Which of the following factors has been shown to affect the quantity of trade between two countries?
a. if the two are similar in size
b. if both countries are landlocked
c. if the same language is spoken in both
d. if they were colonized by different countries
e. if the two share ideological values
Why does Frankel argue that international trade may have the effect of reducing income inequality within countries?
a. Workers tend to benefit more from trade than the owners of capital do.
b. Trade tends to increase a country's overall income, making everyone better off.
c. Trade makes countries richer, and richer countries can afford to adopt income redistribution policies.
d. Trade allows countries to import cheap consumer goods, allowing the poor to enjoy a better standard of living.
e. Countries that trade more tend to be more democratic, so the people are able to exert pressure on governments to redistribute income.
What impact does the empirical evidence suggest trade has on a country's growth rates?
a. The more trade a country engages in, the slower its rates of growth.
b. Trade increases a country's GDP level but has no effect on rates of growth.
c. It has a strong positive impact, though not as strong as investments in physical and human capital.
d. It is impossible to tell because higher growth may be either a cause or an effect of higher levels of trade.
e. Most of the empirical evidence is too ambiguous to draw hard conclusions about the impact of trade on growth.
According to economic theory, in what should arbitrage conducted in a borderless world result?
a. price equality
b. higher prices where supply is lower
c. higher prices where demand is higher
d. wealth being concentrated in the hands of the few
e. a widening gap between the incomes of rich and poor countries
To what recent evidence does Frankel point in showing that centrifugal forces are still at work in the global economy?
a. the erection of new tariff barriers
b. the breakdown of world trade talks
c. the emergence of regional trade blocs
d. the increase in the number of wars fought between nations since 1990
e. the creation of multiple new nations out of the ruins of the former Soviet Union
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