Global Economy Midterm

1. Many countries in the late 1940s realized that the reductions in world trade in wartime and during the Depression had hurt their economies

True

False

2. GATT stands for ____________________.

General Agreement on Tariffs and Tencent

General Arithmetic on Tariffs and Trade

General Agreement on Tariffs and Trade

General Agreement on Terrible Trades

3. GDP is defined as the total market value of all final goods and services produced within the country in a given period of time (usually a calendar year).

True

False

4. A high inflation rate means that your currency buys less.

True

False

Submit

6. All of the following are examples of the effects of globalization except

A department store put's items on lay away

A McDonald's open up in India

An American fashion designer uses cultural ideas from Chinese pop to make clothes

It is less costly to ship goods from China than to make them in Europe

7. The countries of the world could not and did not want to drop the trade barrier’s of the 1930’s that pushed countries apart such as heavy tariffs.

True

False

8. The US and other major currencies of the world use _______ exchange rates.

Fixed

Soft-Pegged

Self Regulated

Floating

9. GDP =

GDP = corporate spending+ government investment + government spending + (exports − imports)

GDP = consumption + gross investment + government spending

GDP = consumption + government investment + government spending +

GDP = consumption + gross investment + government spending + (exports − imports)

10. The overwhelming majority of trades in 2007 were the exchange of Euro's.

True

False

11. Most trading on exchange rate markets is related to _______________ and ______________.

International exchange and management of the risks of possible future changes in exchange rates.

International investments and management of the opportunities available with possible future changes in exchange rates.

Domestic investments and management of the risks of possible future changes in exchange rates.

International investments and management of the risks of possible future changes in exchange rates.

12. A common issue with China in the first decade of the 21st century is that china has fixed its exchange rate at a fairly low level which is helping its exports but also leading to humungous and unsustainable large trade surpluses.

True

False

13. A strong currency means you can __________________________________.

Buy more imports so imports rise but the foreign currency that exporters earn is worthless so exports tend to fall.

Buy less imports so imports fall but the foreign currency that exporters earn is worthless so exports tend to fall.

14. An example of a change that significantly reduced the cost of transportation of goods is_______________.

Health Regulations

Barriers to trade

Guns

Containerization

15. You can always keep the foreign exchange value of your currency rising as long as you are willing to keep accumulating foreign exchange reserves.

True

False

16. What is an economy?

The factors of production, exchange, distribution, and consumption of goods and services of a country or other area.

The factors of production, exchange, distribution, and consumption in a country or other area.

The realized social system of production, exchange, distribution, and consumption of goods and services of a country or other area.

The realized political system of production, exchange, distribution, and consumption of goods and services of a country or other area.

17. All of the following are skills sets economists predict will be most valuable in the future global economy except?

Sales

Bureaucratic

Investment

Service

Computer

18. There are two main ways to deal with floating exchange rate risks. What are they? (Select two)

Limit the number of transactions you do that involve long term commitments that would reduce the risks to some extent

Increase the number of transactions you do that involve long term commitments that would reduce the risks to some extent

Use financial contracts that would hedge some of the risks with floating exchange rates

Use fixed exchange rates that would hedge some of the risks with floating exchange rates

Submit