question

Which of the following cannot be done by the government in a command economy? A. Deciding what goods consumers buy. B. Assigning production goals to producers. C. Allocating resources for maximum production. D. Setting wages for workers.

answer

A. Deciding what goods consumers buy

question

Which of the following must be a feature of an activity for it to be a game? A. Winners and losers B. A system of points C. A set of rules D. A playing field

answer

C. A set of rules

question

A capitalist country has which of the following economic systems? A. Command B. Free-market C. Planned D. Socialist

answer

B. Free-market

question

Which of the following is not a goal pursued in the game of economics? A. Equity B. Freedom C. Inflation D. Efficiency

answer

C. Inflation

question

Which of the following best explains why players in the game of economics are often in conflict with each other? A. Producers needs consumers more than consumers need producers. B. Efficient outcomes require free choices. C. Some economic goals are incompatible with each other. D. Supply and demand are usually not balanced.

answer

C. Some economic goals are incompatible with each other.

question

Economics is about allocating resources for doing which of the following processes involving goods and services? A. Consumption and destruction B. Innovation and efficiency C. Production and distribution D. Expansion and stagnation

answer

C. Production and Distribution

question

Because the choices of consumers influence producers and the choices of producers also influence consumers, the free-market system has which of the following? A. Only two kinds of players B. A tendency toward equality C. A circular flow of influences D. A built-in process of growth

answer

C. A circular flow of Influences

question

Which of the following describes an efficient outcome? A. A company sets up retirement program for its employees. B. Consumers are given the widest range of choice possible. C. A government program allocates food to the needy. D. A car is designed to waste as little fuel as possible.

answer

D. A car is designed to waste as little fuel as possible

question

Which of the following best explains why the game of economics cannot eliminate scarcity? A. The population of the Earth has grown too large to be sustained by the available natural resources. B. Technology has not advanced far enough to create fully efficient systems of production and distribution. C. Human intellectual capacities are too limited to allow them to make rational allocation decisions. D. No matter how much supply is produced, people's demands will always increase to exceed supply.

answer

D. No matter how much supply is produced, people's demands will always increase to exceed supply.

question

Which of the following best explains why the government makes and enforces laws in a free-market system? A. Laws against theft, fraud, and coercion are needed to protect free choice. B. The government needs to plan efficient outcomes. C. Workers pressure the government to guarantee minimum wages. D. Competition among producers by itself cannot ensure a wide range of consumer choices.

answer

A. Laws against theft, fraud, and coercion are needed to protect free choice.

question

Which of the following is an example of a distribution decision? A. A textile factory decides to use electric sewing machines. B. A pipeline is set up to get oil from wells to refineries. C. Diamonds are set aside to use for industrial drills. D. A telephone factory is converted to make computers.

answer

B. A pipeline is set up to get oil from wells to refineries.

question

Which of the following describes the effect of the purchases that consumers make? A. Provide jobs for distributors. B. Increase producers' costs. C. Are not taxed in a free-market system. D. Indicate their desires to producers.

answer

D. Indicate their desires to producers.

question

In the game of economics, workers are the players who function as both producers and _________.

answer

Consumers

question

A budget is used to do which of the following? A. Keep track of rising and falling prices. B. Plan income and expenses. C. Eliminate opportunity costs. D. Help get a better loan.

answer

B. Plan income and expenses.

question

Which of the following is a technique advertisers employ to increase consumer demand for their goods and services? A. Making sure that there are only benefits. B. Selling goods for less than they cost to produce. C. Turning luxuries into necessities. D. Branding a product based on a negative news story.

answer

C. Turning luxuries into necessities.

question

Which of the following is the market structure of the media industry? A. Monopoly. B. Monopolistic competition. C. Oligopoly. D. Pure competition.

answer

C. Oligopoly.

question

Subtracting costs from revenue calculates ______________.

answer

Profit

question

Which of the following statements best explains why producers conduct market research? A. Producers want to know what other producers are doing so they can copy efficient production methods. B. Producers are strongly motivated to keep costs low so that their revenues are higher. C. Producers are concerned about respecting the cultural values of a diverse group of consumers. D. Producers need to know what consumers want so they can sell more and make more profit.

answer

D. Producers need to know what consumers want so they can sell more and make more profit.

question

Which of the following is measured by utility? A. The difference between revenue and costs. B. The satisfaction a person gets from consumption. C. The most efficient way of organizing production. D. The cost of adding a single unit of something.

answer

B. The satisfaction a person gets from consumption.

question

Media companies make all of their revenue using which of the following methods? A. Buying low and selling high. B. Recycling old programming. C. Selling ads and subscriptions. D. Making capital investments.

answer

C. Selling ads and subscriptions.

question

Which of the following is an example of a successful effort at branding? A. Zappos has grown from a tiny company to a large company very quickly. B. E-commerce is growing faster than any other form of business. C. The word "google" has been added to the dictionary. D. Amazon has expanded from selling books to selling many different products.

answer

C. The word "google" has been added to the dictionary.

question

Which of the following best states one effect of advertising? A. Media revenues exceed costs. B. Stockholders have a high level of utility. C. Market research becomes more accurate. D. Consumer behavior is influenced.

answer

D. Consumer behavior is influenced.

question

A business owned by stockholders is known as a _______________.

answer

Corporation

question

Which group of players provide all goods and services in the game of economics? A. Media. B. Producers. C. Consumers. D. Researchers.

answer

B. Producers

question

The purpose of the news media is to do which of the following? A. Entertain people. B. Warn about dangers. C. Enable advertising. D. Provide information.

answer

D. Provide Information

question

Which of the following is one important difference between a general partnership and a limited partnership? A. A limited partnership makes a single partner fully responsible for all of the business's debts. B. Every partner in a general partnership is fully responsible for the business's debts. C. A limited partnership allows some business decisions to be made individually. D. The partners in a limited partnership may only own a small percentage of the company's stock.

answer

B. Every partner in a general partnership is fully responsible for the business's debts.

question

Which of the following is an advantage the owners of a sole proprietorship enjoy over the owners of a corporation? A. Sole proprietors don't have to pay any taxes on their profits. B. Sole proprietors are supported by stockholders and a board of directors. C. Sole proprietors have an easier time raising money to start or expand their business. D. Sole proprietors get to make all of the business decisions themselves.

answer

D. Sole proprietors get to make all of the business decisions themselves.

question

Google's business model is the most similar to that used by companies in which industry? A. Shipping. B. Retail. C. Media. D. Manufacturing.

answer

C. Media

question

Which of the following is an essential part of making a rational choice? A. Calculating monetary values. B. Conducting a cost-benefit analysis. C. Balancing financial and non-financial goals. D. Evening out utilities.

answer

B. Conducting a cost-benefit analysis.

question

Which of the following statements best explains why some people are more committed to saving for retirement than other people? A. Many people move from one job to another many times before retiring. B. Different people look at future risks differently. C. Not everyone will need money in order to survive during retirement. D. Some people don't think they'll need to retire.

answer

B. Different people look at future risks differently

question

In a free-market system, the profit motive motivates producers to do which of the following? A. Establish monopolistic competition. B. Specialize in providing a single good or service. C. Produce as many different goods and services as they can. D. Minimize costs and maximize revenues.

answer

D. Minimize costs and maximize revenues.

question

A calculation of the amount that the average person can afford to buy is a way of measuring which of the following? A. Unemployment B. The inflation rate C. Standard of living D. National income

answer

C. Standard of living

question

Which of the following leads to the end of a boom period in the business cycle? A. A rise in interest rates. B. A rise in prices resulting from higher production costs. C. A reduction in consumer demand resulting from inflation. D. A natural disaster resulting in greater demand for housing construction.

answer

C. A reduction in consumer demand resulting from inflation.

question

Which of the following limits the freedom of workers in the labor market? A. The existence of industrial robots. B. The inflexibility of the work force. C. The level of the minimum wage. D. The availability of education.

answer

B. The inflexibility of the work force.

question

What is the most direct result of free trade supplying productive resources to areas where they're most needed? A. Enhanced efficiency B. Greater competition C. Lower interest rates D. Increasing specialization

answer

A. Enhanced efficiency

question

Which of the following best states the purpose of an import quota? A. To lower taxes and limit government spending. B. To increase the gross domestic product. C. To reduce competition from foreign producers. D. To prevent a budget deficit.

answer

C. To reduce competition from foreign producers.

question

Which of the following is an example of a fiscal policy? A. Preventing unions from going on strike. B. Increasing the level of the minimum wage. C. Raising taxes in order to cover a budget deficit. D. Restricting the amount of money that banks can lend.

answer

C. Raising taxes in order to cover a budget deficit.

question

Which of the following has led to greater competition among workers looking for jobs? A. Protectionism B. Specialization C. Unionization D. Globalization

answer

D. Globalization

question

Because immigration can result in an increase in the supply of labor, immigration can result in which of the following? A. Severe restrictions on citizenship. B. The passage of minimum-wage laws. C. A general decrease in wages. D. An increase in the bargaining power of unions.

answer

C. A general decrease in wages.

question

Which of the following would lead to an increase in the inflation rate? A. Steadily climbing unemployment. B. An end to protectionist policies. C. Rapidly rising production costs. D. The spread of outsourcing.

answer

C. Rapidly rising production costs.

question

Which of the following best explains why unions give workers more power in contract negotiations? A. Employers can't fire an entire union because of the difficulty of replacing every worker. B. Unions are able to provide workers with the education they need. C. Employers aren't legally allowed to reject a contract from a union. D. Unions can provide a supply of strikebreakers.

answer

A. Employers can't fire an entire union because of the difficulty of replacing every worker.

question

Which of the following best explains why large companies have an advantage over smaller companies? A. Economies of scale make it possible to offer lower prices. B. Decreasing marginal utility enables more efficient production. C. The production possibilities frontier is wider for a larger company. D. Increasing the scale of production leads to a reduction in inputs.

answer

A. Economies of scale make it possible to offer lower prices.

question

What happens when someone orders a second dessert when he or she is already full from the first dessert? A. There's an increase in the economies of scale. B. The production of desserts becomes less efficient. C. There's a decrease in overall demand. D. The second dessert has less utility than the first dessert.

answer

D. The second dessert has less utility than the first dessert.

question

Which of the following accurately describes a situation in which consumers have inelastic demand? A. People don't go to a restaurant because there are no vegetarian-only dishes offered. B. People start using maple syrup because they are making a larger income. C. People cannot quit drinking coffee even though they want to cut down on caffeine intake. D. People give up eating red meat in order to have a healthier heart.

answer

C. People cannot quit drinking coffee even though they want to cut down on caffeine intake.

question

Which of the following accurately describes one way that individual goods differ from public goods? A. All individual goods are normal goods. B. Demand for individual goods is always inelastic. C. Consumer rivalry results in decreasing marginal utility for individual goods. D. People can be excluded from using individual goods if they don't pay.

answer

D. People can be excluded from using individual goods if they don't pay.

question

Which of the following is one of the major factors determining the level of wages? A. The law of supply and demand. B. The law of diminishing marginal return. C. The production possibilities frontier. D. The level of production costs.

answer

A. The law of supply and demand.

question

Which of the following actions can a union take to get an employer to submit to collective bargaining? A. Lobby for government regulation. B. Buy from competitors. C. Increase the labor supply. D. Call a strike.

answer

D. Call a strike.

question

Which of the following is shown by the intersection of the supply curve and the demand curve? A. The equilibrium price of a good or service. B. The amount that supply influences demand. C. The maximum price consumers will pay. D. The cost of production for a commodity.

answer

A. The equilibrium price of a good or service.

question

Goods and services are exchanged without the use of money in a ________ system.

answer

Barter

question

Which of the following most accurately explains why fiat money differs from commodity money? A. Fiat money has value because it enables the barter system to work. B. Fiat money only has value as a medium of exchange. C. Fiat money can also be used as a productive input. D. Fiat money has value because it is a precious metal such as gold.

answer

B. Fiat money only has value as a medium of exchange.

question

Which of the following is the purpose of requiring banks to keep a specific percentage of their deposits on hand in the vault? A. To make sure customers' demands for withdrawals can be met instantly B. To enable the government to calculate the bank's tax burden more easily C. To prevent growth of the money supply from stagnating D. To ensure that banks have enough money to loan to potential customers

answer

A. To make sure customers' demands for withdrawals can be met instantly

question

Which of the following accurately describes how lowering the required reserve ratio increases the money supply? A. When the required reserve ratio is lowered, banks charge lower interest rates that make loans more affordable. B. When the required reserve ratio is lowered, banks make less profit on money loaned out. C. When the required reserve ratio is lowered, banks can loan out more money. D. When the required reserve ratio is lowered, the inflation rate goes up and people spend less money.

answer

C. When the required reserve ratio is lowered, banks can loan out more money.

question

Which of the following explains how Treasury bonds can have an effect on the size of the money supply? A. The government can avoid running a budget deficit and reducing the money supply by issuing Treasury bonds B. The existence of Treasury bonds increases competition among banks to offer low-interest loans C. The use of Treasury bonds to pay for government expenses leads to increased inflation D. The Federal Reserve Bank can buy and sell Treasury bonds to raise or lower bank deposits

answer

D. The Federal Reserve Bank can buy and sell Treasury bonds to raise or lower bank deposits

question

Which of the following describes the most likely effect of the Fed lowering the discount rate on overnight loans? A. An increase in the money supply B. A reduction in the inflation rate C. An increase in unemployment D. A decrease in the money supply

answer

A. An increase in the money supply

question

Which of the following describes someone's expected outcome from investing in the stock market? A. Raising his or her wage level B. Slowing the productive process C. Making profit from savings D. Decreasing the money supply

answer

C. Making profit from savings

question

Just like CDs, bonds reach _____, at which point the amount paid for the bond is returned to the bondholder. A. interest B. maturity C. coupon D. rebate

answer

B. maturity

question

Suppose you buy a CD for $750 that earns 4% APR and is compounded quarterly. The CD matures in 3 years. Assume that if funds are withdrawn before the CD matures, the early withdrawal fee is 3 months' interest. What is the early withdrawal fee on this account? A. $9.25 B. $7.50 C. $13.75 D. $15.00

answer

B. $7.50

question

Sarah has a $2000 bond with a 7% coupon. How much interest will Sarah receive for this bond every 6 months? A. $70.00 B. $75.00 C. $140.00 D. $25.00

answer

A. $70.00

question

Which of the following is not a type of company that a socially responsible investor would support? A. A company that puts profit-maximization above all other considerations B. A company that uses only sustainable natural resources C. A company that attempts to provide fair wages and good working conditions to its employees D. A company that does more to protect the environment than the government requires

answer

A. A company that puts profit-maximization above all other considerations

question

Which of the following accurately explains the difference between the stock market and the currency exchange market? A. Brokers are used in the stock market while person-to-person trading is used in the currency exchange market. B. Equity is bought and sold in the stock market while debt is bought and sold in the currency exchange market. C. Services are traded in the stock market while goods are traded in the currency exchange market. D. Ownership in companies is traded in the stock market while ownership of foreign money is traded in the currency exchange market.

answer

D. Ownership in companies is traded in the stock market while ownership of foreign money is traded in the currency exchange market.

question

A company that wanted to increase its capital through debt financing could trade in which of the following markets? A. Commodity market B. Bond market C. Currency exchange market D. Stock market

answer

B. Bond market

question

Commodity brokers use forward and futures contracts for which of the following reasons? A. The raw, unprocessed nature of commodities means that there is always a third party to any commodity-purchase contract. B. The seasonal nature of many commodities would lead to wide variations in supply and price without these contracts. C. Commodities come from many different countries with very different currency exchange rates. D. The riskiness of commodity production means that many commodity producers go bankrupt before harvest time.

answer

B. The seasonal nature of many commodities would lead to wide variations in supply and price without these contracts.

question

Which of the following is most similar to the act of buying a bond? A. Giving a loan. B. Paying taxes. C. Exchanging currency. D. Buying a share of stock.

answer

A. Giving a loan.

question

Which of the following best describes the exchange of currencies? A. Money from one country is bought using money from another country B. Bonds are purchased with stocks or stocks are purchased with bonds C. One set of goods are bartered for a different set of goods D. Goods or services are exchanged for money from a foreign country

answer

A. Money from one country is bought using money from another country

question

Which of the following accurately explains what an exchange rate of 1:9 between the European euro and Mexican pesos means? A. It takes only one peso to buy nine euros. B. Prices are lower in Europe than in Mexico. C. It takes only one euro to buy nine pesos. D. Goods and services are nine times as expensive in Europe.

answer

C. It takes only one euro to buy nine pesos.

question

Leverage enables currency traders to do which of the following? A. Reduce the risk of losing money B. Force foreign governments to print more money C. Make large currency trades using small amounts of money D. Buy currencies before they are available to the public

answer

C. Make large currency trades using small amounts of money

question

Because investors are often unwilling to buy stock in a company without any financial track record, startup businesses have a difficult time doing which of the following? A. Finding an angel investor B. Securing venture capital C. Going public D. Advertising effectively

answer

C. Going public

question

A business is unlikely to be able to secure a bank loan to fund its operations without which of the following? A. A successful initial public offering B. An exit strategy C. Seed capital D. A stable operating history

answer

D. A stable operating history

question

Which of the following best describes the meaning of "going public"? A. When a company starts offering its products for sale B. When a company is bought out by a government agency C. When a company issues Treasury bonds that can be bought by anyone D. When a company begins selling shares of its stock to the public

answer

D. When a company begins selling shares of its stock to the public

question

Which of the following describes a condition that is LEAST favorable for conducting an IPO(Initial Public Offerring)? A. A recession B. A bear market C. An economic boom D. A bubble

answer

A. A recession

question

When a company goes public, it faces which of the following? A. More government regulation B. Strengthened unions C. Hostile takeovers D. Increased interest rates

answer

A. More government regulation

question

What does the enforcement of antitrust laws do? A. Requires issuing bonds B. Leads to budget surpluses C. Curtails venture capital investment D. Speeds up the flow of capital and wages

answer

D. Speeds up the flow of capital and wages

question

What is the justification of the progressive taxation method? A. The need to reduce demand for harmful and destructive activities B. The fact that poor people get more benefits from government services C. The idea that taxation should be based on the ability-to-pay principle D. The view that merit goods need to be provided by the government

answer

C. The idea that taxation should be based on the ability-to-pay principle

question

Which of these is an example of a land-use law? A. A law against children working in mines B. A regulation against pollution C. A residential zoning ordinance D. A tax on the value of a house

answer

C. A residential zoning ordinance

question

Sort the statements below into the correct order in which the federal budget is prepared. *Congress decides on the details of the budget. *The president signs spending bills into law. *The president gives a proposed budget to Congress.

answer

1. The president gives a proposed budget to Congress. 2. Congress decides on the details of the budget. 3. The president signs spending bills into law.

question

What do banking regulations prohibit? A. Selling government bonds B. Money laundering C. Freezing assets D. Lowering interest rates

answer

B. Money laundering

question

Countries are better able to negotiate free-trade agreements because of the existence of the which of the following? A. Chicago Mercantile Exchange B. Securities and Exchange Commission C. Internal Revenue Service D. World Trade Organization

answer

D. World Trade Organization

question

Taxes differ from tariffs because taxes are what? A. Based on income brackets B. Paid only by non-immigrants C. Used only for subsidies and quotas D. Collected on domestic economic activity

answer

D. Collected on domestic economic activity

question

Politicians approve pork barrel spending for what purpose? A. To subsidize production B. To increase wages C. To win political support D. To restrict international trade

answer

C. To win political support

question

Environmental-protection laws are good for the economy because they do what? A. Create government jobs B. Safeguard resources needed for future production C. Reduce the price of goods and services D. Make businesses more energy efficient

answer

B. Safeguard resources needed for future production

question

Government contractors can be described as which of the following? A. Public sector corporations B. Private sector companies C. Social service agencies D. Anticompetitive monopolies

answer

B. Private sector companies

question

What merit good does the U.S. government pay for through the Medicaid payroll tax? A. Health care B. Infrastructure C. National defense D. Consumer protection

answer

A. Health care

question

One drawback to consumer-protection regulations is that they lead to what? A. A budget deficit B. A recession C. Higher prices D. More taxation

answer

C. Higher prices

question

The government must force people to pay taxes so that it can do what? A. Control the money supply and manage economic growth B. Make and enforce the laws necessary to make the free-market system work properly C. Prevent foreign competitors from destroying essential domestic industries D. Pursue the goals of equity and security

answer

B. Make and enforce the laws necessary to make the free-market system work properly

question

The government might enact a price floor in order to accomplish what? A. Protect producers B. Prevent a budget deficit C. Increase demand D. Reduce the money supply

answer

A. Protect producers

question

Which of these is not necessary for the enforcement of consumer-protection regulations? A. Budget allocations B. Censorship C. Safety testing D. Government agencies

answer

B. Censorship

question

What does predatory pricing involve? A. A large company charging below its production cost in order to eliminate competition B. Several companies making misleading statements about their products C. A government charging tariffs to make foreign products cost more D. A group of companies agreeing on a particular price to charge for their products

answer

A. A large company charging below its production cost in order to eliminate competition

question

Why do government regulations lead to higher prices for consumers? A. The costs of compliance are passed on to the consumer. B. Regulations have a diminishing marginal utility. C. Most regulations result in transfer payments. D. Enforcement of these regulations raises taxes.

answer

A. The costs of compliance are passed on to the consumer.

question

Parental freedom is limited by laws requiring what? A. Uncensored textbooks B. Educational subsidies C. Compulsory education D. Public-school funding

answer

C. Compulsory education

question

Which of these has been a trend in the 20th century? A. Decreased free trade B. The spread of censorship C. Reduced levels of taxations D. Growing levels of government spending

answer

D. Growing levels of government spending

question

A household consists of a married couple, their two-year-old daughter, and their twin six-year-old sons. The couple's children had no income and lived with their parents all of last year. How many exemptions can the couple claim on last year's tax return if they file with the "Married filing jointly" status? A. 5 B. 4 C. 2 D. 3

answer

A. 5

question

Country X would have a comparative advantage in the production of cotton under what circumstance? A. Country X could sell cotton more cheaply in the international marketplace than any other country. B. Country X didn't have to give up a more profitable form of production in order to grow cotton. C. Country X was able to impose a high tariff on cotton imported from other countries. D. Country X had a large domestic textile and apparel industry that could use the cotton.

answer

B. Country X didn't have to give up a more profitable form of production in order to grow cotton.

question

Why has globalization led to an increasing income gap between rich and poor countries? A. Reduced transportation costs have enabled developed countries to extract more natural resources from their colonies. B. The reduced production costs provided by low wages in developing countries enable companies to make larger profits. C. Countries with well-established infrastructure and productive capacities have more competitive industries. D. Laborers from developing countries migrate to developed countries in search of better-paying jobs.

answer

C. Countries with well-established infrastructure and productive capacities have more competitive industries.

question

Why does interdependence bring economic growth? A. Interdependence creates greater protection for domestic producers, which enables them to raise prices. B. Interdependence enables specialized production, which is more efficient. C. Interdependence strengthens governments, allowing great tax revenues. D. Interdependence increases international competition, which leads to lower prices.

answer

B. Interdependence enables specialized production, which is more efficient.

question

Why does globalization lead to a reduction in wages in developed countries? A. Labor unions have moved their operations to developing countries. B. A high volume of international trade reduces the demand for skilled labor. C. Globalization results in lower prices that give workers greater purchasing power. D. Increased mobility allows producers to move jobs to lower-cost labor markets.

answer

D. Increased mobility allows producers to move jobs to lower-cost labor markets.

question

How did the colonizers benefit from the colonies they controlled? A. Workers in the colonizing countries were able to push for higher wages. B. The colonizers used the resources of their colonies to grow their own economies. C. The revenues generated from running colonies helped the colonizers lower their tariffs. D. Luxury goods manufactured in the colonies brought tariff revenues to the colonizers.

answer

B. The colonizers used the resources of their colonies to grow their own economies.

question

Because most developing countries have weak domestic industries, they do not benefit from what? A. IMF advice B. World Bank loans C. Free-trade policies D. Foreign aid

answer

C. Free-trade policies

question

Why do central banks play an important role in the global economy? A. They control the foreign currency reserves that are used for international trade. B. They prevent foreign companies from removing profits from their national economy. C. They have control over the interest rates charged on the debts owed by their governments. D. They charge tariffs on trades that take place in the currency exchange market.

answer

A. They control the foreign currency reserves that are used for international trade.

question

Why does the IMF impose conditionality on countries that accept its loans? A. The IMF wants to help fix the economies of countries that need its help. B. The IMF wants to impose uniform regulations on the international banking system. C. The IMF wants to make sure that the money it loans results in sustainable development. D. The IMF wants to get all countries to accept free-trade policies.

answer

A. The IMF wants to help fix the economies of countries that need its help.

question

Why does the World Bank charge little or no interest on the loans it makes? A. It wants to get countries to accept its loans along with its policy recommendations. B. It gives only short-term emergency loans to very needy countries. C. Its main purpose is to promote development, not make profits. D. Its loans are for such large amounts that no country could afford to pay interest on them.

answer

C. Its main purpose is to promote development, not make profits.

question

How has globalization helped work against human rights violations around the world? A. Violating human rights is too costly to be profitable in the competitive international marketplace. B. Improved global communications brings these abuses to the world's attention. C. Revolutions against abusive governments have made the investment climate insecure. D. Companies have boycotted abusive governments as a punishment for these practices.

answer

B. Improved global communications brings these abuses to the world's attention.

question

Why does reducing trade barriers promote increased international trade? A. The reduction of tariffs raises prices and profits for businesses. B. The loss of subsidies causes businesses to increase profits. C. The free market gives domestic producers an absolute advantage. D. Free trade leads to lower prices and greater sales.

answer

D. Free trade leads to lower prices and greater sales.

question

Why is globalization potentially damaging to the environment? A. Most governments can't afford to enforce environmental-protection regulations. B. Protecting the environment increases production costs and reduces competitiveness. C. Technology has improved to the point where environmental protection is unnecessary. D. Future production relies on safeguarding the earth's limited natural resources.

answer

B. Protecting the environment increases production costs and reduces competitiveness.

question

The existence of an international division of labor among countries enables those countries to have what? A. Protectionist policies B. Social welfare programs C. A gross domestic product D. Specialized production

answer

D. Specialized production

question

What is one reason why some people are critical of globalization? A. It undermines the purchasing power of consumers. B. It gives governments too much control over the global economy. C. It leads to increased damage to the environment. D. It provides only comparative advantage instead of absolute advantage.

answer

C. It leads to increased damage to the environment.

question

How does the WTO promote global free trade? A. By helping developing countries build their infrastructure B. By enforcing strict banking regulations C. By providing loans for sustainable development D. By creating multilateral trade agreements

answer

D. By creating multilateral trade agreements

question

Country X would have an absolute advantage over Country Y in the production of automobiles under what conditions? A. Country X's workers earn higher wages. B. Country Y subsidizes its automobile industry. C. Country Y has a protective tariff on car imports. D. Country X can manufacture cars more cheaply.

answer

D. Country X can manufacture cars more cheaply.

question

Which of these is a gift of money from one government to another? A. No-interest loans B. Trade sanctions C. Foreign aid D. Agricultural subsidies

answer

C. Foreign aid

question

Why do many people object to globalization? A. They understand how much environmental damage can be caused by international competition. B. They want to protect the domestic industries that are vital to their homelands. C. They object because of the reductions in wages brought about by globalization. D. They feel that globalization mainly serves the interests of the United States at the expense of poor countries.

answer

D. They feel that globalization mainly serves the interests of the United States at the expense of poor countries.

question

Why do lower labor costs in other countries lead to job loss in the United States? A. Foreign governments can charge higher tariffs and make more revenues. B. Workers migrate in search of better-paying jobs. C. Foreign producers are able to insource and make higher profits. D. It enables foreign producers to undersell domestic producers.

answer

D. It enables foreign producers to undersell domestic producers.

question

Which of these is a problem that globalization poses for the U.S. government? A. Increased security concerns B. Migration of U.S. workers abroad C. Opposition to its human rights abuses D. Loss of tariff revenues

answer

A. Increased security concerns

question

Globalization

answer

Increasing interconectedness of people and nations through communication, trade, and the exchange of ideas.

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