Exam 1 (Sample Exam)

Front 1

Globalization is most accurately defines as.

Back 1

A process of interaction and integration among people, firms, and government of different nations, driven by international trade and investment and aided by information technology.

Front 2

After world war two, the pace of globalization increased due to:

Back 2

worldwide decreases in average tariff levels.

Front 3

Barriers to trade

Back 3

Include government policies such as tariffs and quotas.

have been falling with technological improvements in transportation and communication

Front 4

The difference between a country's Gross National Product (GNP) and Gross Domestic Product (GDP) is that:

Back 4

GDP refers to production within the nation while GNP refers to production by domestic factors no matter where they are located.

Front 5

Which of the following is true?

a) Much of the trade of the European Union countries is with EU countries

b) Industrialized countries tend to trade relatively little with each other and largely with themselves.

c) Developing countries in Africa and South America tend to trade the most largely with themselves.

d) All of the above are true

Back 5

Much of the trade of the EU countries is with EU countries

Front 6

Which of the following is included in Germany's GDP?

i) BMWs produced in a German owned factory in South Carolina

ii) The value of the stocks sold on the German stock exchange, the Frankfurt Stock Exchange

iii) China dishes produced by the English owned Wedgewood Company at a factory in Germany

Back 6

iii) China dishes produced by the English owned Wedgewood Company at a factory in Germany

Front 7

______ analyses by economists refers to the attempt to answer questions such as what are the effects of a tax on production and consumption decisions.

Back 7

Positive

Front 8

_______ analysis by economists refers to the attempt to answer questions such as should a tax be imposed.

Back 8

Normative

Front 9

If individuals have money illusion then they:

Back 9

Ignore the effects on their income or wealth of some price changes in the economy

Front 10

If individuals have money illusion then they:

Back 10

Ignore the effects on their income or wealth of some price changes in the economy

Front 11

If the relative of S were to increase, then the price line would:

Back 11

Become Steeper

Front 12

In autarky, when a community maximizes its standard of living, its consumption point is:

Back 12

On the production possibility frontier

Front 13

A diagram that shows the maximum amount of one type of good that can be produced in an economy, given the production of the other in known as:

Back 13

The Production Possibilities Frontier

Front 14

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the:

Back 14

Amount of the other good or service that must be forgone;

Front 15

The HO theorem states that a country will have comparative advantage in the good whose production is relatively intensive in the ______ with which the country is relatively abundant.

Back 15

Factor

Front 16

Which factors of production gain and which factors of production lose when trade arises between these two countries?

Back 16

Using the Stolper Samuelson Theorem, in America, capital owners (abundant factor) gain from trade while land owners (the scarce factor) loses from trade. In Australia, land owners (the abundant factor) gaines from trade, while capital owners (the scarce factor) lose.

Front 17

Describe the controversy surrounding the HO model and the widening of the American income gap.

Back 17

Over 3 decades real wages in America paid to blue collar workers have only risen slightly, while real wages to college graduates have risen significantly.

It is the rapid pace in technological change that has reduced the demand for low-skilled workers, reducing real wages and employment in this section. Trade is the main factor that is widening the income gap.