AP Unit 6

Which of the following is true regarding international trade

• A country that exports more than it imports has a trade deficit

• A country that exports more than 30% of their GDP has a trade surplus

• A deficit in the current account is offset by a surplus in the capital and financial account

• A country that exports more than it imports will have a financial account surplus

• A country with a trade deficit will have a current account surplus

Which of the following is an example of direct foreign investment?

• An increase in the demand for US dollars by foreigners

• A decrease in the supply of US dollars by Americans

• The purchase of American planed by a Mexican company

• The sale of financial service to a foreign investor by a US bank

• A Chinese company buying a microprocessor factory in Korea

All of the following are true regarding international trade except

• Countries experience a trade deficit when imports are greater than exports

• Net exports will increase when that country's currency depreciates

• Exports are considered a debit in a country's balance of trade

• The balance of payment is a summary of a country's transactions with other countries

• The primary components of the balance of payments are the current account and the capital (financial)

Which of the following would definitely move a country toward a current account deficit?

• An increase in exports

• An increase in imports

• An larger capital account deficit

• An increase in capital outflow

• A decrease in foreign aid provided to other countries

Which of the following is the best example of foreign direct investment?

• The Chinese government buying United States Treasury bonds

• A business in the United States selling machinery to a company in Japan

• A United States citizen buying Mexican pesos.

• The United States sending earthquake relief aid to Haiti

• A Japanese software company buying a factory in the United States

Assume the inflation rate in Mexico is significantly higher than its trading partners. Which of the following will occur to the demand, supply, and international value of the Mexican Peso?

• Demand Supply Value

  Increase Increase Depreciate

• Demand Supply Value

  Increase Decrease Appreciate

• Demand Supply Value

  Decrease Increase Appreciate

• Demand Supply Value

  Decrease Increase Depreciate

• Demand Supply Value

  Decrease Decrease Depreciate

Based on the information in the Lorenz curve above, which of the following is true?

• People in Country X make more money than people in Country Z.

• Income is more equally distributed in Country X than in Country Z.

• The top 20 percent of households in Country X received 60 percent of the total income.

• The top 20 percent of households in Country Z received 40 percent of the total income.

• The average income in Country X is higher than the average income in Country Z.

Which of the following best describes the concept of 'cultural diffusion'?

• A) The spread of cultural beliefs and social activities from one group to another

• B) The isolation of a culture from external influences

• C) The rejection of foreign cultural elements

• D) The preservation of traditional cultural practices

What is the primary purpose of the United Nations?

• A) To promote international trade

• B) To maintain international peace and security

• C) To regulate global financial markets

• D) To enforce international law

Which of the following is a characteristic of a command economy?

• A) Prices are determined by supply and demand

• B) The government makes all economic decisions

• C) Businesses are privately owned

• D) There is a high level of competition