ECO 365 Week 5 Knowledge Check Question
1 What problem do economists see with free trade areas such as NAFTA and the European
Union?
A. They tend to lead to free trade rather than fair trade.
B. They can lead to regional trading blocs then restrict trade.
C. They lead to globalization.
D. They encourage countries to rely on others rather than being
self-sufficient.
2.
A group of countries that allows free trade among its members and puts up common
barriers against all other countries' goods is called
A. a tariff-free zone
B. a most-favored nation agreement
C. an autarky
D. a free trade association
3.
Mexico has a comparative advantage in producing corn
A. if its opportunity cost of producing corn is higher than the
opportunity cost in other countries
B. if its opportunity cost of producing corn is the same as the
opportunity cost in other countries
C. if its opportunity cost of producing corn is lower than
opportunity cost in other countries
D. regardless of the opportunity cost in other countries
4. Workers in education, health care, and government sectors have
A. seen their incomes fall just like in manufacturing
B. been mostly hurt from globalization
C. benefited from globalization in terms of lower consumer prices
D. been hurt because the sector has been shrinking
5.
In the United States globalization has
A. played a significant role in growing income disparity because
some sectors have benefited and others have not
B. played little role in growing income disparity because all
Americans are consumers who have enjoyed lower prices
C. played a significant role in growing income disparity because
foreign workers' incomes have risen
D. played little role in growing income disparity because while
some jobs were lost, the gain in jobs balanced out those that
were lost
6.
Most economists
A. oppose free trade
B. favor free trade
C. have no opinion on free trade
D. would prefer to have no trade with other nations
7.
World trade declined in the 1930s. Which of the following is the best explanation of that
decline?
A. World income shrank and trade restrictions increased.
B. World income shrank, but there were few changes in trade
restrictions
C. Trade restrictions increased, but there was little change in
world income
D. The incomes of most nations increased, allowing them to
become more self-sufficient.
8.
As a country develops economically, what changes usually take place in the goods it
exports?
A. There is little change because comparative advantage does
not change.
B. Raw materials and agricultural products decline in importance
and are replaced by services and manufactured goods.
C. Services and manufactured goods decline in importance and
are replaced by raw materials and agricultural products.
D. Exports go from being diversified to being specialized in
whatever the country finds to be its comparative advantage.
9. When a U.S. company establishes a call center in India that answers its customer service
calls, the United States is
A. outsourcing, a form of importing services
B. outsourcing, a form of exporting services
C. insourcing, a form of importing services
D. insources, a form of exporting services
USA 
India