Dr. Nasser Duella Practice Midterm Exam Econ 335
Spring 2016

1.A primary reason why nations conduct international trade is because: | a. | Some nations prefer to produce one thing while others produce other things | | b. | Resources are not equally distributed among all trading nations | | c. | Trade enhances opportunities to accumulate profits | | d. | Interest rates are not identical in all trading nations |

. | b |

2.International trade is based on the idea that: | a. | Exports should exceed imports | | b. | Imports should exceed exports | | c. | Resources are more mobile internationally than are goods | | d. | Resources are less mobile internationally than are goods |

. | d |

3.Increased foreign competition tends to: | a. | Intensify inflationary pressures at home | | b. | Induce falling output per worker-hour for domestic workers | | c. | Place constraints on the wages of domestic workers | | d. | Increase profits of domestic import-competing industries |

. | c | . | |
4. ____ is the ability of a firm/industry, under free and fair market conditions, to design, produce, and market goods and services that are better and/or cheaper than those of other firms/industries. | a. | Competitiveness | | b. | Protectionism | | c. | Comparative advantage | | d. | Absolute advantage |

. | a |

5. Economists have generally found that economic growth rates have a close relation to: | a. | openness to trade | | b. | education | | c. | communications infrastructure | | d. | all of these |

. | d |

6. The United States was less open to international trade between: | a. | 1890 and 1910 | | b. | 1930 and 1950 | | c. | 1890 and 1950 | | d. | 1950 and 2013 |

. | c |