AnswersEconomicsThe Global Economy

Practice Test Answers

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1
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Based on the graph, what conclusion can be drawn about trade between the United States and China?

A
China’s economy is declining, which has harmed trade.
B
China’s economy is improving, which has helped trade.
C
The United States has a trade deficit with China.
D
The United States has a trade surplus with China.
2
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What is a benefit associated with free trade?

A
enhanced innovation and technology
B
limited market access for domestic industries
C
increased government revenue from tariffs
D
higher inflation due to import competition
3

Which of these statements most accurately describes the use of currencies in different parts of the world?

A
Countries in Asia use the euro as their currency.
B
Different countries use different currencies.
C
All countries are required to use the same currency.
D
Most countries use the dollar as their currency.
4

Which form of transportation has led to more efficient business in a global market?

A
helicopters
B
tractor trailers
C
cargo ships
D
high-speed trains
5

An exchange rate table makes it easy to compare the

A
unemployment rates for two or more countries.
B
cost to produce the currency used by a single country.
C
different currency denominations used by a single country.
D
value of the currencies for two or more countries.
6

Which best describes the effect negative incentives have on a certain course of action?

A
They make the action impossible.
B
They make the action difficult.
C
They make the action less profitable.
D
They make the action less likely.
7

How did NAFTA affect the economies of participating countries?

A
by creating a balance of exports and imports
B
by increasing the overall volume of production
C
by raising employment rates and standards of living
D
by creating unrestricted trade benefits
8

An economic incentive is best described as something that

A
pushes producers or consumers to act on the government's behalf.
B
benefits producers or consumers when taking action.
C
forces producers or consumers to act in a certain way.
D
motivates producers or consumers to take action.
9

Why does an increase in literacy rates often accompany an increase in per capita income?

A
Developing countries have higher-than-average literacy rates, which typically leads to higher income.
B
People who can read and who receive an education are eligible for higher-paying jobs.
C
Developed countries often attempt to raise low literacy rates to improve income.
D
People who have higher-paying jobs often have the time available to develop literacy skills.
10

A reason that countries trade with each other is

A
to get products they cannot produce.
B
to sell goods they do not need.
C
to share excess resources.
D
to help their neighbors.
11

Globalization is the process of

A
limiting exhange of goods and services.
B
connecting the world over time.
C
focusing on certain goods and services.
D
requiring or relying on something.
12

Why do developing countries usually have less variety in their economic activities?

A
Focusing on one or two economic activities leads to more rapid economic development.
B
People prefer the lifestyle that accompanies traditional activities such as farming.
C
Limited access to education means that people are not trained to work in industry or technology.
D
Developing countries are usually small and have limited populations and resources.

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