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ECO 365 Week 5 Knowledge Check -
1. What problem do economists see with free trade areas such as
NAFTA and the European Union?
- They tend to lead to free trade rather than fair trade.
- They can lead to regional trading blocs then restrict trade.
- They lead to globalization.
- They encourage countries to rely on others rather than being self-sufficient
2. A group of countries that allows free trade among its members and puts up common barriers against all other countries' goods is
- a tariff-free zone
- a most-favored nation agreement
- an autarky
- a free trade association
3. Mexico has a comparative advantage in producing corn
- if its opportunity cost of producing corn is higher than the opportunity cost in other countries
- if its opportunity cost of producing corn is the same as the opportunity cost in other countries
- if its opportunity cost of producing corn is lower than opportunity cost in other countries
- regardless of the opportunity cost in other countries
4. Workers in education, health care, and government sectors have
- seen their incomes fall just like in manufacturing
- been mostly hurt from globalization
- benefited from globalization in terms of lower consumer prices
- been hurt because the sector has been shrinking
5. In the United States globalization has
- played a significant role in growing income disparity because some sectors have benefited and others have not
- played little role in growing income disparity because all Americans are consumers who have enjoyed lower prices
- played a significant role in growing income disparity because foreign workers' incomes have risen
- played little role in growing income disparity because while some jobs were lost, the gain in jobs balanced out those that were lost
6. Most economists
- oppose free trade
- favor free trade
- have no opinion on free trade
- Would prefer to have no trade with other nations
7. World trade declined in the 1930s. Which of the following is the best explanation of that decline?
- World income shrank and trade restrictions increased.
- World income shrank, but there were few changes in trade
- Trade restrictions increased, but there was little change in world income
- The incomes of most nations increased, allowing them to become more self-sufficient.
8. As a country develops economically, what changes usually take place in the goods it exports?
- There is little change because comparative advantage does not change.
- Raw materials and agricultural products decline in importance and are replaced by services and manufactured goods.
- Services and manufactured goods decline in importance and are replaced by raw materials and agricultural products.
- Exports go from being diversified to being specialized in whatever the country finds to be its comparative advantage.
9. When a U.S. company establishes a call center in India that answers its customer service calls, the United States is
- outsourcing, a form of importing services
- outsourcing, a form of exporting services
- in sourcing, a form of importing services
- in sources, a form of exporting services