Question 1: Which of the following is an example of trade diversion?

a. Apparel firms move from lowest-cost producers in the Caribbean to Mexico because Mexico has zero tariffs with the United States.

b. U.S. firms begin producing labor-intensive products in Mexico.

c. Mexico begins importing higher technology capital equipment from the United States to increase its manufacturing productivity.

d. Canada produces lower-cost timber than the United States, so U.S. imports of timber rise.

e. All of the above are examples of trade diversion.

Question 2: Which of the following is FALSE?

a. In 2002, the United States imported more goods and services from foreign suppliers than it exported to foreign purchasers.
b. Services are almost one-third of total exports and are a growing part of U.S. and world trade.
c. The U.S. trade balance in services is in deficit.
d. With the exception of the Gulf War period in 1991, the U.S. current account has been in deficit since the 1980s.

Question 3: A lender of last resort

a. makes loans when no one else will.
b. makes loans without regard for risk.
c. is a firm that is forced to make loans for its own survival.
d. Both A and B.
e. None of the above.

Question 4: Before the creation of the European Economic Community, there was the

a. European Economic Union.
b. European Coal and Steel Community.
c. European Union.
d. European Free Trade Area.
e. Single European Community.

Question 5: Which of the following is FALSE?

a. The economies of Mexico and Canada depend more on trade that the U.S. economy does.
b. The NAFTA market is over 439 million people and $16 trillion in GDP.
c. Canadian and Mexican trade is highly concentrated with the United States.
d. U.S. trade with Mexico and Canada was unlikely to grow without NAFTA.
e. The NAFTA market is relatively rich compared to the rest of the world in terms of GDP per capita.

Question 6: Twenty-four years before CUSTA, another agreement between the same countries covered trade in

a. textiles.
b. steel.
c. autos.
d. agriculture.
e. telecommunications.

Question 7: For China

a. there was a long period of success with the economic results of communism so it was hard to change policies.
b. reform of its economic system was rapid, with a quick dismantling of most of the controls exercised by the state and party over the economic system, but not the political system.
c. economic reforms were intended to create more wealth to distribute, not do undo the communist party.
d. there are no longer state owned enterprises.

Question 8: China's initial economic reforms were in which sector?

a. Manufacturing
b. Infrastructure
c. Agriculture
d. Mining

Question 9: Suppose the dollar is subject to a floating exchange rate system and thatR is the number of dollars per unit of foreign exchange. If R increases, then the dollar

a. depreciates.
b. appreciates.
c. is devalued.
d. is revalued.
e. Both A and C.

Question 10: Economic growth would be illustrated by

a. a rightward shift of aggregate demand.
b. a leftward shift of aggregate demand.
c. a rightward shift of aggregate supply.
d. a leftward shift of aggregate supply

Question 11: Which of the following is FALSE about increased U.S. enforcement efforts on the U.S/Mexican border?

a. The increase of enforcement personnel stationed at the border has been very effective in averting migration.
b. Illegal migration has moved toward more inhospitable areas on the border.
c. Thousand of migrants are estimated to have died since the increased enforcement efforts began.
d. Migrants are staying in the United States longer on average than they were before the enforcement efforts.

Question 12: Along the aggregate supply curve

a. the horizontal part represents a situation where the economy is operating above full employment levels.
b. inflation would be a primary concern along the horizontal part of the aggregate supply curve.
c. idle resources, such as labor and capital, would be a feature of the vertical section of the aggregate supply curve.
d. the horizontal section of the aggregate supply curve represents the limit of production.
e. the middle, upward-sloping part of the aggregate supply curve would be associated with a growing economy that experienced increased prices from resources that are becoming relatively scarce.