apex economics the global game board – Flashcards
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Companies in Country A can produce computers at a lower cost.
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Country A would have an absolute advantage over Country B in the production of computers under what circumstance?
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Its production costs for clothing were the lowest in the world
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Country X would enjoy an absolute advantage in the production of clothing under what circumstance?
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When it gives up less than others to engage in a particular type of production
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What gives a country a comparative advantage?
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It has a lower opportunity cost for production of that good.
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Under what circumstance would a country have a comparative advantage in the production of a certain good?
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Country X didn't have to give up a more profitable form of production in order to grow cotton.
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Country X would have a comparative advantage in the production of cotton under what circumstance?
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Interdependence enables specialized production, which is more efficient.
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Why does interdependence bring economic growth?
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Interdependence involves a loss of control over the national economy.
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Why do some countries fear increasing economic interdependence?
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International trade enables specialization, which brings increased efficiency and greater competition.
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Why does the growth of international trade lead to a rising global standard of living?
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There was a one-way flow of wealth from the colonies to their colonial masters.
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Which of these best characterizes the flow of wealth during the period of colonization?
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There was a one-way flow of wealth favoring the colonizers.
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What was the result of developed countries extracting resources from their colonies?
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The colonizers used the resources of their colonies to grow their own economies.
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How did the colonizers benefit from the colonies they controlled?
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Traded goods cost more when there are high tariffs, and this limits their sale.
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Why do high tariff levels restrict international trade?
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Protective tariffs increase the price of goods and limit the sale of those goods.
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Why do protective tariffs lead to reduced international trade?
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Free trade leads to lower prices and greater sales.
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Why does reducing trade barriers promote increased international trade?
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Improved communication: Easier outsourcing; Trade liberalization: Increased trade; Infrastructure development: Cheaper transportation; Industrialization: Greater productivity.
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Match each current trend in the global economy with one of its economic effects
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Improved communication: Makes it easier for International businesses to operate efficiently; Trade liberalization: Provides an incentive for countries to export more goods; Infrastructure development: Facilitates less expensive international trade; Industrialization: Increases productivity and lowers prices.
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Match each current trend with one of its economic effects.
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Improved communication: Facilitates international trade; Free-trade policies: Increases the mobility of goods and labor; Development of infrastructure: Reduces distribution costs; Industrialization: Helps developing countries.
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Match each current trend in the global economy with the benefit it provides.
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Lower production costs help lure foreign investment.
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Why does globalization give countries an incentive to reduce wages for their workers?
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Increased mobility allows producers to move jobs to lower-cost labor markets.
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Why does globalization lead to a reduction in wages in developed countries?
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Competition for jobs drives down wages, which helps companies lower their prices.
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Why does globalization lead to a reduction in prices for goods and services?
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They set each country's monetary policies.
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Why do central banks play an important role in the global economy?
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Control of the money supply determines how much money is available for international trade.
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Why do the actions of central banks have an important effect on the global economy?
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They control the foreign currency reserves that are used for international trade
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Why do central banks play an important role in the global economy?
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Foreign aid
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Which of these is a gift of money from one government to another?
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In order to help needy countries
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Why is foreign aid given?
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Alleviate poverty and underdevelopment
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What is the main purpose of foreign aid?
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Bank for International Settlements (BIS): Create financial stability; International Monetary Fund (IMF): Prevent economic crises; World Bank: Reduce poverty; World Trade Organization (WTO): Promote free
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Match each international organization with its purpose.
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Bank for International Settlements (BIS): Coordinate banking regulations; International Monetary Fund (IMF): Provide short-term emergency loans; World Bank: Provide long-term development loans; World Trade Organization (WTO): Generate multilateral trade agreements.
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Match each international organization with one of its functions.
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Bank for International Settlements (BIS): Provide a forum for coordinating banking regulations; International Monetary Fund (IMF): Make economic policy recommendations; World Bank: Promote sustainable development; World Trade Organization (WTO): Mediate and resolve trade disputes.
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Match each international organization with one of its purposes.
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The IMF wants to help fix the economies of countries that need its help
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Why does the IMF impose conditionality on countries that accept its loans?
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The IMF wants to help struggling countries better manage their economies.
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Why does the IMF require countries that accept its loans to follow its policy recommendations?
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To help manage the economies of struggling countries
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Why does the IMF impose conditions on its loans?
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To help countries achieve sustainable development
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What is the main purpose of the loans made by the World Bank?
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Its main purpose is to promote development, not make profits.
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Why does the World Bank charge little or no interest on the loans it makes?
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An improved climate for foreign investment
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What does the World Bank hope will result from the loans it makes to developing countries?
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By assuring that producers will have open access to necessary resources
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How does the WTO help stabilize the global economy?
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By creating multilateral trade agreements
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How does the WTO promote global free trade?
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To assure that international trade flows smoothly and freely
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What is the main goal of the WTO?
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World Bank loans: Eliminate poverty; Foreign aid: Provide emergency relief; Trade embargo: Punish an offending government; Outsourcing: Reduce production costs.
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Match each economic activity with one of its purposes.
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IMF loans: Stabilize the global economy; Foreign aid: Help needy governments; Boycott: Influence economic decisions; Offshoring: Reduce production costs.
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Match each economic activity with its main purpose.
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WTO agreements: Promote free trade; Boycott: Punish unfair practices; Offshoring: Reduce production costs; Foreign aid: Help needy governments.
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Match each economic activity with its main purpose.
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Countries with well-established infrastructure and productive capacities have more competitive industries.
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Why has globalization led to an increasing income gap between rich and poor countries?
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Many countries are too underdeveloped to take advantage of the opportunities presented by increasing international trade.
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Why are the majority of the world's countries left on the margins of globalization?
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Underdeveloped countries don't have the productive capacities necessary to take advantage of increasing international trade.
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Why hasn't globalization benefited the majority of the world's underdeveloped countries?
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Developed: High level of productive capacity; Developing: Low standard of living; Underdeveloped: Little infrastructure or industry; New globalizer: Rapid economic growth
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Match each type of country with one of its central features
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Developed: High level of productive capacity; Developing: Low standard of living; Underdeveloped: Little infrastructure or industry; New globalizer: Rapidly increasing levels of exports.
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Match each type of country with one of its central features.
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Developed: High level of productive capacity; Developing: Low standard of living; Underdeveloped: Low levels of industrial capacity; New globalizer: High levels of foreign investment.
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Match each type of country with one of its central features.
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Their industries are too weak to compete in the international market.
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Why don't developing countries usually benefit from free-trade policies?
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They have weak domestic industries
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Why don't many developing countries benefit from the spread of free trade?
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Free-trade policies
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Because most developing countries have weak domestic industries, they do not benefit from what?
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Globalization can bring about dislocation and inequality.
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Why has globalization contributed to the rise of international terrorism?
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The downsides of globalization affect many people who often feel they have nowhere to turn other than violence.
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How has globalization contributed to the recent increase in international terrorism?
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They feel that globalization mainly serves the interests of the United States at the expense of poor countries
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Why do many people object to globalization?
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Companies taking advantage of low labor costs don't make trouble for repressive governments.
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Why don't companies doing business in countries with repressive governments object to the human rights abuses?
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They tend to care more about a safe investment climate than about human rights.
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Why don't companies that do business in countries where human rights are violated tend to fight against these abuses?
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Improved global communications brings these abuses to the world's attention.
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How has globalization helped work against human rights violations around the world?
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Protecting the environment increases production costs and reduces competitiveness.
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Why is globalization potentially damaging to the environment?
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Environmental protection is expensive, and reduces a company's competitiveness in the global market.
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What is the primary reason that globalization leads to greater global pollution?
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Environmental-protection regulations increase compliance costs and decrease economic competitiveness.
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Why does globalization lead to increasing environmental damage?
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Offshoring: A U.S. car company begins making certain car parts in Bangladesh; Boycott: Consumers refuse to buy goods from companies that use child labor; Trade sanctions: Japan imposes a 100% tariff on cars coming from Europe and the United States; Conditionality: The IMF requires a loan recipient to privatize its oil industry.
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Match each practice with an example of its use
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Outsourcing: A U.S. computer company buys its memory chips from a company in Taiwan; Boycott: A group of consumers refuses to buy clothing made in Indonesian sweatshops; Conditionality: The IMF asks a government to cut its taxes before receiving an emergency loan.
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Match each global business practice with an example of its use.
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Embargo: The United States forbids its citizens from doing business with a government that has ties to terrorist groups; Insourcing: A South Korean car company opens a factory in the United States; Conditionality: The IMF requires a government receiving a loan to balance its budget
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Match each global business practice with an example of its use.
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Inexpensive imported televisions
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Which of these would cause job loss in the United States?
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Labor costs are lower in other countries.
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Why has globalization led to some job loss in the United States?
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It enables foreign producers to undersell domestic producers.
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Why do lower labor costs in other countries lead to job loss in the United States?
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Economic growth
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What has been the main benefit of globalization for the United States?
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Wage reductions
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What has been the main drawback of globalization for the United States?
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Increased security concerns
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Which of these is a problem that globalization poses for the U.S. government?
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Higher prices for consumers
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All of the following have been negative effects of globalization except what?
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It leads to increased damage to the environment.
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What is one reason why some people are critical of globalization?
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It only benefits a handful of the world's countries
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Which of these is a reason why many don't support globalization?
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