front 74 What is one reason why some people are critical of globalization? A. It leads to increased damage to the environment. B. It undermines the purchasing power of consumers. C. It gives governments too much control over the global economy. D. It provides only comparative advantage instead of absolute advantage. | back 74 Answer: A |
front 75 Which of these is a reason why many don't support globalization? A. It undermines the purchasing power of consumers. B. It only benefits a handful of the world's countries. C. It gives too much power to repressive governments. D. It leads to increased environmental-protection costs. | back 75 Answer: B |