Chapter 2 SmartBook Flashcards
An ever-expanding variety of goods and services are in demand by consumers all around the world. Given the importance of world trade, countries are inclined to
Attempt to control the trade for their own benefit.
International trade patterns were disrupted in the last half of the twentieth century because of the:
Ideological split between countries with a socialist Marxist approach and those with a democratic capitalist approach
Which of the following enabled U.S. companies to expand exports and investment worldwide following World War II?
A: Establishment of colonial power
B: Growing consumer and industrial markets
C: A rise in standards of living
D: Suppression of capitalism and infusion of communism
B and C
Money constantly flows into and out of a country in which of the following ways?
A: When a country makes foreign investments
B: When a country exports and imports products and services
C: When a country receives cash receipts or makes cash payments
D: When a country has no tourist industry
E: When countries exchange monetary gifts
A, B, C and E
The international financial transactions of a nation are recorded by a system of accounts. This system of accounts is known as the
Balance of payments
With increasing competition in world markets, there is growing tendency to adopt
Protectionism
Which of the following are features of international trade in the twenty-first century?
A: Countries are more interdependent economically
B: Countries are more self-sufficient than ever before
C: The potential for increased demand is low
D: There are greater opportunities for international trade
A and D
A country’s balance-of-payments statement serves which of the following purposes?
Evaluating the country’s international economic position
Which of the following led to the creation of new global marketing opportunities?
A: Countries that were previously underdeveloped and economies that were war-torn grew rapidly
B: Conflicts between the socialist Marxist approach and the democratic capitalist approach began
C: Major worldwide recessions catapulted the world’s economies to new heights
D: Economic cooperation and assistance developed at a large scale
A and D
Which of the following are receipts (the plus side) on the U.S. balance-of-payments statement?
A: Payments of interest and dividends on investments abroad
B: Money spent by U.S. tourists overseas
C: Foreign government payments to the United States
D: Export sales of merchandise
A, C and D
When there is Blank______ among countries, financial transactions take place between businesses or consumers of the countries.
Trade
Which of the following are accurate statements about a nation’s balance-of-payments statement?
A: It determines whether the nation is in good or poor financial condition
B: It records all financial transactions between residents and the rest of the world
C: It provides a record of the nation’s political status
D: It maintains records through a double-entry bookkeeping system
B and D
How many accounts are included in a balance-of-payments statement?
Three
To impede the entry of unwanted goods into its markets, countries commonly impose which of the following types of barriers?
A: Cultural
B: Legal
C: Psychological
D: Exchange
B, C and D
Balance-of-payment statements are mainly used by
Government agencies
Which of the following arguments in favor of protectionism do economists support?
A: Protecting infant industries
B: Protecting foreign markets
C: Industrializing underdeveloped nations
D: Strengthening national defense
A, C and D
Which of the following are international investments (the minus side) on the U.S. balance-of-payments statement?
A: Payments of dividends and interest on investments abroad
B: New overseas investments
C: Costs of goods that are imported
D: Money spent by U.S. tourists overseas
E: Cost for foreign military and economic aid
B, C, D and E
Which of the following are nontariff barriers?
A: Quotas
B: market barriers
C: monetary barriers
D: union strikes
E: boycotts
A, B, C and E
A country wants to maintain a record of its direct investment. The entry should be made in the Blank______ account.
Capital
The government of a nation imposes a tax on goods that enter its borders. This tax is known as a(n)
Tariff
A country resorts to protectionism in order to
Prevent foreign companies from intruding on domestic markets
Which of the following statements about tariffs is true?
They are arbitrary
Which of the following are reasons that protectionists want government to impose restrictions on trade?
A: To protect natural resources
B: To protect foreign markets
C: To maintain the standard of living
D: To keep up employment and reduce unemployment
E: To discourage the accumulation of capital
A, C and D
Trade barriers are primarily encouraged by
Local industries
The limit that a government places on imports in terms of number of units or dollar amounts is called a(n)
Quota
Match the types of customs duties used in the United States (in the left column) with what they are based on (in the right column).
Ad valorem duties = percentage of the value
Specific duties = set amount per unit weight or other measure
Compound duties = rate based on weight plus a percentage of value
Countries use import licenses to
Regulate the flow and amount of imported goods
Which of the following are the consequences of imposing tariffs?
A: Balance-of-payments positions gain strength
B: International relations are weakended
C: Government control in economic matters become greater
D: The sources of supply for manufacturers become restricted
B, C and D