Unit 5 Assessment Review

Front

Which must exist before a country can specialize its production? Options: a free-market system, an international division of labor, government subsidies, a global economy

Back

an international division of labor

Front

Which of these can a country have when there is an international division of labor? a gross domestic product, social welfare programs, specialized production, protectionist policies

Back

specialized production

Front

Which conditions would allow Country X to have an absolute advantage over Country Y in the production of automobiles? Options: Country X's workers earn higher wages. Country X can manufacture cars more cheaply. Country Y subsidizes its automobile industry. Country Y has a protective tariff on car imports.

Back

Country X can manufacture cars more cheaply.

Front

Which circumstance would give Country X an absolute advantage over Country Y in the production of clothing?

Back

Its production costs for clothing were the lowest in the world.

Front

Which gives a country a comparative advantage?

Back

when it gives up less than others to engage in a particular type of production

Front

Why does interdependence bring economic growth?

Back

Interdependence enables specialized production, which is more efficient.

Front

Why do high tariff levels restrict international trade?

Back

Traded goods cost more when there are high tariffs, and this limits their sale.

Front

Which current trend tied to increased globalization has the effect of easier outsourcing?

Back

improved communication

Front

Why does globalization lead to a reduction in wages in developed countries?

Back

Increased mobility allows producers to move jobs to lower-cost labor markets.

Front

Why do central banks play an important role in the global economy?

Back

They set each country's monetary policy.