Apex Economics Final Exam Review
When the government runs a budget deficit, what must it eventually do in order to pay back its
debt? - ANS-have a budget surplus
What does enforcing consumer-protection regulations involve? - ANS-government oversight of
the production process
Match each company, organization, or agency with the correct label.
A)Consumer Reports
B)FDA
C)FTC - ANS-A)Consumer advocacy publication
B)Consumer protection agency
C)Competition regulator
Which of these inspires consumer confidence, increases purchases, and speeds up the flow of
investment and wages in the circular flow of the free-market system? -
ANS-consumer-protection regulations
Which of these gives companies an anticompetitive impulse? - ANS-the profit motive
What unfair business practice do cartels use? - ANS-price fixing
Match each unfair business practice with an example of its use.
A)Predatory pricing
B)Making misleading statements
C)Price fixing - ANS-C) A group of music companies agrees to charge $20 for CDs
A)A large furniture maker charges a price below production cost in order to eliminate small
competitors.
B)A coffee maker falsely claims that its drinks reduce the incidence of heart attacks.
What is one benefit of consumer-protection regulations? - ANS-greater consumer confidence
What is one way that consumer-advocacy groups help protect consumers? - ANS-by providing
product information
Match each type of restriction with one of its effects.
A)Trade restrictions
B)Labor laws
C)Banking regulations - ANS-C)Stability
B)Regulation of union activities
A)Higher prices for consumers
,What is one economic effect of environmental- protection laws? - ANS-higher prices for
consumers
Which of these is an example of a land-use law? - ANS-a town zones an area for residental
buildings only
Compulsory education restricts whose freedom? - ANS-parents
Freedom of expression is limited by what? - ANS-censorship
Country A would have absolute advantage over Country B in the production of computers under
what circumstance? - ANS-companies in Country A can produce computers at a lower cost
Why don't many developing countries benefit from the spread of free trade? - ANS-they have
weak domestic industries
Why do central banks play an important role in the global economy? - ANS-they set each
country's monetary policies
Why do protective tariffs lead to reduced international trade? - ANS-protective tariffs increase
the price of goods and limit the sale of those goods
How does the WTO promote global free trade? - ANS-by creating multilateral trade agreements
Why has globalization led to some job loss in the US? - ANS-labor costs are lower in other
countries
Match each international organization with its purpose.
A)Bank for international settlements (BIS)
B)International Monetary Fund (IMF)
C)World Bank
D)World Trade Organization(WTO)
Reduce poverty
Promote free trade
Create financial stability
Prevent economic crises - ANS-C,D,A,B
Match each practice with an example of its use.
A)Offshoring
B)Boycott
, C)Trade Sanctions
D)Conditionality
The IMF requires a loan recipient to privatize its oil industry.
Japan imposes a 100% tariff on cars coming from Europe and the US
Consumers refuse to buy goods from companies that use child labor
A US car company begins making certain car parts in Bangladesh - ANS-D,C,B,A
How has globalization contributed to the recent increase of international terrorism? - ANS-the
downsides of globalization affect many people who often feel they have nowhere to turn other
than violence
What does the World Bank hope will result from loans it makes to developing countries? -
ANS-an improved climate for foreign investment
The global economy can have specialized production because of what? - ANS-the international
division of labor
Match each type of country with one of its central features.
A)Developed
B)Developing
C)Underdeveloped
D)New Globalizer
High level of productive capacity
Low levels of industrial capacity
High levels of foreign investment
Low standard of living - ANS-A,C,D,B
Why has globalization led to an increasing income gap between rich and poor countries? -
ANS-countries with well-established infrastructure and productive capacities have more
competitive industries
What is the PRIMARY reason that globalization leads to greater global pollution? -
ANS-environmental protection is expensive, and reduces a company's competitiveness in the
global market
Country X would have a comparative advantage in the production of cotton under what
circumstance? - ANS-Country X didn't have to give up a more profitable form of production in
order to grow cotton
What is one reason why some people are critical of globalization? - ANS-it leads to increased
damage to the environment
When the government runs a budget deficit, what must it eventually do in order to pay back its
debt? - ANS-have a budget surplus
What does enforcing consumer-protection regulations involve? - ANS-government oversight of
the production process
Match each company, organization, or agency with the correct label.
A)Consumer Reports
B)FDA
C)FTC - ANS-A)Consumer advocacy publication
B)Consumer protection agency
C)Competition regulator
Which of these inspires consumer confidence, increases purchases, and speeds up the flow of
investment and wages in the circular flow of the free-market system? -
ANS-consumer-protection regulations
Which of these gives companies an anticompetitive impulse? - ANS-the profit motive
What unfair business practice do cartels use? - ANS-price fixing
Match each unfair business practice with an example of its use.
A)Predatory pricing
B)Making misleading statements
C)Price fixing - ANS-C) A group of music companies agrees to charge $20 for CDs
A)A large furniture maker charges a price below production cost in order to eliminate small
competitors.
B)A coffee maker falsely claims that its drinks reduce the incidence of heart attacks.
What is one benefit of consumer-protection regulations? - ANS-greater consumer confidence
What is one way that consumer-advocacy groups help protect consumers? - ANS-by providing
product information
Match each type of restriction with one of its effects.
A)Trade restrictions
B)Labor laws
C)Banking regulations - ANS-C)Stability
B)Regulation of union activities
A)Higher prices for consumers
,What is one economic effect of environmental- protection laws? - ANS-higher prices for
consumers
Which of these is an example of a land-use law? - ANS-a town zones an area for residental
buildings only
Compulsory education restricts whose freedom? - ANS-parents
Freedom of expression is limited by what? - ANS-censorship
Country A would have absolute advantage over Country B in the production of computers under
what circumstance? - ANS-companies in Country A can produce computers at a lower cost
Why don't many developing countries benefit from the spread of free trade? - ANS-they have
weak domestic industries
Why do central banks play an important role in the global economy? - ANS-they set each
country's monetary policies
Why do protective tariffs lead to reduced international trade? - ANS-protective tariffs increase
the price of goods and limit the sale of those goods
How does the WTO promote global free trade? - ANS-by creating multilateral trade agreements
Why has globalization led to some job loss in the US? - ANS-labor costs are lower in other
countries
Match each international organization with its purpose.
A)Bank for international settlements (BIS)
B)International Monetary Fund (IMF)
C)World Bank
D)World Trade Organization(WTO)
Reduce poverty
Promote free trade
Create financial stability
Prevent economic crises - ANS-C,D,A,B
Match each practice with an example of its use.
A)Offshoring
B)Boycott
, C)Trade Sanctions
D)Conditionality
The IMF requires a loan recipient to privatize its oil industry.
Japan imposes a 100% tariff on cars coming from Europe and the US
Consumers refuse to buy goods from companies that use child labor
A US car company begins making certain car parts in Bangladesh - ANS-D,C,B,A
How has globalization contributed to the recent increase of international terrorism? - ANS-the
downsides of globalization affect many people who often feel they have nowhere to turn other
than violence
What does the World Bank hope will result from loans it makes to developing countries? -
ANS-an improved climate for foreign investment
The global economy can have specialized production because of what? - ANS-the international
division of labor
Match each type of country with one of its central features.
A)Developed
B)Developing
C)Underdeveloped
D)New Globalizer
High level of productive capacity
Low levels of industrial capacity
High levels of foreign investment
Low standard of living - ANS-A,C,D,B
Why has globalization led to an increasing income gap between rich and poor countries? -
ANS-countries with well-established infrastructure and productive capacities have more
competitive industries
What is the PRIMARY reason that globalization leads to greater global pollution? -
ANS-environmental protection is expensive, and reduces a company's competitiveness in the
global market
Country X would have a comparative advantage in the production of cotton under what
circumstance? - ANS-Country X didn't have to give up a more profitable form of production in
order to grow cotton
What is one reason why some people are critical of globalization? - ANS-it leads to increased
damage to the environment
