UCI Econ 13 / IS 13 Homework 3
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question. (3 pts each)
1) If a computer contains a microprocessor from Costa Rica and a hard
disk drive from the Philippines, the computer manufacturer most likely
uses which of the following entry strategies?
A) franchising
B) global sourcing
C) exporting
D) licensing
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2) Which of the following most likely explains why India is a popular
country for offshoring?
A) generate sales
B) process orders
C) transport goods
D) maintain inventory
4) Which of the following is a major concern for opponents of global
sourcing?
A) employment losses
B) government support
C) minimum wage laws
D) environmental harm
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5) Which of the following is typically correlated with developing
economies?
A) few natural resources
B) poor education systems
C) large elderly population
D) lack of cultural history
6) All of the following are typical characteristics of emerging markets
except ________.
A) moderate competition
B) rapid industrialization
C) rapidly declining trade barriers
D) low inward foreign direct investment
7) An emerging market's lack of transparency may suggest which of the
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A) corruption
B) bureaucracy
C) accountability
D) expertise
8) If a country's real GDP is rising by 3% per year while its population is
rising at 5% per year, which of the following is true?
A) Growth in nominal GDP is less than the growth in the population.
B) The country's standard of living is falling.
C) Growth in nominal GDP outweighs growth in the population.
D) The country's standard of living is rising.
9) An economic growth model
A) explains changes in nominal GDP per capita in the long run.
B) explains changes in real GDP per capita in the long run.
C) explains changes in real GDP per capita in the short run.
D) explains changes in nominal GDP per capita in the short run.
Figure 22-1
10) Refer to Figure 22-1. Technological change is shown in the figure above
by the movement from
A) B to E.
B) B to D.
C) B to A.
D) B to C.
10) ______
11) What is human capital?
A) buildings, equipment, and machinery owned by individuals rather
than firms
B) labor productivity
C) buildings, equipment, and machinery owned by firms
D) the accumulated knowledge and skills that workers acquire from
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11) ______
12) What's the difference between foreign direct investment and foreign
portfolio investment?
A) Individuals engage in foreign portfolio investment, but only firms
can engage in foreign direct investment.
B) Foreign direct investment involves purchases of foreign stock or
bonds by individuals or firms, while foreign portfolio investment
involves a firm purchasing or building a facility in a foreign
country.
C) Foreign direct investment can give a low-income country access to
funds and technology it would not otherwise have, but foreign
portfolio investment does not expand that access.
D) Foreign direct investment only takes place when governments
make official purchases or foreign investments, while foreign
portfolio investment takes place when firms, individuals, or the
12) ______
government
purchase foreign investments.
13) In the past the federal government often employed what is called a
"command and control" approach to the reduction of pollution
1
3)
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emissions. Many economists are critical of this approach because
A) the "command and control" approach leads to negative
externalities.
B) the "command and control" approach is designed to help firms at
the expense of consumers.
C) it does not lead to significant reductions in pollution.
D) they believe a market-based approach will reduce emissions more
efficiently.
14) When there is a positive externality
A) the social benefit received by consumers is greater than the private
benefit.
B) the private benefit received by consumers is greater than the social
benefit.
C) the private benefit received by consumers is greater than the
external benefit.
D) the private benefit received by consumers is greater than the
private cost.
SHORT ANSWER. (10 pts each)
15) In a short essay, discuss three advantages and three disadvantages of China as a
location for global sourcing.
16) In a short essay, explain why emerging markets have grown at such a fast rate.
What characteristics of emerging markets contribute to their success? Provide an
example of a firm or industry that has been particularly successful in an emerging
market.
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17) How do economic growth rates affect a nation's standard of
living?
18) Using the points on the diagram below, identify which
combinations of these points illustrate diminishing returns to
capital. Give a brief explanation to support your answer.
List four types of government policies which can aid
economic growth.
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19)
20) What is a private benefit from consumption? What is a social
benefit from consumption? When is the private benefit from
consumption equal to the social benefit from consumption?
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