HTM 2314 EXAM 2 QUESTIONS AND
ANSWERS ALL CORRECT
Which of the following countries of the Central American Common Market has adopted
the U.S. dollar as its official currency?
El Salvador
Nicaragua
Honduras
Costa Rica - Answer-El Salvador
Which of the following is an important goal of regional economic integration?
to limit the choice of products available to customers
to increase the selling prices of products
to raise the living standards of people
to establish a socialist government - Answer-to raise the living standards of people
No proposed legislation becomes EU law unless the ________ votes it into law.
Council of the European Union
European Commission
European Parliament
Court of Auditors - Answer-Council of the European Union
A(n) ________ eliminates trade barriers among member countries, and is the lowest
level of regional economic integration.
common market
free trade area
customs union
economic union - Answer-free trade area
Which of the following countries is a member of the North American Free Trade
Agreement (NAFTA)?
Venezuela
Honduras
,Costa Rica
Canada - Answer-Canada
The Court of Justice is the ________ of the European Union.
court of honor
small-claims court
court of appeals
arbitral tribunal - Answer-court of appeals
The factor proportions theory of international trade was developed by Heckscher-Ohlin.
True
False - Answer-True
According to the international product life cycle theory, the innovating firm's country is
primarily an exporter of the product in all three stages.
True
False - Answer-False
Trade deficit occurs when the value of a country's exports is greater than the value of its
imports.
True
False - Answer-False
Trade between most nations is presently characterized by a certain degree of
isolationism.
True
False - Answer-False
Which theory suggests that a country should produce and export those goods and
services for which it is relatively more productive than other countries and import those
goods and services for which other countries are relatively more productive?
absolute advantage
relative advantage
specialization of countries
comparative advantage - Answer-comparative advantage
When there are gains to be had by both countries that are party to an exchange,
international trade is considered a(n) ________.
equal-sum game
, negative-sum game
zero-sum game
positive-sum game - Answer-positive-sum game
________ says that nations should accumulate financial wealth, usually in the form of
gold, by encouraging exports and discouraging imports.
Mercantilism
Communism
Factor proportions theory
Absolute advantage theory - Answer-Mercantilism
Who proposed the theory of absolute advantage?
Raymond Vernon
Bertil Ohlin
David Ricardo
Adam Smith - Answer-Adam Smith
During which stage of the international product life cycle theory does demand rise and
remain sustained for a fairly lengthy period of time?
maturing product stage
standardized product stage
product decline stage
new product stage - Answer-maturing product stage
The theories of comparative and absolute advantage assume that specialization in the
production of one particular good results in efficiency gains.
True
False - Answer-False
Trade between most nations is presently characterized by a certain degree of
isolationism.
True
False - Answer-False
The ability of a nation to produce a good more efficiently than any other nation is called
its absolute advantage.
True
False - Answer-True
ANSWERS ALL CORRECT
Which of the following countries of the Central American Common Market has adopted
the U.S. dollar as its official currency?
El Salvador
Nicaragua
Honduras
Costa Rica - Answer-El Salvador
Which of the following is an important goal of regional economic integration?
to limit the choice of products available to customers
to increase the selling prices of products
to raise the living standards of people
to establish a socialist government - Answer-to raise the living standards of people
No proposed legislation becomes EU law unless the ________ votes it into law.
Council of the European Union
European Commission
European Parliament
Court of Auditors - Answer-Council of the European Union
A(n) ________ eliminates trade barriers among member countries, and is the lowest
level of regional economic integration.
common market
free trade area
customs union
economic union - Answer-free trade area
Which of the following countries is a member of the North American Free Trade
Agreement (NAFTA)?
Venezuela
Honduras
,Costa Rica
Canada - Answer-Canada
The Court of Justice is the ________ of the European Union.
court of honor
small-claims court
court of appeals
arbitral tribunal - Answer-court of appeals
The factor proportions theory of international trade was developed by Heckscher-Ohlin.
True
False - Answer-True
According to the international product life cycle theory, the innovating firm's country is
primarily an exporter of the product in all three stages.
True
False - Answer-False
Trade deficit occurs when the value of a country's exports is greater than the value of its
imports.
True
False - Answer-False
Trade between most nations is presently characterized by a certain degree of
isolationism.
True
False - Answer-False
Which theory suggests that a country should produce and export those goods and
services for which it is relatively more productive than other countries and import those
goods and services for which other countries are relatively more productive?
absolute advantage
relative advantage
specialization of countries
comparative advantage - Answer-comparative advantage
When there are gains to be had by both countries that are party to an exchange,
international trade is considered a(n) ________.
equal-sum game
, negative-sum game
zero-sum game
positive-sum game - Answer-positive-sum game
________ says that nations should accumulate financial wealth, usually in the form of
gold, by encouraging exports and discouraging imports.
Mercantilism
Communism
Factor proportions theory
Absolute advantage theory - Answer-Mercantilism
Who proposed the theory of absolute advantage?
Raymond Vernon
Bertil Ohlin
David Ricardo
Adam Smith - Answer-Adam Smith
During which stage of the international product life cycle theory does demand rise and
remain sustained for a fairly lengthy period of time?
maturing product stage
standardized product stage
product decline stage
new product stage - Answer-maturing product stage
The theories of comparative and absolute advantage assume that specialization in the
production of one particular good results in efficiency gains.
True
False - Answer-False
Trade between most nations is presently characterized by a certain degree of
isolationism.
True
False - Answer-False
The ability of a nation to produce a good more efficiently than any other nation is called
its absolute advantage.
True
False - Answer-True
