, Chapter 1: Trade in the Global Economy
1. What country was the world's largest exporter of goods in 2012?
A) China
B) Germany
C) the United States
D) Japan
Ans: A Difficulty: Easy Section: Introduction Skill Descriptor: Fact-
Based Topic: Introduction
2. Which of the following is a trade flow?
A) Robert Feenstra purchases $100 million of British treasury bonds.
B) Robert Feenstra purchases a yogurt factory in France.
C) Neither of Robert Feenstra's purchases is considered a trade flow.
D) Both of Robert Feenstra's purchases are considered trade flows.
Ans: C Difficulty: Easy Section: Introduction
Skill Descriptor: Definitional Topic: Introduction
3. Currently, which of the following countries is the world's largest exporter of goods (in
dollar volume)?
A) China
B) the United States
C) Japan
D) Germany
Ans: A Difficulty: Moderate Section: Introduction
Skill Descriptor: Fact-Based Topic: Introduction
4. Currently, which of the following countries is the world's largest exporter of goods and
services (in dollar volume)?
A) China
B) the United States
C) Japan
D) Germany
Ans: B Difficulty: Moderate Section: Introduction
Skill Descriptor: Fact-Based Topic: Introduction
5. What is the term for a capital flow that is used to purchase or build a tangible asset like
a factory?
A) migration
B) service exports
C) service imports
D) foreign direct investment
Ans: D Difficulty: Easy Section: Introduction
Skill Descriptor: Definitional Topic: Introduction
, Chapter 1: Trade in the Global Economy
6. When a foreign resident purchases a good or service from someone in the United States,
the transaction is:
A) a U.S. export.
B) a U.S. import.
C) bilateral exchange.
D) a compensating differential.
Ans: A Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
7. Imports are:
A) goods or services purchased from a foreign resident.
B) goods or services sold to foreign residents.
C) goods only purchased from foreigners—you cannot purchase services from foreigners.
D) services only—imports do not include goods.
Ans: A Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
8. Exports are:
A) goods or services purchased from a foreign resident.
B) goods or services sold to foreign residents.
C) goods only sold to foreigners—you cannot sell services to foreigners.
D) services only—exports do not include goods.
Ans: B Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
9. Which of the following entries is considered to be a service export?
A) the Japanese buying soybeans from the United States
B) the Chinese selling iPhones to the United States
C) Mexican tourists visiting the Grand Canyon
D) the French selling wine to the United States
Ans: C Difficulty: Moderate Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
10. Which of the following transactions is NOT a trade flow?
A) domestic residents' purchases of foreign-made goods
B) domestic residents' purchases of foreign-provided services
C) domestic residents' purchases of foreign stocks and bonds
D) domestic residents' purchases of foreign-produced software
Ans: C Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
Page 2
, Chapter 1: Trade in the Global Economy
11. A country's service exports include:
A) a restaurant meal purchased by its resident in another country.
B) equipment or automobiles with a warranty and a service contract sold to a foreign
resident.
C) a ticket on a country's airline sold to a foreign resident.
D) a country's resident who migrates to work in another country.
Ans: C Difficulty: Moderate Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
12. The difference between the total value of a country's exports and the total value of its
imports is defined as the country's:
A) trade status.
B) trade balance.
C) trade deficit.
D) bilateral trade balance.
Ans: B Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
13. An American tourist buys a ticket to an opera in Paris. The U.S. government classifies
this transaction as:
A) a goods' import of a French Opera.
B) a service export.
C) a service import.
D) a goods' export.
Ans: C Difficulty: Difficult Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
14. A Chinese student pays tuition at a U.S. university. The Chinese government classifies
this transaction as:
A) a goods' import.
B) a service export.
C) a service import.
D) a goods' export.
Ans: C Difficulty: Difficult Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
15. If the value of a nation's imports is more than the value of its exports, then the nation is
experiencing:
A) a trade deficit.
B) a trade surplus.
Page 3
1. What country was the world's largest exporter of goods in 2012?
A) China
B) Germany
C) the United States
D) Japan
Ans: A Difficulty: Easy Section: Introduction Skill Descriptor: Fact-
Based Topic: Introduction
2. Which of the following is a trade flow?
A) Robert Feenstra purchases $100 million of British treasury bonds.
B) Robert Feenstra purchases a yogurt factory in France.
C) Neither of Robert Feenstra's purchases is considered a trade flow.
D) Both of Robert Feenstra's purchases are considered trade flows.
Ans: C Difficulty: Easy Section: Introduction
Skill Descriptor: Definitional Topic: Introduction
3. Currently, which of the following countries is the world's largest exporter of goods (in
dollar volume)?
A) China
B) the United States
C) Japan
D) Germany
Ans: A Difficulty: Moderate Section: Introduction
Skill Descriptor: Fact-Based Topic: Introduction
4. Currently, which of the following countries is the world's largest exporter of goods and
services (in dollar volume)?
A) China
B) the United States
C) Japan
D) Germany
Ans: B Difficulty: Moderate Section: Introduction
Skill Descriptor: Fact-Based Topic: Introduction
5. What is the term for a capital flow that is used to purchase or build a tangible asset like
a factory?
A) migration
B) service exports
C) service imports
D) foreign direct investment
Ans: D Difficulty: Easy Section: Introduction
Skill Descriptor: Definitional Topic: Introduction
, Chapter 1: Trade in the Global Economy
6. When a foreign resident purchases a good or service from someone in the United States,
the transaction is:
A) a U.S. export.
B) a U.S. import.
C) bilateral exchange.
D) a compensating differential.
Ans: A Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
7. Imports are:
A) goods or services purchased from a foreign resident.
B) goods or services sold to foreign residents.
C) goods only purchased from foreigners—you cannot purchase services from foreigners.
D) services only—imports do not include goods.
Ans: A Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
8. Exports are:
A) goods or services purchased from a foreign resident.
B) goods or services sold to foreign residents.
C) goods only sold to foreigners—you cannot sell services to foreigners.
D) services only—exports do not include goods.
Ans: B Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
9. Which of the following entries is considered to be a service export?
A) the Japanese buying soybeans from the United States
B) the Chinese selling iPhones to the United States
C) Mexican tourists visiting the Grand Canyon
D) the French selling wine to the United States
Ans: C Difficulty: Moderate Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
10. Which of the following transactions is NOT a trade flow?
A) domestic residents' purchases of foreign-made goods
B) domestic residents' purchases of foreign-provided services
C) domestic residents' purchases of foreign stocks and bonds
D) domestic residents' purchases of foreign-produced software
Ans: C Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
Page 2
, Chapter 1: Trade in the Global Economy
11. A country's service exports include:
A) a restaurant meal purchased by its resident in another country.
B) equipment or automobiles with a warranty and a service contract sold to a foreign
resident.
C) a ticket on a country's airline sold to a foreign resident.
D) a country's resident who migrates to work in another country.
Ans: C Difficulty: Moderate Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
12. The difference between the total value of a country's exports and the total value of its
imports is defined as the country's:
A) trade status.
B) trade balance.
C) trade deficit.
D) bilateral trade balance.
Ans: B Difficulty: Easy Section: International Trade
Skill Descriptor: Definitional Topic: The Basics of World Trade
13. An American tourist buys a ticket to an opera in Paris. The U.S. government classifies
this transaction as:
A) a goods' import of a French Opera.
B) a service export.
C) a service import.
D) a goods' export.
Ans: C Difficulty: Difficult Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
14. A Chinese student pays tuition at a U.S. university. The Chinese government classifies
this transaction as:
A) a goods' import.
B) a service export.
C) a service import.
D) a goods' export.
Ans: C Difficulty: Difficult Section: International Trade
Skill Descriptor: Concept-Based Topic: The Basics of World Trade
15. If the value of a nation's imports is more than the value of its exports, then the nation is
experiencing:
A) a trade deficit.
B) a trade surplus.
Page 3
