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Applied International Economics, 5e Charles Sawyer, Richard Sprinkle

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CHAPTER 1

Introduction: an overview of the world

economy

Multiple Choice

1. The discipline of economics can be divided into:

• microeconomics and macroeconomics.
• stocks and flows.
• merchandise and services.
• unlimited wants and limited resources.
• exports and imports.

2. The study of microeconomics focuses on the:

• interaction of international trade and domestic production of goods and services.
• operation of the entire economy.
• role of the banking system in the economy.
• structure and performance of particular industries and markets.
• GDP of a country.

3. Macroeconomics focuses on the performance of:

• individual consumers.
• business firms.
• government agencies.
• the economy as a whole.
• industrial structure.

4. International economics is a blend of:

• microeconomics and sociology.
• macroeconomics and medicine.
• regional economics and macroeconomics.
• microeconomics and macroeconomics.
• trade and GDP.

5. The majority of economic activity is:

• international activity.
• domestic activity.
• trade block activity.
• internationalization.
• government spending.
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6. GDP has several major exclusions, including:

• economic activity that does not occur in a market.
• items resold during the period.
• legally sold items that are non-taxable.
• illegal activity.
• all of the above.

• GDP for a country excludes which of the following?
• Consumption by the public
• Imports and exports
• Illegal economic activities
• Investment spending by businesses
• none of the above

8. GDP is:

• the sum of the amounts of goods and services in the economy.
• a measure of the amount of capital in an economy.
• a measure of per capita economic growth of the economy.
• a monetary measure of final output produced during a given period

of time.

9. GDP is:

• measured in physical units.
• a measure of the economic growth rate.
• the total market value of all final goods and services produced in a country in a

year.

• a per capita measure.
• none of the above

10. GDP per capita is:

• the sum of consumer goods, investment goods, government services, and exports.
• a monetary measure of the economic growth rate of a country.
• the value of the factors of production used to produce a country’s output.
• GDP divided by the total population.
• GDP divided by employment.

11. GDP per capita will always increase when:

• the population increases.
• the rate of economic growth increases.
• there is an increase in the rate of growth of the country’s labor force.
• the rate of economic growth exceeds the rate of population growth.
• none of the above
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• The best measure of how much output the average person would receive if all output

were divided evenly among a country’s population would be:

• GDP.
• population.
• percentage change in GDP.
• GDP per capita.
• Gross National Welfare.

13. Average living standards are best measured using:

• GDP.
• GDP per capita.
• the economic growth of a country.
• the amount of business investment in the economy.
• life expectancy.

14. The size of the world economy is approximately:

• $15 trillion.
• $20 trillion.
• $32 trillion.
• $45 trillion.
• $73 trillion.

15. The total GDP of the world economy is approximately:

• $10 trillion.
• $15 trillion.
• $32 trillion.
• $45 trillion.
• $86 trillion.

16. The average GDP per capita in the low-income economies is approximately:

• $602.
• $635.
• $812.
• $3,200.
• $2,140.

17. The average GDP per capita in the middle-income economies is approximately:

• $360.
• $1,123.
• $2,782.
• $5,483.
• $8,672.
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