Module 2 Commodity Prices & Terms of Trade Flashcards
(12 cards)
The gravity model suggests that over time
A) trade between neighboring countries will increase.
B) trade between all countries will increase.
C) world trade will eventually be swallowed by a black hole.
D) trade between Earth and other planets will become important.
E) the value of trade between two countries will be proportional to the product of
the two countries’ GDP.
Answer: E
According to the gravity model, a characteristic that tends to affect the
probability of trade existing between any two countries is
A) their cultural affinity.
B) the average weight/value of their traded goods.
C) their colonial-historical ties.
D) the distance between them.
E) the number of different product varieties produced by their industries.
Answer: D
Since the early 1970s, world’s trade as a share of world production has
A) remained constant.
B) increased.
C) decreased.
D) fluctuated widely with no clear trend.
E) increased slightly before dropping off.
Answer: B
In the current Post-Industrial economy, international trade in services (including
banking and financial services)
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A) dominates world trade.
B) does not exist.
C) is an increasingly important component of global trade.
D) is relatively stagnant.
E) far surpasses the predictions of economist Alan Blinder.
Answer: C
In the early 20th century, the United Kingdom exported mainly
A) manufactured goods.
B) services.
C) primary products including agricultural.
D) technology intensive products.
E) livestock.
Answer: A
In the early 20th century, the United Kingdom imported mainly
A) manufactured goods.
B) services.
C) primary products including agricultural.
D) technology intensive products.
E) from the United States.
Answer: C
In the present, most of the exports from China are
A) manufactured goods.
B) services.
C) primary products including agricultural.
D) technology intensive products.
E) overpriced by world market standards.
Answer: A
The meaning of “terms of trade” is
A) the amount of exports sold by a country.
B) the tariffs in place between two trading countries.
C) the quantities of imports received in free trade.
D) the price of a country’s exports divided by the price of its imports.
E) the price conditions bargained for in international markets.
Answer: D
If the ratio of price of cloth (PC) divided by the price of food (PF) increases in
the international marketplace, then
A) the terms of trade of food exporters will improve.
B) the terms of trade of all countries will improve.
C) the terms of trade of cloth exporters will worsen.
D) all countries would be better off.
E) the terms of trade of cloth exporters will improve.
Answer: E
If the ratio of price of cloth (PC) divided by the price of food (PF) increases in
the international marketplace, then
A) the country would import more cloth.
B) the food exporter will increase the quantity of food exported.
C) the cloth exporter will increase the quantity of cloth produced.
D) the cloth exporter will increase the quantity of cloth exported.
E) the cloth exporter will decrease the quantity of cloth exported.
Answer: C
Terms of trade refers to
A) what goods are exported.
B) the volume of trade.
C) the relative price at which trade occurs.
D) the tariffs applied to trade.
E) what goods are imported.
Answer: C
If Slovenia is a small country in world trade terms, then if it imposes a large
series of tariffs on many of its imports, this would
A) decrease its marginal propensity to consume.
B) deteriorate its terms of trade.
C) increase its exports.
D) have no effect on its terms of trade.
E) improve its terms of trade.
Answer: D
