Economics Micro & Macro (CliffsAP)

Chapter Review Questions

1. What does the word globalizationrefer to?
   A. The increasing amount of tariffs used around the world
   B. The idea of being self-sufficient in production and use of resources
   C. The idea of specialization occurring between nations that are increasingly interdependent
   D. When countries are using gold for trade and exchange
   E. None of the above


2. Which of the following could contribute to the U.S. balance of trade deficit?
   A. China pays interest on its debt to a U.S. bank.
   B. An Egyptian builds a large estate in the United States.
   C. U.S. tourists travel in large numbers to Japan.
   D. Exports to Russia are increased.
   E. Toyota builds a motor plant in Iowa.


3. Which of the following describes a barrier to trade in the form of laws forbidding trade in certain goods?
   A. A tariff
   B. An embargo
   C. A quota
   D. Import taxes
   E. A voluntary trade agreement


4. An increase in U.S. tariffs on foreign produced steel would benefit all of the following except:
   A. Domestic steel producers
   B. U.S. steel workers
   C. Domestic steel users
   D. Domestic iron producers
   E. Related steel-producing firms


5. The following table gives the number of tons of wheat and corn that can be produced in country A and country B
   by using the exact same amount of productive resources:

Wheat Corn

Country A 10 5

Country B 8 2

The theory of comparative advantage suggests that under these conditions, country B would find it beneficial to:

A. Export wheat and import corn

B. Export corn and import wheat

C. Export both wheat and corn

D. Import both corn and wheat

E. Neither import nor export wheat or corn

International Economics