Econ Unit 6 Review
Why does the IMF impose conditionality on countries that accept its loans
The IMF wants to help fix the economies of countries that need its help.
How does the WTO promote global free trade
creating multilateral trade agreements
Why do the actions of central banks have an important effect on the global economy
Control of the money supply determines how much money is available for international trade.
Which conditions would allow Country X to have an absolute advantage over Country Y in the production of automobiles
Country X can manufacture cars more cheaply.
What is the primary reason that globalization leads to greater global pollution
Environmental protection is expensive, and reduces a company's competitiveness in the global market.
Which of these can a country have when there is an international division of labor
specialized production
Which describes the goal of World Bank loans
support development in poor nations
Which gives a country a comparative advantage
when it gives up less than others to engage in a particular type of production
Which is an example of offshoring
A U.S. car company begins making certain car parts in Bangladesh.
Why has globalization led to an increasing income gap between rich and poor countries
Countries with well-established infrastructure and productive capacities have more competitive industries.
Under which circumstance would Country X have a comparative advantage in the production of cotton
Country X didn't have to give up a more profitable form of production in order to grow cotton.
Why does the IMF require countries that accept its loans to follow its policy recommendations
The IMF wants to help struggling countries better manage their economies.
What is the main purpose of foreign aid
alleviate poverty and underdevelopment
What is the main goal of the WTO
assure that international trade flows smoothly and freely
How does the WTO help stabilize the global economy
assuring that producers will have open access to necessary resources
What has been the main benefit of globalization for the United States
economic growth
Which is an example of outsourcing
A U.S. computer company buys its memory chips from a company in Taiwan.
Which is an example of outsourcing
A phone service provider from the United States opens a customer assistance center in India.
Why don't companies doing business in countries with repressive governments object to the human rights abuses
Companies taking advantage of low labor costs don't make trouble for repressive governments.
Why does globalization lead to a reduction in prices for goods and services
Competition for jobs drives down wages, which helps companies lower their prices.
Why does globalization lead to increasing environmental damage
Environmental-protection regulations increase compliance costs, and decrease economic competitiveness.
Why does reducing trade barriers promote increased international trade
Free trade leads to lower prices and greater sales.
Why has globalization contributed to the rise of international terrorism
Globalization can bring about dislocation and inequality.
Why do developing countries not usually benefit from free-trade policies
Their industries are too weak to compete in the international market.
Which is a negative impact of globalization
a greater gap between rich and poor countries
What must exist before a country can specialize its production
an international division of labor
Which describes the role of the Bank for International Settlements (BIS) in the global economy
coordinate banking regulations
Which kind of country tends to lose manufacturing jobs as a result of globalization
developed countries
Which current trend tied to increased globalization has the effect of easier outsourcing
improved communication
Which of these is a problem that globalization poses for the U.S. government
increased security concerns
Which current trend tied to increased globalization has the effect of cheaper transportation
infrastructure development
Which describes the goal of international foreign aid
provide emergency relief
Which describes the role of the International Monetary Fund (IMF) in the global economy
provide short-term emergency loans
Which of these would cause job loss in the United States
inexpensive imported televisions
Which circumstances would allow Country A to have an absolute advantage over Country B in the production of computers
Companies in Country A can produce computers at a lower cost.
How has globalization helped work against human rights violations around the world
Improved global communications brings these abuses to the world's attention.
Why does globalization lead to a reduction in wages in developed countries
Increased mobility allows producers to move jobs to lower-cost labor markets.
Why does interdependence bring economic growth
Interdependence enables specialized production, which is more efficient.
Why do some countries fear increasing economic interdependence
Interdependence involves a loss of control over the national economy.
Why does the growth of international trade lead to a rising global standard of living
International trade enables specialization, which brings increased efficiency and greater competition.
Why do lower labor costs in other countries lead to job loss in the United States
It enables foreign producers to undersell domestic producers.
Under which circumstance would a country have a comparative advantage in the production of a certain good
It has a lower opportunity cost for production of that good.
Which is a criticism of globalization
It leads to increased damage to the environment.
Which of these is a reason for opposing globalization
It only benefits a handful of the w
Why does the World Bank charge little or no interest on the loans it makes
Its main purpose is to promote development, not make profits.
Which circumstance would give Country X and absolute advantage over Country Y in the production of clothing
Its production costs for clothing were the lowest in the world.
Why has globalization led to some job loss in the United States
Labor costs are lower in other countries.
Why does globalization give countries an incentive to reduce wages for their workers
Lower production costs help lure foreign investment.
Why are the majority of the world's countries left on the margins of globalization
Many countries are too underdeveloped to take advantage of the opportunities presented by increasing international trade.
Why is globalization potentially damaging to the environment
Protecting the environment increases production costs and reduces competitiveness.
Why do protective tariffs lead to reduced international trade
Protective tariffs increase the price of goods and limit the sale of those goods.
How did the colonizers benefit from the colonies they controlled
The colonizers used the resources of their colonies to grow their own economies.
How has globalization contributed to the recent increase in international terrorism
The downsides of globalization affect many people who often feel they have nowhere to turn other than violence.
What was the result of developed countries extracting resources from their colonies
There was a one-way flow of wealth favoring the colonizers.
Which of these best characterizes the flow of wealth during the period of colonization
There was a one-way flow of wealth from the colonies to their colonial masters.
Why do central banks play an important role in the global economy
They control the foreign currency reserves that are used for international trade.
Why do many people object to globalization
They feel that globalization mainly serves the interests of the United States at the expense of poor countries.
Why do many developing countries not benefit from the spread of free trade
They have weak domestic industries.
Why do central banks play an important role in the global economy
They set each country's monetary policies.
Why do many companies do business in countries where human rights are violated
They tend to care more about a safe investment climate than about human rights.
Why do high tariff levels restrict international trade
Traded goods cost more when there are high tariffs, and this limits their sale.
Why hasn't globalization benefited the majority of the world's underdeveloped countries
Underdeveloped countries don't have the productive capacities necessary to take advantage of increasing international trade.
Which describes the goal of World Bank loans
eliminate poverty
Which of these is a gift of money from one government to another
foreign aid
Because most developing countries have weak domestic industries, they do not benefit from what
free-trade policies
Which describes the role of the World Trade Organization (WTO) in the global economy
generate multilateral agreements
What is the main purpose of the loans made by the World Bank
help countries achieve sustainable development
Why does the IMF impose conditions on its loans
help manage the economies of struggling countries
Which is not an issue caused by globalization
higher prices
Which of these allows specialized production in the global economy
the international division of labor
Why is foreign aid given
to help needy countries
Which current trend tied to increased globalization has the effect of providing an incentive for countries to export more goods
trade liberalization
What has been the main drawback of globalization for the United States
wage reductions
Which is a direct result of globalization
wealth inequality in developing countries