Ch. 5- Quiz

Question 1

Trade in services accounts for around 22 percent of total world trade. Although the importance of trade in services is growing for many​ nations, it tends to be relatively more important for the​ world’s ___________ countries.

Answer 1

Richest

Question 2

Which​ agencies/departments/organizations in most countries record the destination of​ exports, the source of​ imports, and the physical quantities and values of goods crossing their​ borders?

Answer 2

Customs

Question 3

Which one of the following statements BEST explains the benefits of international trade to​ nations?

Answer 3

International trade is an important engine for job creation.

Question 4

There has been a persistent pattern of merchandise trade among nations. Trade between which economies of the world represents the highest level of total world merchandise​ trade?

Answer 4

Trade between the​ world’s high-income economies

Question 5

As the world becomes even more like a global​ village, countries become dependent on trade with each other to sustain their own economies.​ However, the dangers of trade dependency become apparent when​ ________________.

Answer 5

a nation experiences economic recession or political turmoil

Question 6

​____________ advocates that nations should accumulate financial​ wealth, usually in the form of​ gold, by encouraging exports and discouraging imports.

Answer 6

Mercantilism

Question 7

The main problem with mercantilism is that it views trade as​ a(n) ________.

Answer 7

zero-sum game

Question 8

Which one of the following statements BEST expresses a pillar of ​ mercantilism?

Answer 8

Nations should increase their wealth by increasing their exports and minimizing their imports.

Question 9

The practice of mercantilism rested on three essential pillars. Which of the following sets identify these three​ pillars?

Answer 9

Trade​ surpluses, government​ intervention, and colonialism

Question 10

Mercantilism advocates that governments should actively intervene in international trade to maintain a trade surplus. Which of the following tools have mercantilist nations used to support this​ policy?

Answer 10

Subsidize​ export, ban​ import, and impose tariff charges and quotas.

Question 11

According to Adam​ Smith, a nation should concentrate on producing the goods in which it​ ________.

Answer 11

has an absolute advantage in producing the product

Question 12

Which one of the following trade conditions occurs when a country is unable to produce a good more efficiently than other​ nations, but produces the good more efficiently than it does any other​ good?

Answer 12

Comparative advantage

Question 13

Which one of the following describes the theory of absolute​ advantage?

Answer 13

​It’s the ability of a nation to produce a good more efficiently than any other nation

Question 14

Country X specializes in the production of corn more efficiently than any other nation and buys rice which it produces less efficiently than corn from Country​ Z, despite the fact that Country Z produces rice less efficiently than Country X. Which one of the following international trade theories agrees with Country​ X’s decision to buy rice from Country​ Z?

Answer 14

Comparative advantage

Question 15

Which one of the following is TRUE with regard to the factor proportions​ theory?

Answer 15

Countries produce and export goods which require resources that are abundant and import goods that require resources in short supply.

Question 16

The difference between the comparative advantage theory and the factor proportions theory is that the factor proportions theory​ ________.

Answer 16

states that a country specializes in producing and exporting goods using the factors of production that are most abundant and thus cheapest–not the goods in which it is most productive

Question 17

International product life cycle theory says that a company will begin by exporting its product and later undertake foreign direct investment as the product moves through its life cycle. Which of the following BEST defines the maturing product​ stage?

Answer 17

Exports begin to account for an increasingly greater share of total product sales.

Question 18

​________ says that a company will begin by exporting its product and later undertake foreign direct investment. The theory also says​ that, for a number of​ reasons, a​ country’s export eventually becomes its import.

Answer 18

The product life cycle theory

Question 19

The international product life cycle theory follows the path of a good through its life cycle in order to determine where it will be produced. Which one of the following BEST defines the standardized product​ stage?

Answer 19

Competition pressures companies to lower prices in order to maintain sales levels

Question 20

The ability of the theory of the product life cycle to accurately depict the trade flow of nations is being challenged. This is due to the fact that​ ________.

Answer 20

more companies are operating in international markets from their inception

Question 21

Which of the following statements BEST describes the new trade​ theory?

Answer 21

There are gains to be made from specialization and increasing economies of scale.

Question 22

Which one of the following trade theories indicates that government may play a role in assisting its home companies and that government involvement has always been widely accepted in undertakings such as space exploration for national security​ reasons?

Answer 22

New trade

Question 23

Which one of the following is a component of​ Porter’s diamond?

Answer 23

Firm​ strategy, structure, and rivalry

Question 24

Which one of the following represents the core of the national competitive advantage​ theory?

Answer 24

A​ nation’s competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.

Question 25

Which one of the following of​ Porter’s diamond components supports the concept that companies that belong to a​ nation’s internationally competitive industries do not exist in​ isolation, rather, supporting industries spring up to provide the inputs required by the​ industry?

Answer 25

Related and supporting industries