Question

1

Since World War II, world trade has

	decreased in importance as nations turn inward due to security concerns.
	risen sharply, outpacing gains in annual world real GDP.
	increased, but not as dramatically as annual world real GDP has climbed.
	increased in relative importance for most nations, but not for the United States.

Question 2

The importance of international trade in the U.S. economy

	has been increasing but is expected to decrease in the future.
	has been decreasing and is expected to continue to decrease.
	has been decreasing but is expected to start to increase.
	has been increasing and is expected to continue to increase.

Question 3

Benefits of free trade include all of the following EXCEPT

	transmission of new ideas.
	increased world production.
	higher standards of living.
	increased international mobility of labor.

Question 4

Restrictions on imports

	enhance economic welfare by encouraging more exports.
	usually have no long-run effects on an economy.
	eventually reduce exports, too.
	are the quickest way for a country in recession to start on a path of economic recovery.

Question 5

The standard of living in a nation depends on

	whether or not its currency is adopted as the world's monetary standard.
	the size of the country, with larger nations always doing better than smaller ones.
	how well the economy functions within that country.
	how well its economy functions relative to other countries.

Answer 1

Answer 1:

Option B. Since World War II, world trade has risen sharply, outpacing gains in annual world real GDP.

Answer 2:

Option D. The importance of international trade in the US economy has been increasing and is expected to increase in the near future also.

Answer 3:

Option D. Benefits of free trade include all of the following except increased international mobility of labor. Increase in the mobility of labor is not a benefit of free trade.

Answer 4:

Option D. Restrictions on imports are the quickest way for a country in recession to start on the path of recovery because it increases net exports and thus shifts the aggregate demand curve rightwards.