Macroeconomics 10th Edition Slavin Test Bank Full Chapter PDF

Macroeconomics 10th Edition Slavin
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Chapter 08 - The Export-Import Sector
Chapter 08
The Export-Import Sector
Multiple Choice Questions
1. Until 2004, the largest exporter in the world was?

A. Japan
B. Germany
C. United States
D. China
2. The sum of our imports and exports is equal to about _________% of our GDP.
A. 10
B. 20
C. 25
D. 30
E. 40
3. Statement I: The euro has largely replaced the dollar in international trade.
Statement II: Every European nation except Russia and Yugoslavia are members of the
European Union.
A. Statement I is true and statement II is false.
B. Statement II is true and statement I is false.
C. Both statements are true.
D. Both statements are false.
4. Between 2005 and 2007 our trade averaged ___________ each year.
A. 400 billion
B. –700 billion
C. 250 billion
D. –500 billion
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5. We run a trade ________ on goods and a trade _________ on services.

A. deficit, deficit
B. surplus, surplus
C. surplus, deficit
D. deficit, surplus
6. If U.S. imports of goods and services exceed exports

A. GDP in the United States will be less than the sum of consumption, investment, and
government purchases.
B. GDP in the United States will exceed the sum of consumption, investment and government
purchases.
C. net exports for the United States are positive.
D. None of the choices are true.
7. Net exports is a negative figure whenever

A. a nation's exports of goods and services exceed its imports.
B. a nation's imports of goods and services exceed its exports.
C. inventories dwindle.
D. gross savings is greater than net investment.
8. The NAFTA agreement affects our trade with

A. Asia.
B. North America.
C. Africa.
D. The OPEC nations.
E. The European Common Market.
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9. Statement I: Most economists support the concept of free trade.
Statement II: The NAFTA and GATT agreements placed substantial barriers in the way of
free trade.
10. Our trade balance in merchandise is ________ and our trade balance in services is
_________.
A. positive, positive
B. negative, negative
C. negative, positive
D. positive, negative
11. Which is the most accurate statement?

A. Our trade deficit has narrowed since 1995.
B. We export more merchandise than services (in terms of dollars).
C. The largest service purchase that foreigners make from the U.S. is educational services.
D. In recent years foreigners have generally refused to accept U.S. dollars in payment for their
goods and services.
12. Relative to the trade deficit in 1990 our current is

A. substantially less.
B. slightly less.
C. slightly higher.
D. substantially higher .
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13. Which statement is true?

A. C + I + G + Xn has always been higher than C + I + G.
B. C + I + G has always been higher than C + I + G + Xn.
C. C + I + G has always been equal to C + I + G + Xn.
D. None of these statements are true.
14. The members of NAFTA include

A. only the United States and Mexico.
B. only the United States and Canada.
C. only Mexico and Canada.
D. the United States, Canada, and Mexico.
15. Congress has ratified

A. both NAFTA and GATT.
B. neither NAFTA nor GATT.
C. NAFTA, but not GATT.
D. GATT, but not NAFTA.
16. Net exports is a negative figure when

A. a nation's exports of goods and services exceed its imports
B. depreciation exceeds gross private domestic investment
C. the economy's stock of capital is declining
D. a nation's imports of goods and services exceed its exports
17. Since the formation of NAFTA, our trade deficit with Mexico has gone ___________ and
our trade deficit with Canada has gone ___________.
A. up, up
B. down, down
C. up, down
D. down, up
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18. The basis for international trade is

A. self-sufficiency.
B. specialization.
C. amassing national wealth at the expense of trading partners.
D. maximizing your exports and minimizing your imports.
19. Net exports is a negative number whenever

C. the nation's gross investment is on the decline.
D. the nation's gross savings rate is on the decline.
20. Net exports are

A. the smallest component of GDP.
B. income after taxes.
C. the largest component of GDP.
D. included in government spending.
21. Adam Smith believed that

A. people should never buy anything if they can make it themselves.
B. what makes sense in the conduct of a private family's economic endeavors also makes
sense in those of a nation.
C. trading with other nations promotes full employment.
D. a nation will gain if its citizens trade among themselves, but it will probably lose if it
trades with other nations.

A. Xn has always been positive.
B. Xn has always been negative.
C. Xn had been positive from 1900 until the 1970s.
D. Xn had been negative from 1900 until the 1970s.
E. None of these statements is true.
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23. The population and GDP of the European Union is ___________ that of the United
States.
A. much less than
B. comparable to
C. much greater than
24. Since the end of World War II in 1945, the world has experienced an accelerating
movement toward
A. free trade.
B. an increase in trade barriers.
C. self-sufficiency in most industrial nations.
D. a breakdown of international trade.
25. If yesterday the dollar traded for 100 Japanese yen and today 101 yen for the dollar, we
would say
A. that the dollar rose in value relative to the yen.
B. that the yen fell in value relative to the dollar.
C. both of the choices.
26. The world's largest exporter is

A. The United States.
B. Japan.
C. Germany.
D. the United Kingdom.
E. China.
27. In the treatment of American exports and imports, national income accountants
A. subtract exports, but add imports, in calculating GDP.
B. subtract both exports and imports in calculating GDP.
C. add both exports and imports in calculating GDP.
D. add exports, but subtract imports, in calculating GDP.
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28. Our merchandise balance of trade has been negative since the
A. 1960s
B. 1970s
C. 1980s
D. 1990s
29. The relatively small export-import sector in the United States began to grow significantly
A. after 1900.
B. in the 1920s.
C. in the 1950s.
D. in the 1970s.
E. in the 1980s.
30. Statement I: Until the mid-1970s, our imports and exports was a relatively small
percentage of our domestic goods output.
Statement II: Our negative merchandise trade balance is about as large as our positive services
trade balance.
31. If more foreign tourists visited the United States, this would
A. lower our merchandise trade imbalance.
B. lower our overall trade imbalance.
C. raise our merchandise trade imbalance.
D. raise our overall trade imbalance.
32. In 2007, Mexico signed a trade pact with

A. Japan.
B. China.
C. the European Union.
D. Brazil and Argentina.
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33. Statement I: There are growing reservations about the consequences of globalization, even
among "free traders."
Statement II: Most economists support the concept of free trade.

34. Net exports became negative in the

A. 1930s.
B. 1950s.
C. 1970s.
D. 1990s.
35. Which best describes the American economy?

A. It is a highly specialized economy.
B. There is a small amount of specialization.
C. There is a great deal of self-sufficiency.
D. Half of the economy is highly specialized and the other half is self-sufficient.
36. Which component of GDP is most likely to be negative?

A. Net exports
B. Gross private domestic investment
C. Government purchases
D. Imports
E. Consumption
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37. Statement I: In 2009 the United States had a negative merchandise balance of trade over
$708 billion.
Statement II: In 2009 the United States had a positive services balance of trade over $118
billion.
38. From 1970 to 2000, relative to other sectors of GDP, net exports were
A. negative and large.
B. negative and small.
C. positive and large.
D. positive and small.
39. If total exports exceed total imports, other things being constant, then
A. net exports are negative.
B. net exports are positive.
C. GDP falls.
D. investment rises.
40. Net exports is defined as

A. exports plus imports.
B. exports minus imports.
C. imports minus exports.
D. that portion of consumption and investment goods sent to other countries.
41. The trading bloc that has eliminated all internal tariffs is
A. the European Union.
B. NAFTA.
C. Mercosur.
D. the World Trade Organization.
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42. Which of the following were prominent among the protesters at the WTO meetings since
1999?
A. Labor union members concerned that free trade undermined worker rights to organize.
B. Environmentalists concerned that corporations would locate in countries that had very lax
environmental standards.
C. Human rights advocates concerned that free trade condoned sweatshop working conditions.
D. All of the answers are true.
43. Statement I: The European Monetary Union has fewer members than the European Union.
Statement II: Mexico has become a manufacturing export platform.

44. Mexico sends the United States over ______ percent of its exports.
A. 20
B. 40
C. 60
D. 80
45. Hourly wages in Mexico are ____________ those paid in the United States for
comparable work.
A. equal to
B. one half
C. one quarter
D. one eighth
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46. In 2009, ________ became the world's largest exporter.

A. Germany
B. China
C. Japan
D. Russia
47. Statement I: Canada is our most important trading partner.
Statement II: In 1999, 11 EU countries formed the European Monetary Union.

48. Statement I: Germany is the world's largest exporter.
Statement II: International trade is more important to the Dutch (Netherlands) economy than it
is to the U.S. economy, even though we are the world's largest exporter.
49. Statement I: The International Monetary Fund (IMF) was set up as a lender of last resort
to discourage member nations from devaluating their currency.
Statement II: The World Bank was created in the same year as the IMF for the purpose of
making long-term, low-interest loans to developing countries, mainly to build highways,
bridges, dams, power generators, and water supply systems.
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A. A country like Japan would go to the World Bank to borrow currency to stabilize the yen.
B. The WTO has a Dispute Settlement Body to handle trade disagreements among member
nations.
C. GATT was established at the end of the Great Depression.
D. The IMF was set up to aid developing countries build infrastructure.
51. Statement I: GATT regulates world trade.
Statement II: The basis for international trade is that a nation stands to gain more if it can sell
more to other nations than it buys from them.

A. Since the early 1990s the U.S. trade deficit has risen every year.
B. Net exports has always been positive.
C. The U.S. exports more services than merchandise (in terms of dollars).
D. The U.S. balance of trade was positive for most of the 20th century.
53. Statement I: Adam Smith believed that people should never buy anything if they can make
it themselves.
Statement II: The basis for international trade is that if a nation can import a particular good
or service at a lower cost than if it were produced domestically, it should trade for that good.
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54. Which statement is false?

A. If net exports were not included in GDP, that figure would be higher.
B. Between the early 1990s and 2007 our trade deficit increased substantially.
C. During the last ten years, our trade balance in services was negative.
D. After the 1970s, our trade balance has been negative.
55. The NAFTA agreement

A. was supported by most economists and people in the business community.
B. has NOT led to the loss of millions of U.S. jobs to Mexico.
C. has less economic integration than the European Union.
D. did not eliminate all internal tariffs among its three members.
E. All of the answers are true.
56. Statement I: We pay for a large part of our trade deficit with U.S. dollars.
Statement II: The United States is much more dependent on foreign trade than it was 30 years
ago.

A. Because the American economy is much larger than any other country, we can continue
running larger and larger trade deficits for as long as we like.
B. Most of the protesters at WTO meetings oppose strict environmental standards.
C. Since the passage of NAFTA our trade deficits with Mexico and Canada have increased.
D. Most economists would describe themselves as being against free trade.
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58. Modern, highly productive economies

A. have virtually no specialization.
B. have a small degree of specialization.
C. have a substantial degree of specialization.
D. have a high degree of specialization.
59. Statement I: In modern economies, virtually everyone specializes.
Statement II: A family that tries to be self-sufficient will have a relatively low standard of
living.
60. Two characteristics of a modern economy are

A. barter and self-sufficiency.
B. specialization and exchange.
C. a low standard of living a high poverty rate.
D. self-sufficient workers and very little international trade.
61. Statement I: A society in which everyone is self-sufficient will generally have a higher
standard of living than one in which everyone specializes in a particular type of work.
Statement II: People can specialize only if there is a well-developed system of exchange.
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62. All modern economies

A. depend on self-sufficient workers.
B. depend on workers who have acquired a wide variety of skills ("jacks of all trades").
C. depend on workers with a high degree of specialized skills.
D. depend on workers who can build their own tools.
63. Which was NOT an argument of the protesters against the IMF, WTO, and the World
Bank?
A. We are exploiting factory workers in poor countries.
B. Our subsidized grain exports sold below cost in poor countries, driving local farmers out of
business.
C. Globalization is hurting the American standard of living.
D. Globalization is lowering American wages and exporting high paying jobs.
64. All modern economies depend on

A. the exploitation of workers
B. government ownership of the means of production
C. free-enterprise
D. specialization
65. Statement I: The most potent argument against globalization is that workers in poorer
countries are exploited to produce goods that are shipped to relatively rich countries.
Statement II: Most economists are against globalization.

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66. The main criticism Joseph Stiglitz levels at the IMF is that
A. it provides too many loans that are not repaid.
B. it no longer promotes economic growth, but rather contraction.
C. it does not provide enough loans.
D. it does not sufficiently promote the market system.
67. Statement I: There have been a series of demonstrations, beginning in Seattle in 1999, in
favor of the policies of the WTO and the IMF.
Statement II: Globalization has helped almost everyone and hurt almost no one.
68. According to Nobel Prize winning economist Joseph Stiglitz

A. over the years the IMF has markedly changed.
B. the IMF was founded on the belief that markets often worked badly.
C. the IMF now champions the free market as the best way to run an economy.
D. All of the choices are true.
69. Which statement is TRUE, according to economist Joseph Stiglitz?

A. IMF policies are sensitive to the human suffering its policies could create.
B. The IMF takes a "hands off" approach as to how a country uses the money it is lent.
C. The IMF was founded on the belief that there was a need for international pressure for
countries to have expansionary economic policies.
D. The IMF was founded on the belief that there was a need for international pressure for
countries to cut deficits, raise taxes and interest rates.
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70. A characteristic of a modern economy is

B. specialization and exchange.
C. a high percentage of people who make their living as jacks-of-all-trades.
D. a high proportion of people employed in agriculture.
71. Specialization and exchange

A. creates benefits for both individuals and nations.
B. does NOT particularly benefit either individuals or nations.
C. can benefit individuals but not nations.
D. can benefit nations but not individuals.
72. Statement I: U.S. self-sufficiency in food production and its huge manufacturing base
were important factors in winning World War I and II.
Statement II: The relatively small U.S. export-import sector of its economy began to grow
significantly in the 1970s.
73. Statement I: Until the mid-1970s, U.S. exports and imports were less than 1 percent of our
domestic output.
Statement II: America was called the "arsenal of democracy" because of the vast quantity of
armaments we sent to our allies during World War II.
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74. Statement I: We could not have a modern, highly productive economy without
specialization and trade.
Statement II: In modern economies, virtually everyone is a jack-of-all-trades.


A. that a nation can import a particular good or service at a lower cost than if it were produced
domestically.
B. Specialization.
C. both countries can gain from trade.
D. All of the choices are true.

B. that we stand to gain if we can sell more to other nations than they buy from us.
C. maximizing your exports and minimizing your imports.
77. If U.S. exports of goods and services exceed imports

B. GDP in the United States will exceed the sum of consumption, investment, and
C. net exports for the United States equals gross investment.
D. net exports for the United States equals gross savings.
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78. Net exports is a positive number whenever

C. the nation's gross investment is positive.
D. the nation's gross savings rate is positive.
79. Net exports

A. are the smallest component of GDP.
B. equal exports minus imports.
C. have been negative in the United States since the mid-1970s.
D. All of the choices are true of net exports.
80. Adam Smith believed all of the following EXCEPT

A. never attempt to make at home what it will cost more to make than to buy.
C. a nation will gain if its citizens trade among themselves, but it will probably lose if it trades
with other nations.
D. specialization and exchange benefited both individuals and nations.
81. GDP = C + I + G + Xn. From the outbreak of World War I (1914) until the 1970s, if Xn
were not included our GDP would be
A. higher.
B. about the same.
C. lower.
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82. Statement I: Our trade deficit is higher than it was five years ago.
Statement II: Until the mid-1970s, our imports and exports were each less than 10 percent of
our domestic goods output.
83. Which statement is FALSE about the European Union?

A. So-called "quality codes" between members ended.
B. All 27 nations have given up their own currency and adopted the euro.
C. Freight is able to move anywhere within the EU without check point delays and
paperwork.
D. Workers from an EU country can work in any other member country.

A. Xn in the United States has been negative every year since the mid-1970s.
B. Xn in the United States was generally positive for most years from the 1920s until 1971.
C. Since the mid-1970s, GDP would have been higher without Xn.
D. All of the statements are true.
85. What was the most important advantage to the EU countries that adopted the EURO as
their official currency?
A. Introduction of the euro increased exports to outside countries.
B. Introduction of the euro has eased trade and commerce among the nations that adopted the
euro.
C. Introduction of the euro increased the disposal income of member countries population.
D. The euro immediately replaced the dollar in international trade.
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86. Since the GATT agreement in 1947, the world has experienced
A. virtually no unfair trading practices among nations.
B. the complete elimination of tariffs and other trade barriers among nations.
C. a reduction of trade barriers among nations in the WTO.
D. all of the choices are true.
87. Statement I: The population and GDP of the European Union is greater than that of the
United States.
Statement II: The European Union has NOT attained as high of a degree of economic
integration as NAFTA.
88. Statement I: Since the mid 1970s our balance of trade has been negative.
Statement II: The United States foreign trade sector has more than doubled over the last 30
years.
89. The U.S. negative balance of trade was almost ________ in 2008.
A. $200 billion
B. $400 billion
C. $600 billion
D. $800 billion
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90. Before the ________ the American export-import sector was relatively small.
A. 1920s
B. 1960s
C. 1970s
D. 1990s
91. Statement I: The U.S. trade deficit has gone up with Mexico since the passage of NAFTA,
but we are running a trade surplus with Canada.
Statement II: There is little evidence that the NAFTA agreement has cost American's more
than 200,000 jobs.
92. Which of the following European Union (EU) nations has not adopted the euro?
A. France
B. Great Britain
C. Germany
D. Italy
93. Net exports are positive when

C. a nation's exports of goods exceeds its imports.
D. a nation's exports of services exceeds its imports.
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94. Statement I: The United States has a much more self-sufficient economy than those of
Western Europe.
Statement II: The European Union, as a free trade association, can trace its origins back to the
1950s.

A. The WTO was set up a few years after World War II.
B. GATT negotiations addressed intellectual property rights for the first time in the 1990s.
C. GATT was set up in the 1990s.
D. GATT negotiations have no affect on the trade of agricultural commodities.
96. Statement I: Since the end of World War II in 1945, the world has seen trade barriers fall
significantly.
Statement II: The United States ran a trade surplus in merchandise for most of the 20th
century.
97. Each of the following is a characteristic of the European Union EXCEPT that
A. workers from any EU country could seek work in any other member country.
B. the euro replaced the domestic currencies (eg. francs, marks, lira) in almost half of the
member countries.
C. its population and GDP are much smaller than those of the United States.
D. freight is able to move anywhere within the EU without checkpoint delays and paperwork.
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98. Statement I: College sweatshirts are usually made in sweatshop factories in low-wage
countries.
Statement II: Critics of the IMF argue that it champions market supremacy with ideological
fervor.
99. If total imports exceed total exports, other things being constant, then
A. net exports are negative.
B. net exports are positive.
C. GDP rises.
D. investment rises.
100. Net exports are negative when

A. a nation's imports of goods exceeds its exports.
B. a nation's imports of services exceeds its exports.
C. a nation's exports of goods and services exceeds its imports.
D. a nation's imports of goods and services exceeds its exports.
101. Which of the following were prominent among the protesters at the WTO meeting in
Seattle in late 1999?
A. International bankers that free trade undermined underdeveloped nation's ability to pay
back loans.
B. Environmentalists concerned that corporations would locate in countries that had very lax
environmental standards.
C. Multinational corporations concerned that free trade condoned sweatshop working
conditions.
D. All of the choices were prominent in the Seattle protest.
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102. Statement I: The European Monetary Union has the same number of members as the
European Union.
Statement II: Twelve nations of the European Union have adopted the euro as a common
currency.
103. Statement I: Mexico sends over 80 percent of its exports to the United States.
Statement II: Hourly wages in Mexico are one-eighth of those paid in the United States for
comparable work.
A. Statement I is true and statement II is false
B. Statement II is true and statement I is false
C. Both statements are true
D. Both statements are false
104. Statement I: China and South Korea are the world's largest exporters.
Statement II: International trade is more important to the U.S. economy than it is to smaller
industrial countries such as the Netherlands.
A. Statement I is true and statement II is false
B. Statement II is true and statement I is false
C. Both statements are true
D. Both statements are false
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105. Statement I: The International Monetary Fund (IMF) was set up to promote free trade,
free market style economies around the world.
Statement II: The World Bank was created in 1944 for the purpose of making long-term, low-
interest loans to developing countries, mainly to build highways, bridges, dams, power
generators, and water supply systems.
106. Statement I: The WTO regulates world trade.
Statement II: The basis for international trade is that all nations stand to gain through
specialization and exchange with other nations.

A. Since 2007, the U.S. trade deficit has fallen significantly.
B. Net exports has always been negative.
C. The U.S. exports more services than merchandise (in terms of dollars).
D. The U.S. balance of trade was negative for most of the 20th century.
108. Statement I: Adam Smith believed the key to wealth for a nation was self-sufficiency.
Statement II: Adam Smith believed what made sense in the conduct of a private family's
economic endeavors also made sense for those of a nation.
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109. The establishment of the NAFTA agreement

A. was supported by most economists and people in the business community.
B. has led to the loss of millions of U.S. jobs to Mexico.
C. has more economic integration than the European Union.
D. eliminated all internal tariffs among its three members.

A. Because the American economy is much larger than any other country, we can continue
running larger and larger trade deficits for as long as we like.
B. Included among the protesters at WTO meetings are environmentalists, organized labor,
and human rights advocates.
C. Since the passage of NAFTA our trade deficits with Mexico and Canada have significantly
decreased.
D. Even the protestors at WTO meetings are in favor of globalization.
111. In 2009, Xn was about

A. $700 billion.
B. $400 billion.
C. $100 billion
D. -$200 billion.
E. -$400 billion.
112. Which of the following groups would like to see a rise in the value of the dollar vs. the
euro?
A. Americans planning a European vacation.
B. Exporters of American made tractors and combines.
C. Foreign exchange speculators.
D. Europeans planning an American vacation.
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113. Which of the following working conditions are common at sweatshops?

A. No information about hazardous chemicals workers are using.
B. A lack of guards on sewing and cutting machines.
C. Restricted bathroom break times.
D. Blocked aisles and fire exits.
E. All of the answers are correct.
114. The agreement between the U.S., the Dominican Republic and five small Central
American countries that will eventually eliminate tariffs among all seven nations is called
A. NAFTA.
B. CAFTA.
C. Mercosur.
D. GATT.
115. All of the following are an example of "off-shoring" EXCEPT

A. Accounting work that is sent over the Internet by the Miller Brewing Company in
Milwaukee to Ireland.
B. An X-ray read by an Indian physician sent over the Internet from Durango, Colorado.
C. Briefs for law firms typed by people in China.
D. Wal-Mart hires a local janitorial firm to clean their stores at night.
116. After World World II, the United States produced about ______ percent of the world's
oil, much of which we exported.
A. 40
B. 50
C. 60
D. 70
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117. In 2004, ___________ exceeded the United States in value of exports becoming the
world's largest exporter.
A. China
B. Japan
C. Canada
D. Germany
118. In 2009, ___________ exceeded Germany in value of exports becoming the world's
largest exporter.
A. China
B. Japan
C. Canada
D. Germany
119. The most important economic concept to consider when deciding whether to produce a
product domestically or import the product is
A. law of supply
B. law of demand
C. opportunity cost
D. law of increasing cost
120. The most important economic concept to consider when deciding whether to build your
own deck or hire it done is
A. law of supply
B. specialization
C. opportunity cost
D. law of increasing cost
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121. Between 1990 and 2007 our trade deficit

A. fell substantially.
B. remained about the same.
C. rose about 40 percent.
D. almost doubled.
E. more than quadrupled.
122. Volkswagen's New Beetle is made in

A. Germany.
B. The U.S.
C. Canada.
D. Mexico.
123. Between 2007 and 2009 our trade deficit

A. fell substantially.
B. remained about the same.
C. rose about 40 percent.
D. almost doubled.
E. more than quadrupled.
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Fill in the Blank Questions
124. Because of the ________________________, the United States and Europe are guilty of
selling agricultural products at below cost or dumping the products on the market.
________________________________________
125. We send more of our exports to _________ than any other country.
________________________________________
126. We import more goods and services from ___________ than from any other country.
________________________________________
127. The world's two main free trade areas (or organizations) are ____________ and
_______________.
________________________________________
128. The World Trade Organization has about ________ members.

________________________________________
129. The name of the currency now being used throughout the European Monetary Union is
the _________.
________________________________________
130. The practice of selling a good abroad below cost is known as ____________.
________________________________________
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131. Our most important trading partner is ____________.

________________________________________
132. Adam Smith said to never attempt to make at home what it will cost more to make than
to ___________.
________________________________________
133. The world's leading trading nation is ____________.

________________________________________
134. In deciding whether to build your own deck or hire it done, you should consider the
economic concept of ___________________.
________________________________________
135. When a country is considering the question of whether to produce a product domestically
or import the product, the country should make the decision based on __________________.
________________________________________
136. Since the 17th century, the United States has consistently ran a trade surplus in the export
of ____________ products.
________________________________________
137. If the exchange rate between the euro and the U.S. dollar is 0.85 and you eat a meal in
Paris that cost 40 euros, the meal cost _________ U.S. dollars.
________________________________________
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138. About ______ percent of the workforce in the United States is employed in the service
sector.
________________________________________
139. Between 1993 and 2009, the trade deficit with Mexico has increased by $___________
billion, while the trade deficit with Canada has increased by $_________ billion.
________________________________________
140. Workers in the poor countries of the world where labor intensive products are produced
earn between ________________ per day compared to United States workers earning eight to
twelve dollars per hour.
________________________________________
141. Our trade deficit in 2009 was _______.

________________________________________
142. Recently we have run a _________ balance of trade on goods and a ___________
balance of trade on services.
________________________________________
143. Between 1995 and 2000 our trade deficit more than _______________.
________________________________________
144. The C + I + G curve lies __________ the C + I + G + Xn curve.

________________________________________
8-33
145. If exports exceeded imports it would be called a trade _________.

________________________________________
146. International trade is ________ important to the Netherlands than it is to the United
States.
________________________________________
147. The largest merchandise exporting country is _____________.

________________________________________
148. The free trade zone that includes Argentina, Brazil, Paraguay and Uruguay is known as
______________.
________________________________________
149. The ______________________ which was set up in 1995, was the successor to GATT.
________________________________________
150. Prominent among the protesters at the WTO meeting in Seattle in late 1999 were these
three groups: (1) _________________; (2) __________________; (3)
___________________.
________________________________________
151. The world trade agreement that was drafted in 1947 was known as _____________.
________________________________________
152. There are _____ nations in the European Union.

________________________________________
8-34
153. Exports minus imports equal _____________.

________________________________________
154. The world's leading exporting nation is ______________; the nation with the largest
trade deficit is ______________.
________________________________________
155. Were it not for our trade surplus of ___________ the U.S. balance of trade would be
even larger.
________________________________________
156. The C + I + G + Xn curve lies ____________ the C + I + G curve.

________________________________________
157. If imports exceed exports it would be called a trade _________.

________________________________________
158. The basis for international trade is ______________ and _____________.

________________________________________
159. With regard to dependence on international trade, for most of its history the United
States has been ____________.
________________________________________
160. In the last 30 years, the U.S. has become much more __________ on international trade.
________________________________________
8-35
161. Until the mid-1970s, U.S. imports and exports were a relatively ______ percent of
domestic output.
________________________________________
162. The big increase in the U.S. trade deficit in the mid-1970s was mainly due to
__________.
________________________________________
163. A positive balance of trade is when ________________________________________.

________________________________________
164. A negative balance of trade is when _______________________________________.

________________________________________
165. The 500,000 foreign students in our universities and colleges add to our ______ balance
of trade in _____.
________________________________________
166. In 1970 our imports and exports added together were __________ percent of GDP.
________________________________________
167. The 2009 our imports and exports added together are __________ percent of GDP.
________________________________________
168. The European Common Market was renamed the _____________________.

________________________________________
8-36
169. The NAFTA treaty includes side agreements on _______________, _____________,

and ________________.
________________________________________
170. Hourly wages and fringe benefits average about _______ an hour in Mexico.
________________________________________
171. Of the countries in the European Union, ______ have adopted the euro as its currency.
________________________________________
172. The major country NOT to adopt the euro in the European Union is ______________.
________________________________________
173. The WTO has a ________________ to handle trade disagreements among member
nations.
________________________________________
174. Economist _____________ is the author of Globalization and Its Discontents.

________________________________________
175. Nobel Prize winning economist Joseph Stiglitz has argued that since its inception, the
_______ has changed its philosophy from an organization that believed markets sometimes
behaved badly to an organization that virtually worships free markets.
________________________________________
8-37
176. American and European farmers can sell their crops well below the cost of production
thanks to ____________ given by their respective governments.
________________________________________
177. The most potent argument against globalization is that

___________________________.
________________________________________
Chapter 08 The Export-Import Sector Answer Key
Multiple Choice Questions
1. Until 2004, the largest exporter in the world was?

A. Japan
B. Germany
C. United States
D. China
AACSB: Analytic
Bloom's: Understand
Difficulty: Easy
Learning Objective: 08-03 Summarize post–World War II trends in our imports and exports.
8-38
2. The sum of our imports and exports is equal to about _________% of our GDP.
A. 10
B. 20
C. 25
D. 30
E. 40
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
3. Statement I: The euro has largely replaced the dollar in international trade.
Statement II: Every European nation except Russia and Yugoslavia are members of the
European Union.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
Learning Objective: 08-07 Summarize the world trade agreements and discuss the free trade zones.
4. Between 2005 and 2007 our trade averaged ___________ each year.
A. 400 billion
B. –700 billion
C. 250 billion
D. –500 billion
AACSB: Analytic
Bloom's: Remember
Difficulty: Medium
8-39
5. We run a trade ________ on goods and a trade _________ on services.

A. deficit, deficit
B. surplus, surplus
C. surplus, deficit
D. deficit, surplus
AACSB: Reflective Thinking

Bloom's: Understand
Difficulty: Medium
6. If U.S. imports of goods and services exceed exports

B. GDP in the United States will exceed the sum of consumption, investment and government
purchases.
C. net exports for the United States are positive.
AACSB: Analytic
Bloom's: Apply
Difficulty: Medium
7. Net exports is a negative figure whenever

C. inventories dwindle.
D. gross savings is greater than net investment.
AACSB: Analytic
Bloom's: Apply
Difficulty: Medium
8-40
8. The NAFTA agreement affects our trade with

A. Asia.
B. North America.
C. Africa.
D. The OPEC nations.
E. The European Common Market.

Bloom's: Understand
Difficulty: Easy
9. Statement I: Most economists support the concept of free trade.
Statement II: The NAFTA and GATT agreements placed substantial barriers in the way of
free trade.

Bloom's: Understand
Difficulty: Easy
10. Our trade balance in merchandise is ________ and our trade balance in services is
_________.
A. positive, positive
B. negative, negative
C. negative, positive
D. positive, negative
AACSB: Analytic
Bloom's: Understand
Difficulty: Easy
8-41

A. Our trade deficit has narrowed since 1995.
B. We export more merchandise than services (in terms of dollars).
C. The largest service purchase that foreigners make from the U.S. is educational services.
D. In recent years foreigners have generally refused to accept U.S. dollars in payment for their
goods and services.

Bloom's: Understand
Difficulty: Medium
12. Relative to the trade deficit in 1990 our current is

A. substantially less.
B. slightly less.
C. slightly higher.
D. substantially higher .

Bloom's: Understand
Difficulty: Easy

A. C + I + G + Xn has always been higher than C + I + G.
B. C + I + G has always been higher than C + I + G + Xn.
C. C + I + G has always been equal to C + I + G + Xn.
D. None of these statements are true.

Bloom's: Understand
Difficulty: Hard
Learning Objective: 08-05 Analyze the graphing of the C + I + G + Xn line.
8-42
14. The members of NAFTA include

A. only the United States and Mexico.
B. only the United States and Canada.
C. only Mexico and Canada.
D. the United States, Canada, and Mexico.
AACSB: Analytic
Bloom's: Remember
Difficulty: Easy
15. Congress has ratified

A. both NAFTA and GATT.
B. neither NAFTA nor GATT.
C. NAFTA, but not GATT.
D. GATT, but not NAFTA.

Bloom's: Remember
Difficulty: Easy
16. Net exports is a negative figure when

A. a nation's exports of goods and services exceed its imports
B. depreciation exceeds gross private domestic investment
C. the economy's stock of capital is declining
D. a nation's imports of goods and services exceed its exports
AACSB: Analytic
Bloom's: Understand
Difficulty: Easy
Learning Objective: 08-02 Demonstrate the relationship between specialization and exchange.
8-43
17. Since the formation of NAFTA, our trade deficit with Mexico has gone ___________ and
our trade deficit with Canada has gone ___________.
A. up, up
B. down, down
C. up, down
D. down, up

Bloom's: Understand
Difficulty: Easy

B. specialization.
C. amassing national wealth at the expense of trading partners.
D. maximizing your exports and minimizing your imports.
AACSB: Analytic
Bloom's: Understand
Difficulty: Easy
Learning Objective: 08-01 Explain and discuss the basis for international trade.
19. Net exports is a negative number whenever

C. the nation's gross investment is on the decline.
D. the nation's gross savings rate is on the decline.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
8-44
20. Net exports are

A. the smallest component of GDP.
B. income after taxes.
C. the largest component of GDP.
D. included in government spending.
AACSB: Analytic
Bloom's: Understand
Difficulty: Easy
Learning Objective: 08-05 Analyze the graphing of the C + I + G + Xn line.
21. Adam Smith believed that

A. people should never buy anything if they can make it themselves.
C. trading with other nations promotes full employment.
D. a nation will gain if its citizens trade among themselves, but it will probably lose if it
trades with other nations.

Bloom's: Remember
Difficulty: Hard
Learning Objective: 08-01 Explain and discuss the basis for international trade.

A. Xn has always been positive.
B. Xn has always been negative.
C. Xn had been positive from 1900 until the 1970s.
D. Xn had been negative from 1900 until the 1970s.
E. None of these statements is true.
AACSB: Analytic
Bloom's: Understand
Difficulty: Medium
8-45
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Macroeconomics 10th Edition Slavin

Multiple Choice Questions

1. Until 2004, the largest exporter in the world was?

5. We run a trade ________ on goods and a trade _________ on services.

6. If U.S. imports of goods and services exceed exports

7. Net exports is a negative figure whenever

8. The NAFTA agreement affects our trade with

9. Statement I: Most economists support the concept of free trade.

11. Which is the most accurate statement?

12. Relative to the trade deficit in 1990 our current is

13. Which statement is true?

14. The members of NAFTA include

15. Congress has ratified

16. Net exports is a negative figure when

18. The basis for international trade is

19. Net exports is a negative number whenever

20. Net exports are

21. Adam Smith believed that

22. Which statement is true?

26. The world's largest exporter is

32. In 2007, Mexico signed a trade pact with

Statement II: Most economists support the concept of free trade.

34. Net exports became negative in the

35. Which best describes the American economy?

36. Which component of GDP is most likely to be negative?

40. Net exports is defined as

Statement II: Mexico has become a manufacturing export platform.

46. In 2009, ________ became the world's largest exporter.

47. Statement I: Canada is our most important trading partner.

Statement II: In 1999, 11 EU countries formed the European Monetary Union.

48. Statement I: Germany is the world's largest exporter.

50. Which statement is true?

51. Statement I: GATT regulates world trade.

52. Which statement is true?

54. Which statement is false?

55. The NAFTA agreement

57. Which is the most accurate statement?

58. Modern, highly productive economies

59. Statement I: In modern economies, virtually everyone specializes.

60. Two characteristics of a modern economy are

62. All modern economies

64. All modern economies depend on

Statement II: Most economists are against globalization.

68. According to Nobel Prize winning economist Joseph Stiglitz

69. Which statement is TRUE, according to economist Joseph Stiglitz?

70. A characteristic of a modern economy is

71. Specialization and exchange

Statement II: In modern economies, virtually everyone is a jack-of-all-trades.

75. The basis for international trade is

76. The basis for international trade is

77. If U.S. exports of goods and services exceed imports

78. Net exports is a positive number whenever

79. Net exports

80. Adam Smith believed all of the following EXCEPT

83. Which statement is FALSE about the European Union?

84. Which statement is true?

93. Net exports are positive when

95. Which is the most accurate statement?

100. Net exports are negative when

106. Statement I: The WTO regulates world trade.

107. Which statement is true?

109. The establishment of the NAFTA agreement

110. Which is the most accurate statement?

5. We run a trade on goods and a trade _ on services.

158. The basis for international trade is __ and _.

169. The NAFTA treaty includes side agreements on ___, _,

5. We run a trade on goods and a trade _ on services.