Economics Unit 4: Global Economy - Questions and Answers
Sample Questions and Answers
Q1: What is globalization in economics?
A1: Globalization refers to the increasing interdependence of world economies due to the growing scale of
cross-border trade of commodities and services, flow of international capital, and wide and rapid spread of
technologies.
Q2: How does international trade benefit countries?
A2: International trade allows countries to obtain goods and services they do not produce efficiently, leading
to increased economic efficiency, more variety for consumers, and access to larger markets.
Q3: What are trade barriers?
A3: Trade barriers are government-imposed restrictions on international trade, such as tariffs, quotas, and
subsidies, intended to protect domestic industries from foreign competition.
Q4: What role do exchange rates play in international trade?
A4: Exchange rates affect the relative price of domestic and foreign goods, influencing exports and imports. A
weaker currency makes exports cheaper and imports more expensive.
Q5: Define balance of payments.
A5: The balance of payments is a record of all economic transactions between residents of a country and the
rest of the world in a given time period, including trade balance, capital flows, and financial transfers.
Q6: What are the components of the current account?
Sample Questions and Answers
Q1: What is globalization in economics?
A1: Globalization refers to the increasing interdependence of world economies due to the growing scale of
cross-border trade of commodities and services, flow of international capital, and wide and rapid spread of
technologies.
Q2: How does international trade benefit countries?
A2: International trade allows countries to obtain goods and services they do not produce efficiently, leading
to increased economic efficiency, more variety for consumers, and access to larger markets.
Q3: What are trade barriers?
A3: Trade barriers are government-imposed restrictions on international trade, such as tariffs, quotas, and
subsidies, intended to protect domestic industries from foreign competition.
Q4: What role do exchange rates play in international trade?
A4: Exchange rates affect the relative price of domestic and foreign goods, influencing exports and imports. A
weaker currency makes exports cheaper and imports more expensive.
Q5: Define balance of payments.
A5: The balance of payments is a record of all economic transactions between residents of a country and the
rest of the world in a given time period, including trade balance, capital flows, and financial transfers.
Q6: What are the components of the current account?
