CHAPTER 1—THE INTERNATIONAL ECONOMY AND GLOBALIZATION MULTIPLE CHOICE 1. A primary reason why nations conduct international trade is because: a. Some nations prefer to produce one thing while others produce other things b. Resources are not equally distributed among all trading nations c. Trade enhances opportunities to accumulate profits d. Interest rates are not identical in all trading nations ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic TOP: Globalization of Economic Activity KEY: BLOOM'S: Knowledge 2. A main advantage of specialization results from: a. Economies of large-scale production b. The specializing country behaving as a monopoly c. Smaller production runs resulting in lower unit costs d. High wages paid to foreign workers ANS: A PTS: 1 DIF: Moderate NAT: BUSPROG: Reflective Thinking TOP: Why is Globalization Important? KEY: BLOOM'S: Comprehension 3. International trade in goods and services is sometimes used as a substitute for all of the following except: a. International movements of capital b. International movements of labor c. Domestic production of the same goods and services d. Domestic production of different goods and services ANS: D PTS: 1 DIF: Challenging NAT: BUSPROG: Reflective Thinking TOP: Globalization of Economic Activity KEY: BLOOM'S: Comprehension 4. If a nation has an open economy, it means that the nation: a. Allows private ownership of capital b. Has flexible exchange rates c. Has fixed exchange rates d. Conducts trade with other countries ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Reflective Thinking