Globalization and trade

Technological changes in telecommunications have:

a.reduced the importance of services in the world economy.
b. allowed increased foreign trade in many services.
c. reduced the need for foreign trade in many services.
d. profoundly affected trade in manufactured goods with little effect on trade in services.

Question 2

Infant industry protection can be justified in theory by:
Answer
a.both the "learning by doing" argument and the existence of economies of scale.
b. the "learning by doing" argument but not by the existence of economies of scale.
c. the existence of economies of scale but not by the "learning by doing" argument.
d. neither the "learning by doing" argument nor the existence of economies of scale.

Question 3
A widget has an opportunity cost of 4 wadgets in Saudi Arabia and 2 wadgets in the United States. Given these opportunity costs, you would suggest that:
Answer
a.Saudi Arabia specialize in widgets and the United States in wadgets.
b.no trade should take place.
c. Saudi Arabia specialize in wadgets and the United States in widgets. d. both countries produce an equal amount of each.

Question 4....(See Attachment)
Refer to the table.

Which of the following statements is true?
Answer
a.Gains from trade are possible for both countries.
b. Only Kiribati will benefit from trade with Tuvalu.
c. Only Tuvalu will benefit from trade with Kiribati.
d. No gains from trade are possible for either Kiribati or Tuvalu.

Question 5
If a country has a trade deficit, it is definitely:
Answer
a.buying more than it is producing.
b.borrowing from foreigners.
c.selling financial assets.
d.selling real assets.

Question 6
There are ten sources of U.S. comparative advantage. Which of the following is NOT one of them?

a.Relatively open immigration laws
b. Religious diversity
c. Skills of the U.S. labor force
d.A large stock of intellectual property rights

Question 7

Free trade associations tends to:

a. reduce restrictions on trade and thereby always expand free trade.
b. lower trade barriers for all countries.
c.replace multinational negotiations, and thereby always hurt free trade.
d.expand, but can also reduce free trade.

Question 8
An import quota does which of the following?
Answer
a. Decreases the price of the imported good to the consumer.
b. Increases the price of the domestic good to the consumer.
c. Redistributes income from domestic producers to domestic consumers.
d. Decreases the price received by the foreign producer.

Question 9

All of the following are arguments in support of protectionist legislation except:
Answer
a. supporting infant industries.
b.preserving domestic employment.
c. increasing global trade.
d. promoting national security.

Question 10

In the early 2000s the WTO authorized several countries to impose about $150 million in trade sanctions against the United States in retaliation for a U.S. import law that the WTO ruled to be illegal. The WTO that issued this ruling against the United States is known as
Answer
a. Wage Tariff Objective
b. World Trade Organization
c. Wealth Technology Order
d. Welfare Tax Order

Question 11

One of the basic economic laws is 'the law of one price.' It says that given certain assumptions one would expect that if the free trade is allowed, the price of goods in countries should converge. a. Can you list what three of those assumptions likely are? b. Should the law of one price hold for labor also? Why or why not? c. Should it hold for capital more or less so than for labor? Why?

Question 12

See Attachment

Question 13

What are three reasons why economists' and laypeople's view of trade differ?