Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.
1. The lowest corporate tax rates are found in
A. the United States, Brazil, India, and France.
B. Brazil, China, Australia, and Japan.
C. Peru, Australia, Italy, and Luxembourg.
D. Switzerland, Ireland, Singapore, and Russia.
2. When the law of one price is applied to interest rates, it suggests that
A. inflation and interest rates don't follow the law of one price.
B. varying interest rates take into account anticipated differences in inflation rates.
C. interest rates don't differ much across national borders.
D. inflation isn't affected by interest rates.
3. Sir Isaac Newton put England on the gold standard when he
A. established a fixed equivalency between gold and the British currency.
B. brought the matter to Queen Anne, who declared that Britain would follow the gold standard.
C. declared, as master of the English mint, that he would sell gold for 1 pound, 1 shilling, and 1 pence under the law of one price.
D. set a market price for gold, the British pound, and the US dollar.
4. An explanation of how a product begins as a country's export and later becomes an import is the theory of
A. international product life cycles.
B. supply and demand.
C. directional trade.
D. unfair retaliation.
5. The most common form of direct government participation in trade is
A. government production of goods.
B. import duties.
C. the subsidy.
D. shipping on national vessels.
6. The Doha Development Agenda is
A. a development rules list.
B. a decision-making approach to development.
C. a WTO conference on trade.
D. an agreement on climate control and greenhouse gases.
7. The three largest markets for American exports of goods in 2010 were
A. Canada, Japan, and the UK.
B. Japan, Mexico, and the UK.
C. Canada, Mexico, and China.
D. Japan, the UK, and China.
8. An import duty that's a fixed percentage of the invoice value of an imported product is called a/an _______ duty.
A. ad valorem
B. compound
C. specific
D. invoice
9. The level of merchandise exports in 2010, worldwide, was
A. $15.2 trillion.
B. $3.7 trillion.
C. $8.5 trillion.
D. $18.9 trillion.
10. The EU began as a common market for
A. the coal and steel industries.
B. the transportation industries.
C. the textile and dairy industries.
D. all imported goods from beyond Europe.
11. The Chinese concept of guanxi is an example of
A. an informal, cognitive institution.
B. taken-for-granted approaches to friendship relations.
C. a favorite cooking method of Chairman Mao.
D. a regulative, formal institution.
12. Economies of scale and the experience curve
A. allow developing countries to remain competitive in foreign trade.
B. explain how international trade in manufactured goods will be linked to gross national income.
C. state that a nation will trade goods that can be produced with the production factor that's most abundant.
D. explain why many companies will engage in international trade.
13.Offshoring is an application of
A. comparative advantage.
B. money market rates.
C. exchange rate theory.
D. differences in taste.
14. The economic cooperation of the EU is most accurately described as a
A. common market.
B. complete economic integration.
C. free trade area.
D. customs union.
15. Foreign reserves are used to
A. support foreign operations that are branches but not subsidiaries.
B. cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter.
C. help foreigners who need additional funds.
D. provide military support to foreign operations—for example, the French legion and UN peacekeepers.
16. If the Japanese yen is strengthening against the US dollar and the Japanese government wanted to boost exports, the central bank of Japan might well
A. sell massive amounts of Japanese yen in the FX markets.
B. buy massive amounts of other hard currencies, such as the British pound sterling and the euro, to deflect the focus on dollars.
C. buy massive amounts of Japanese yen in the FX markets.
D. sell US dollars in large amounts in the currency markets.
17. An evaluation of a country's economic and political risks made by a bank or potential investor is called a/an
A. international credit score.
B. country risk assessment.
C. stability appraisal.
D. benchmark.
18. The primary motivation of tariffs is to
A. encourage foreign consumption.
B. punish countries over political issues.
C. raise government revenue at the cost of importers.
D. raise the price of imports to protect domestic goods.
19. The IBRD is a major institution of the World Bank whose function is to loan to
A. countries whose income levels make them not creditworthy.
B. private individuals in developing nations whose entrepreneurial efforts support development.
C. middle-income and creditworthy poor nations.
D. private-sector development-focused firms.
20.. Countries put limitations on the convertibility of their currencies when they're concerned that
A. there's too much domestic spending.
B. there isn't enough domestic spending.
C. foreigners will take control of their monetary policies.
D. their foreign reserves could be depleted.
1. The lowest corporate tax rates are found in
A. the United States, Brazil, India, and France.
B. Brazil, China, Australia, and Japan.
C. Peru, Australia, Italy, and Luxembourg.
D. Switzerland, Ireland, Singapore, and Russia.
2. When the law of one price is applied to interest rates, it suggests that
A. inflation and interest rates don't follow the law of one price.
B. varying interest rates take into account anticipated differences in inflation rates.
C. interest rates don't differ much across national borders.
D. inflation isn't affected by interest rates.
3. Sir Isaac Newton put England on the gold standard when he
A. established a fixed equivalency between gold and the British currency.
B. brought the matter to Queen Anne, who declared that Britain would follow the gold standard.
C. declared, as master of the English mint, that he would sell gold for 1 pound, 1 shilling, and 1 pence under the law of one price.
D. set a market price for gold, the British pound, and the US dollar.
4. An explanation of how a product begins as a country's export and later becomes an import is the theory of
A. international product life cycles.
B. supply and demand.
C. directional trade.
D. unfair retaliation.
5. The most common form of direct government participation in trade is
A. government production of goods.
B. import duties.
C. the subsidy.
D. shipping on national vessels.
6. The Doha Development Agenda is
A. a development rules list.
B. a decision-making approach to development.
C. a WTO conference on trade.
D. an agreement on climate control and greenhouse gases.
7. The three largest markets for American exports of goods in 2010 were
A. Canada, Japan, and the UK.
B. Japan, Mexico, and the UK.
C. Canada, Mexico, and China.
D. Japan, the UK, and China.
8. An import duty that's a fixed percentage of the invoice value of an imported product is called a/an _______ duty.
A. ad valorem
B. compound
C. specific
D. invoice
9. The level of merchandise exports in 2010, worldwide, was
A. $15.2 trillion.
B. $3.7 trillion.
C. $8.5 trillion.
D. $18.9 trillion.
10. The EU began as a common market for
A. the coal and steel industries.
B. the transportation industries.
C. the textile and dairy industries.
D. all imported goods from beyond Europe.
11. The Chinese concept of guanxi is an example of
A. an informal, cognitive institution.
B. taken-for-granted approaches to friendship relations.
C. a favorite cooking method of Chairman Mao.
D. a regulative, formal institution.
12. Economies of scale and the experience curve
A. allow developing countries to remain competitive in foreign trade.
B. explain how international trade in manufactured goods will be linked to gross national income.
C. state that a nation will trade goods that can be produced with the production factor that's most abundant.
D. explain why many companies will engage in international trade.
13.Offshoring is an application of
A. comparative advantage.
B. money market rates.
C. exchange rate theory.
D. differences in taste.
14. The economic cooperation of the EU is most accurately described as a
A. common market.
B. complete economic integration.
C. free trade area.
D. customs union.
15. Foreign reserves are used to
A. support foreign operations that are branches but not subsidiaries.
B. cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter.
C. help foreigners who need additional funds.
D. provide military support to foreign operations—for example, the French legion and UN peacekeepers.
16. If the Japanese yen is strengthening against the US dollar and the Japanese government wanted to boost exports, the central bank of Japan might well
A. sell massive amounts of Japanese yen in the FX markets.
B. buy massive amounts of other hard currencies, such as the British pound sterling and the euro, to deflect the focus on dollars.
C. buy massive amounts of Japanese yen in the FX markets.
D. sell US dollars in large amounts in the currency markets.
17. An evaluation of a country's economic and political risks made by a bank or potential investor is called a/an
A. international credit score.
B. country risk assessment.
C. stability appraisal.
D. benchmark.
18. The primary motivation of tariffs is to
A. encourage foreign consumption.
B. punish countries over political issues.
C. raise government revenue at the cost of importers.
D. raise the price of imports to protect domestic goods.
19. The IBRD is a major institution of the World Bank whose function is to loan to
A. countries whose income levels make them not creditworthy.
B. private individuals in developing nations whose entrepreneurial efforts support development.
C. middle-income and creditworthy poor nations.
D. private-sector development-focused firms.
20.. Countries put limitations on the convertibility of their currencies when they're concerned that
A. there's too much domestic spending.
B. there isn't enough domestic spending.
C. foreigners will take control of their monetary policies.
D. their foreign reserves could be depleted.
