Unit 6 Test Flashcards
Which must exist before a country can specialize its production?
an international division of labor
Which conditions would allow Country X to have an absolute advantage over Country Y in the production of automobiles?
Country X can manufacture cars more cheaply.
Which gives a country a comparative advantage?
when it gives up less than others to engage in a particular type of production
Why does interdependence bring economic growth?
Interdependence enables specialized production, which is more efficient.
Which of these best characterizes the flow of wealth during the period of colonization?
There was a one-way flow of wealth from the colonies to their colonial masters.
Why do high tariff levels restrict international trade?
Traded goods cost more when there are high tariffs, and this limits their sale.
Which current trend tied to increased globalization has the effect of easier outsourcing?
improved communication
Why does globalization give countries an incentive to reduce wages for their workers?
Lower production costs help lure foreign investment.
Why do central banks play an important role in the global economy?
They set each country’s monetary policies.
Which of these is a gift of money from one government to another?
foreign aid
Which describes the role of the Bank for International Settlements (BIS) in the global economy?
coordinate banking regulations
Why does the IMF impose conditionality on countries that accept its loans?
The IMF wants to help fix the economies of countries that need its help.
Why does the IMF impose conditions on its loans?
help manage the economies of struggling countries
How does the WTO help stabilize the global economy?
assuring that producers will have open access to necessary resources
Which describes the goal of World Bank loans?
eliminate poverty
Why has globalization led to an increasing income gap between rich and poor countries?
Countries with well-established infrastructure and productive capacities have more competitive industries.
Which is not an issue caused by globalization?
higher prices
Why do developing countries not usually benefit from free-trade policies?
Their industries are too weak to compete in the international market.
Why has globalization contributed to the rise of international terrorism?
Globalization can bring about dislocation and inequality.
Why don’t companies doing business in countries with repressive governments object to the human rights abuses?
Companies taking advantage of low labor costs don’t make trouble for repressive governments.
Why is globalization potentially damaging to the environment?
Protecting the environment increases production costs and reduces competitiveness.
Which is an example of offshoring?
A U.S. car company begins making certain car parts in Bangladesh.
Which of these would cause job loss in the United States?
inexpensive imported televisions
What has been the main benefit of globalization for the United States?
economic growth
Which is a negative impact of globalization?
a greater gap between rich and poor countries
