Multiple Choice
Select the correct answer.

1. Which of the following is NOT a reason for some state leaders to favor protectionism despite the benefits of free trade?
A. Industry adjustments
B. Import substitution
C. Insulating infant industries
D. The law of comparative advantage
E. Uneven distribution of wealth and entrenched interests

	Country A	Country B	Country C
Wine	5 hrs/bottle	6 hrs/bottle	7 hrs/bottle
Cheese	4 hrs/lb	8 hrs/lb	3 hrs/lb
Bread	9 hrs/loaf	6 hrs/loaf	2 hrs/loaf
One bundle in Autarky	18 hrs	20 hrs	12 hrs

2. Consider the table above. Which arrangement gives each country a gain from trade (in terms of increasing leisure time)?
A. Country A produces 3 bottles of wine; Country C produces 3 lbs. of cheese and 3 loaves of bread.
B. Country A produces 3 lbs. of cheese; Country B produces 3 bottles of wine; Country C produces 3 loaves of bread.
C. Country A produces 3 lbs. of cheese; Country B produces 3 loaves of bread; Country C produces 3 bottles of wine.
D. Country A produces 3 loaves of bread; Country B produces 3 lbs. of cheese; Country C produces 3 bottles of wine.
E. No gains from trade are possible.

3. Which of the following is a form of protectionism that places numerical limits on imports?
A. Excise.
B. Quotas.
C. Subsidies.
D. Tariffs.
E. Transparency.

4. The functions of a central bank in the United States are primarily carried out by what two instititions?
A. Department of Agriculture and the Risk Management Agency
B. Department of Commerce and the Mint
C. Department of Interior and the Internal Revenue Service
D. Department of State and the Agency for International Development
E. Department of Treasury and the Federal Reserve

5. Who examined economic trends and predicted that population would surpass food production, leading to starvation and war?
A. John Maynard Keynes
B. Thomas Malthus
C. Karl Marx
D. David Ricardo
E. Adam Smith

6. Which of the following countries is NOT a member of the Group of Eight (G8)?
A. Canada
B. China
C. Italy
D. Germany
E. Russia

Definitions/Fill in the Blank
Type in the correct terms for the following sentences.

7. A(n) is an agreement among member states to coordinate a common external tariff.

8. A policy of creating monopoly zones of economic trade in other parts of the world in order to trade with the imperial center is called .

9. An international business actor based in one state with affiliated branches or subsidiaries operating in other states is called a(n)

10. A(n) means that goods move without tariffs across the borders of the member states.

11. A government payment to an industry to reduce the industry’s costs is called a(n) .

12. Identify the marked country below: .