<p>Hello,</p>
<p>I was going over some practice questions this summer and I had a problem with multiple choice ones on global trade. I couldn't find the answers to the following, please help if you can.</p>
<p>Question 1</p>
<p>An increase in U.S. imports means:</p>
<p>The rest of the world must be exporting more.</p>
<p>Unemployment in the rest of the world must increase.</p>
<p>The rest of the world must have a trade deficit.</p>
<p>The rest of the world must have a trade surplus.</p>
<p>All of the above</p>
<p>Pretty sure it's D but not completely sure...</p>
<p>Question 2</p>
<p>When a country has a lower opportunity cost in producing a good than any other country: </p>
<p>I) Specialization in producing the good will increase consumption possibilities for everyone.
II) It has favorable terms of trade in producing the good.
III) It has an absolute advantage in producing the good. </p>
<p>I only</p>
<p>II only</p>
<p>I and II</p>
<p>II and III</p>
<p>I and III</p>
<p>I is true for sure and III is false for sure. I'm not sure about II, so A or C.</p>
<p>Question 3</p>
<p>In China suppose 1 hour of labor produces either 3 computers or 2 TVs, but in Spain 1 hour produces either 2 computers or 1 TV. Terms of trade between the two countries will lie between:</p>
<p>1/2 and 2/3 TV per computer.</p>
<p>1/3 and 2/3 TV per computer.</p>
<p>1/3 and 1/2 TV per computer.</p>
<p>1/2 and 1 TV per computer.</p>
<p>2/3 and 1/2 TV per computer.</p>
<p>I know how to do the beginning but not terms of trade...but from what I got I think it's D cause my max is 1.</p>
<p>Question 4</p>
<p>Imports do all of the following, except:</p>
<p>Reduce the initial spending impact of additional income on the domestic economy.</p>
<p>Increase competition for consumers.</p>
<p>Represent a leakage from the circular flow.</p>
<p>Increase production possibilities.</p>
<p>Increase X in GDP</p>
<p>For sure D is false (so would be the answer), but I'm not sure about the others.</p>
<p>Thanks for the help!</p>