The Global Economy: A Comprehensive Guide for International Relations Students

Question 1

Which of the following is **not** a fundamental characteristic of the global economy?

Accepted Answer

Nationalism

Answer

Interdependence

Answer

Globalization

Answer

Free Trade

Question 2

Which of the following statements does NOT describe a characteristic of the global economy?

Accepted Answer

Economic activity is limited to within national borders

Answer

Countries are interconnected through trade and investment

Answer

Production and consumption are becoming increasingly globalized

Question 3

What is the term used to describe the exchange of goods and services across national borders?

Accepted Answer

Trade

Answer

Investment

Answer

Finance

Answer

Globalization

Question 4

What is the term for the transfer of ownership rights to assets across borders?

Accepted Answer

Investment

Answer

Trade

Answer

Finance

Answer

Globalization

Question 5

What is the term used to describe the exchange of goods and services across national borders?

Accepted Answer

Trade

Answer

Investment

Answer

Finance

Answer

Capital flows

Question 6

What is the term for foreign companies investing in a particular country?

Accepted Answer

Foreign direct investment

Answer

Foreign portfolio investment

Answer

Multinational corporations

Answer

Joint ventures

Question 7

What is the term used to describe when a country imports more goods and services than it exports?

Accepted Answer

Trade deficit

Answer

Trade surplus

Answer

Balance of trade

Answer

Exchange rate

Question 8

The system that governs the flow of money and credit across borders is known as:

Accepted Answer

International financial system

Answer

Global monetary system

Answer

World Bank system

Answer

IMF system

Question 9

Which of the following is an example of a non-tariff barrier to trade?

Accepted Answer

Product standards

Answer

Quotas

Answer

Embargoes

Answer

Subsidies

Question 10

The principle of comparative advantage suggests that countries should:

Accepted Answer

Specialize in producing goods they can produce most efficiently

Answer

Produce all goods they need domestically

Answer

Engage in trade regardless of comparative costs

Answer

Protect domestic industries from foreign competition

Question 11

Examine the contrasting views on globalization's impact on economic development, considering its potential advantages and negative consequences.

Accepted Answer

Globalization can contribute to widening income gaps within and between countries.

Answer

Globalization primarily benefits developed nations, having little impact on developing countries.

Answer

Globalization has a negligible effect on economic growth and development.

Answer

Globalization exclusively promotes economic growth without any negative consequences.

Question 12

How do the World Trade Organization (WTO) and the International Monetary Fund (IMF) differ in their primary responsibilities for maintaining global economic stability?

Accepted Answer

The WTO sets trade rules and resolves trade disputes, while the IMF promotes monetary and financial stability.

Answer

The WTO provides financial aid to developing countries, while the IMF promotes trade.

Answer

The WTO and IMF have the same role in regulating the global economy.

Answer

Neither the WTO nor the IMF contributes to global economic stability.

Question 13

Which of the following is a defining feature of the global economy?

Accepted Answer

Interdependence and interconnectedness

Answer

Self-sufficiency and isolationism

Answer

Competition and rivalry

Answer

Protectionism and trade barriers

Question 14

What is the primary function of international trade?

Accepted Answer

To enable the exchange of goods and services across borders

Answer

To promote economic development and growth

Answer

To redistribute wealth globally

Answer

To create employment opportunities

Question 15

What is the main responsibility of the International Monetary Fund (IMF)?

Accepted Answer

To provide financial assistance to countries facing economic difficulties

Answer

To regulate the global banking system

Answer

To set global interest rates

Answer

To resolve trade disputes between countries

Question 16

Which of the following is a concern associated with globalization for developing nations?

Accepted Answer

Increased economic disparities

Answer

Reduced environmental degradation

Answer

Improved access to technology

Answer

Enhanced political stability

Question 17

What is the term for an exchange rate system where a country's currency is pegged to the value of another currency?

Accepted Answer

Fixed exchange rate

Answer

Floating exchange rate

Answer

Flexible exchange rate

Answer

Managed exchange rate

Question 18

What is the term for the theory that developing countries are dependent on developed countries due to their export of raw materials and import of finished goods?

Accepted Answer

Dependency theory

Answer

Modernization theory

Answer

World-systems theory

Answer

Neoliberal theory

Question 19

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

Accepted Answer

Increased interdependence between countries

Answer

Minimal role of multinational corporations

Answer

Limited trade and investment flows

Answer

Stagnant technological advancements

Question 20

What is the primary function of the World Trade Organization (WTO)?

Accepted Answer

To facilitate and regulate international trade and promote free trade

Answer

To resolve international disputes

Answer

To provide financial assistance to developing nations

Question 21

Which of the following factors has contributed to the growth of foreign direct investment (FDI)?

Accepted Answer

Technological advancements in communication and transportation

Answer

Declining economic growth in developed countries

Answer

Increased tariffs and trade barriers

Question 22

What is the fundamental difference between a balance of trade deficit and a balance of payments deficit?

Accepted Answer

A balance of payments deficit includes all international financial transactions, while a balance of trade deficit covers only goods and services.

Answer

A balance of trade deficit is always more severe than a balance of payments deficit.

Question 23

What is the main responsibility of the International Monetary Fund (IMF)?

Accepted Answer

To provide financial assistance and support to member countries facing economic difficulties

Answer

To negotiate trade agreements

Answer

To regulate the activities of global banks

Question 24

Which of the following is a criticism of the global economy?

Accepted Answer

It can lead to increased inequality and exploitation of workers

Answer

It ensures sustainable economic growth for all countries

Answer

It fosters peace and cooperation between nations

Question 25

What is the "trilemma" in international economics?

Accepted Answer

The inability to simultaneously achieve fixed exchange rates, free capital flows, and independent monetary policy

Answer

The trade-off between economic growth, inflation, and unemployment

Question 26

What are essential elements of a successful global economic governance system?

Accepted Answer

Strong and effective international cooperation, well-established institutions, and transparent regulations

Answer

Minimal government intervention in economic affairs

Answer

Unilateral decision-making by powerful countries