ECO 336 USM Midterm Exam 2025
Questions and Answers
An important factor that increased international capital flows in the second half of the
nineteenth century was - ....ANSWER ...-technological innovations
The four criteria for economic integration include trade flows, capital flows, people
flows, and the similarity of prices in separate markets. - ....ANSWER ...-True
Since the end of World War II - ....ANSWER ...-world trade has grown more
rapidly than world output
Deep integration - ....ANSWER ...-requires cooperation with other national
governments or international bodies
One important difference between the international economy of today and the economy
of 100 years ago is - ....ANSWER ...-presence of international bodies such as the
IMF and World Bank
While the world was fairly integrated at the turn of the last century, most trade was in
agricultural and raw materials, whereas today manufactured consumer and producer
goods play a much greater role in determining exports and imports. -
....ANSWER ...-True
Labor mobility was - ....ANSWER ...-greater in 1900 than in 2010
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 1
,One of the reasons we know that international labor mobility has been higher at other
times is because - ....ANSWER ...-the percent of our population that was foreign
born was higher
Capital flows between countries are smaller than in past decades in absolute terms. -
....ANSWER ...-False
Transactions costs in international financial markets are higher today than they were in
the past. - ....ANSWER ...-False
When world capital is allowed to flow freely between countries, it is expected that capital
will flow from - ....ANSWER ...-countries with abundant savings and capital to
countries with low savings and capital
The elimination or reduction of trade barriers caused by non-trade-related domestic
policies is referred to as - ....ANSWER ...-deep integration
A key institution that did NOT directly arise from post-WWII negotiations was the -
....ANSWER ...-WTO
An example of foreign direct investment is - ....ANSWER ...-building a starbucks
shop in canada
Most of what we buy and sell never makes it out of domestic markets. -
....ANSWER ...-True
Economists - ....ANSWER ...-describe reducing tariffs and quotas as shallow
integration
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 2
,Countries such as the United States that have large populations tend to have -
....ANSWER ...-lower trade-to-GDP ratios
All of the following are differences in capital flows today from the past, EXCEPT -
....ANSWER ...-problem of volatility in financial capital flows
The trade-to-GDP ratio is calculated by - ....ANSWER ...-exports plus imports
divided by GDP
Domestic agricultural subsidies intended to support the nation's farmers would not be
considered a trade barrier so they would not be disputed internationally. -
....ANSWER ...-False
Elimination of barriers to trade (tariffs and quotas) are referred to as -
....ANSWER ...-shallow integration.
Negotiation over domestic policies that impact international trade are referred to as -
....ANSWER ...-deep integration.
Which of the following kinds of agreements between two or more countries would be an
example of a shallow integration measure? - ....ANSWER ...-an agreement to unify
customs forms in order to speed up cross border traffic
A relative measure of the importance of trade is - ....ANSWER ...-trade as a
percentage of GDP
Capital and labor only very recently have been free to move across international borders.
- ....ANSWER ...-False
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 3
, Made in the USA or Made in China has less meaning for products that -
....ANSWER ...-are technological and involve assembling many different types of
sometimes sophisticated components
Which of the following kinds of agreements between two or more countries would be an
example of a deep integration measure? - ....ANSWER ...-an agreement to impose
the same limits on cartels and monopolies
Most economists support open trade because it increase our choices as consumers,
lowers costs for producers, increases competition and innovation, and leads to greater
diffusion of technological change. - ....ANSWER ...-True
Financial capital flows could includes - ....ANSWER ...-currency market
transactions
An example of a foreign direct investment (FDI) would includes - ....ANSWER ...-
a U.S. mutual fund manager buying shares of stock in a Brazilian oil company
One of the most important and most visible roles of the IMF is to - ....ANSWER ...-
intercede by invitation when countries cannot pay their international debts
Which of the following is NOT a criticism of international institutions such as the IMF,
the World Bank, or the WTO? - ....ANSWER ...-Their decision minus making is
biased in favor of underdeveloped nations
Which of the following is a problem that arises when trying to classify regional trade
agreements? - ....ANSWER ...-many agreements combine elements from different
categories
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 4
Questions and Answers
An important factor that increased international capital flows in the second half of the
nineteenth century was - ....ANSWER ...-technological innovations
The four criteria for economic integration include trade flows, capital flows, people
flows, and the similarity of prices in separate markets. - ....ANSWER ...-True
Since the end of World War II - ....ANSWER ...-world trade has grown more
rapidly than world output
Deep integration - ....ANSWER ...-requires cooperation with other national
governments or international bodies
One important difference between the international economy of today and the economy
of 100 years ago is - ....ANSWER ...-presence of international bodies such as the
IMF and World Bank
While the world was fairly integrated at the turn of the last century, most trade was in
agricultural and raw materials, whereas today manufactured consumer and producer
goods play a much greater role in determining exports and imports. -
....ANSWER ...-True
Labor mobility was - ....ANSWER ...-greater in 1900 than in 2010
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 1
,One of the reasons we know that international labor mobility has been higher at other
times is because - ....ANSWER ...-the percent of our population that was foreign
born was higher
Capital flows between countries are smaller than in past decades in absolute terms. -
....ANSWER ...-False
Transactions costs in international financial markets are higher today than they were in
the past. - ....ANSWER ...-False
When world capital is allowed to flow freely between countries, it is expected that capital
will flow from - ....ANSWER ...-countries with abundant savings and capital to
countries with low savings and capital
The elimination or reduction of trade barriers caused by non-trade-related domestic
policies is referred to as - ....ANSWER ...-deep integration
A key institution that did NOT directly arise from post-WWII negotiations was the -
....ANSWER ...-WTO
An example of foreign direct investment is - ....ANSWER ...-building a starbucks
shop in canada
Most of what we buy and sell never makes it out of domestic markets. -
....ANSWER ...-True
Economists - ....ANSWER ...-describe reducing tariffs and quotas as shallow
integration
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 2
,Countries such as the United States that have large populations tend to have -
....ANSWER ...-lower trade-to-GDP ratios
All of the following are differences in capital flows today from the past, EXCEPT -
....ANSWER ...-problem of volatility in financial capital flows
The trade-to-GDP ratio is calculated by - ....ANSWER ...-exports plus imports
divided by GDP
Domestic agricultural subsidies intended to support the nation's farmers would not be
considered a trade barrier so they would not be disputed internationally. -
....ANSWER ...-False
Elimination of barriers to trade (tariffs and quotas) are referred to as -
....ANSWER ...-shallow integration.
Negotiation over domestic policies that impact international trade are referred to as -
....ANSWER ...-deep integration.
Which of the following kinds of agreements between two or more countries would be an
example of a shallow integration measure? - ....ANSWER ...-an agreement to unify
customs forms in order to speed up cross border traffic
A relative measure of the importance of trade is - ....ANSWER ...-trade as a
percentage of GDP
Capital and labor only very recently have been free to move across international borders.
- ....ANSWER ...-False
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 3
, Made in the USA or Made in China has less meaning for products that -
....ANSWER ...-are technological and involve assembling many different types of
sometimes sophisticated components
Which of the following kinds of agreements between two or more countries would be an
example of a deep integration measure? - ....ANSWER ...-an agreement to impose
the same limits on cartels and monopolies
Most economists support open trade because it increase our choices as consumers,
lowers costs for producers, increases competition and innovation, and leads to greater
diffusion of technological change. - ....ANSWER ...-True
Financial capital flows could includes - ....ANSWER ...-currency market
transactions
An example of a foreign direct investment (FDI) would includes - ....ANSWER ...-
a U.S. mutual fund manager buying shares of stock in a Brazilian oil company
One of the most important and most visible roles of the IMF is to - ....ANSWER ...-
intercede by invitation when countries cannot pay their international debts
Which of the following is NOT a criticism of international institutions such as the IMF,
the World Bank, or the WTO? - ....ANSWER ...-Their decision minus making is
biased in favor of underdeveloped nations
Which of the following is a problem that arises when trying to classify regional trade
agreements? - ....ANSWER ...-many agreements combine elements from different
categories
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 4
