37. Table: Costs Associated with Phone Supply Chain
Component/ProcessSource CountryCost in U.S. Dollars
Hard driveJapan$75
Display moduleTaiwan25
Video chipUnited States20
Controller chipUnited States10
AssemblyChina20
Wholesale distributionUnited States (Apple)100
Wholesale distributionUnited States (AT&T)150
Retail price 300
Jane Smith, a U.S. citizen, purchased a phone from AT&T for $300. By how much did Jane's purchase change the U.S. trade balance with China?
a. $300
b. $150
c. $120
d. $30
ANSWER: b
38. Table: Costs Associated with Phone Supply Chain
Component/ProcessSource CountryCost in U.S. Dollars
Hard driveJapan$75
Display moduleTaiwan25
Video chipUnited States20
Controller chipUnited States10
AssemblyChina20
Wholesale distributionUnited States (Apple)100
Wholesale distributionUnited States (AT&T)150
Retail price 300
Jane Smith, a U.S. citizen, purchased a phone from AT&T for $300. By how much did Jane's transaction affect the U.S.–Japan trade balance?
a. It did not affect it at all.
b. The U.S.–Japan trade balance fell by $750.
c. The U.S.–Japan trade balance rose by $130.
d. The U.S.–Japan trade balance fell by 25%.
ANSWER: a
39. Intel, an American company, has manufacturing plants in China that assemble U.S.-made components. Suppose one of these plants produces and sells a computer chip to a Chinese computer manufacturer. How is this sale recorded in U.S. international trade statistics?
a. It is considered to be neither a U.S. import nor a U.S. export.
b. It is considered to be a U.S. export to China.
c. It is considered to be a U.S. import from China.
d. The value of U.S.-made chip components is considered to be a U.S. export.
ANSWER: a
40. Why should the recorded U.S.–China bilateral trade deficit in goods be interpreted with some caution?
a. U.S. imports of Chinese products may be produced by U.S. subsidiaries that generate profits for the U.S. parent firms (recorded as U.S. service export income).
b. U.S. imports of Chinese products may utilize material inputs that China imports from the United States or other countries.
c. U.S. imports of Chinese products may be produced with capital goods (e.g., machinery) that China imports from the United States.
d. China does not record all of its imports from the United States in its trade statistics.
ANSWER: b
41. An example of “value-added” as an important concept in international trade was the case of imports of iPhones from China. The value-added by China was equal to:
a. the total value of imported raw and semi-finished materials into China plus the value of the export to the United States.
b. the total value of the export to the United States minus the total value of raw and semi-finished materials imported into China.
c. the total value of the export plus shipping costs.
d. the difference between the total value of exports to the United States and the total value of imports from the United States.
ANSWER: b
42. Over the past century, how have U.S. exports changed?
a. The United States has steadily increased its exports of raw agricultural materials.
b. The United States has always focused primarily on capital and consumer goods, and not much has changed in the last century.
c. The United States has steadily shifted away from agricultural and raw materials.
d. The United States still exports a larger share of agricultural and raw materials than consumer and capital goods.
ANSWER: c
43. Merchandise trade among European countries accounted for approximately what share of total world merchandise (goods) trade in 2018?
a. 3%
b. 21%
c. 26%
d. 49%
ANSWER: b
44. What nations have the world's highest volume of international trade with one another?
a. Canada, Mexico, and Japan
b. Japan, China, South Korea, and Thailand
c. member nations of the European Union
d. Middle Eastern countries