Business and trade
In Adam Smith's theories, free trade was considered to be one aspect of the __________ of labor.
specialization
When we make a voluntary trade, we are exchanging one item for another because __________________.
we value the item acquired more than what we're giving up
As of 2020, how many members are in the World Trade Organization?
164
Which verse says, "If anyone is not willing to work, let him not eat"?
2 Thessalonians 3:10
From 2009 to 2020, the exchange rate between the euro and the US dollar varied over time. During that time, the number of euros you would've received for $100 ranged from _________.
70 to 95 euros
In one sentence, define the term trade agreement.
A trade agreement is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other.
Who wrote in defense of free trade, "In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest"?
Adam Smith
According to Hazlitt, which of the following would be consequences of the United States placing a new tariff on foreign sweaters, resulting in the creation of a domestic sweater industry? (choose all that apply)
American consumers would be forced to subsidize this industry. There would be no net addition to American industry or employment.
In the video about entrepreneurship, how was the owner of Clean & Mean able to craft her work schedule in a way that allowed her to go to the mall with her mom on Friday mornings?
Because of the level of independence offered by entrepreneurship.
In the video about entrepreneurship, why was the owner of Clean & Mean able to craft her work schedule in a way that allowed her to go to the mall with her mom on Friday mornings?
Because of the level of independence offered by entrepreneurship.
In one sentence, explain the effect entrepreneurs have on competition in market economies.
By establishing new businesses, entrepreneurs intensify competition for existing businesses. Consumers benefit from the resulting lower prices and greater product variety. Researchers have developed a measure of market mobility, which identifies the effects of new business formation on existing firms
Which verses say, "Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ"?
Colossians 3:23-24
In one sentence, define the term comparative advantage.
Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.
Which of the following is a regional political and economic union that promotes trade by removing trade barriers and adopting a common currency?
EU
Which verse says, "There is nothing better for a person than that he should eat and drink and find enjoyment in his toil"?
Ecclesiastes 2:24
In Economics in One Lesson, Hazlitt talks about what would happen if a tariff that had brought an industry into existence was repealed. What does Hazlitt say the results would be? (choose all that apply)
Employment on net balance would NOT go down. Products in that industry would become less expensive or higher quality. Domestic manufacturers in that industry would go out of business, and many workers would lose their jobs. Production on net balance would go up.
Hazlitt writes that "a little economics can easily lead to . . . paradoxical and preposterous conclusions." What does he say about depth in economics?
It brings people back to common sense.
Name four countries that the United States has a free trade agreement with.
Mexico Australia Canada Columbia
Established in 1994, this treaty created a zone of free trade between Canada, Mexico, and the United States.
NAFTA
Which of the following are disadvantages of franchises? (choose all that apply)
Owners have limited control over their business. Owners have to pay an expensive franchise fee.
What effect do tariffs have on domestic producers?
Tariffs help producers in the protected industries at the expense of all other domestic producers.
What effect do tariffs have on labor productivity and wages?
Tariffs reduce labor productivity and reduce wages.
Hazlitt's arguments against tariffs are directed against which of the following fallacies? (choose all that apply)
That tariffs provide employment. That tariffs protect the American standard of living. That tariffs raise wages.
In one sentence, explain the central lesson of the book Economics in One Lesson.
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or public policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
List three of the four main incentives of entrepreneurship.
The four challenges in entrepreneurship are risk, stress, time commitment, and financial Commitment.
If a lot of Americans are buying products made in Europe, which of the following will happen? (choose all that apply)
The supply of American dollars on the foreign exchange market will increase. Demand for euros on the foreign exchange market will increase.
Which of the following are advantages of partnerships? (choose all that apply)
Their owners don't have to pay any special business taxes. Their owners can share responsibilities based on their different skills. They are generally easy and inexpensive to start.
Which of the following are advantages of sole proprietorships? (choose all that apply)
Their owners get to keep all the profits for themselves. They are generally easy and inexpensive to start. Their owners have total control over their business.
Which of the following are advantages of corporations? (choose all that apply)
Their owners have limited liability. They can access an enormous amount of money they can invest.
Which of the following are disadvantages of sole proprietorships? (choose all that apply)
Their owners have unlimited personal liability. Their owners usually have limited financial resources.
Which of the following are advantages of cooperatives? (choose all that apply)
Their owners often get discounts on the goods and services produced by the cooperative. Their owners don't have personal liability for the business. Their owners all have a say in how the business is run.
Why do politicians often establish trade barriers even though the barriers usually do more harm than good?
They are incentivized to create policies that disperse costs over a large number of people but benefit small, powerful groups.
Which of the following are disadvantages of corporations? (choose all that apply)
They are more complicated and expensive to establish than other business structures. Their owners are subjected to double taxation.
Which of the following agreements was negotiated during President Trump's administration and contains provisions that benefit American farmers, protect intellectual property, and regulate digital trade?
USMCA
What group was established in 1995 and oversees international trade agreements, provides a place for its member nations to negotiate, and acts as a mediator when disputes arise?
World trade organization
If Country A can produce wheat at a lower cost than Country B, then Country A has a(n) ____________ advantage in wheat production.
absolute
Hazlitt says that, like mathematics, the answer to an economics problem __________________.
already lies in the statement of the problem
Which of the following would be hurt by a strong dollar? (choose all that apply)
an American farmer who exports corn to the Middle East
Which of the following would be hurt by a weak dollar? (choose all that apply)
an American traveling to Germany an American consumer buying products from England an American company that buys steel from China
Entrepreneurs develop new products and start new businesses by ________________.
bringing natural, human, and capital resources together
If Country A can produce wheat at a lower opportunity cost than Country B, then Country A has a(n) ___________ advantage in wheat production.
comparative
A business that operates as a separate legal entity from its owners is called a ___________.
corporation
Which of the following is an example of a cooperative?
credit union
Hazlitt writes that "the economist, assigned a practical problem, must know both the essential facts of that problem and the valid __________ to be drawn from those facts."
deductions
When a nation imports more goods than it exports, it has a trade ________.
deficit
Hazlitt writes that the fundamental fallacy of looking only at certain groups instead of at everyone "is an almost inevitable result" of what?
division of labour
Which of the following is a trade barrier that forbids buying and selling a certain good with a certain country?
embargo
Hazlitt compares economics to both mathematics and ___________.
engineering
Individuals who take risks to bring natural, human, and capital resources together, in order to develop new products and start new businesses are called ______________.
entrepreneurs
Which of the following are true about the impact of entrepreneurship on society? (choose all that apply)
entrepreneurship increases competition entrepreneurship leads to higher quality goods
In the long run, imports must _________ exports.
equal
One way that nations can control the value of their currency is by establishing a ____________, in which the value of a currency is set at a specific value relative to another currency or some other measure of value.
fixed exchange rate
One way that nations can control the value of their currency is through a ___________, in which the value of a currency is determined by the forces of supply and demand.
floating exchange rate
A business owned by an entrepreneur that is licensed to sell products under the name of a larger corporation is called a ____________.
franchise
Hazlitt writes that economics should be concerned "not only [with] some special interest in the short run, but [with] the _________ interest in the long run."
general
Work is a(n) ______ from God.
gift
The interaction and integration of individuals, businesses, and governments worldwide is called _____________.
globalization
Historically, many countries used to fix their currency to a set amount of ______.
gold
Which of the following can discourage the creation of new businesses?
high tax rates
Match the following terms with their definitions.
import- a foreign product bought from a seller in another nation export- a domestic product sold to a buyer in another nation quota- a limit on the quantity of a product that's allowed into a nation embargo- forbids buying or selling a certain good with a certain country tariff- a tax on imported goods
Which of the following are ways that entrepreneurs benefit society? (choose all that apply)
improving existing products generating economic growth fostering technological advancements
Because of ________________, the world's nations have becoming increasingly interdependent economically.
increased specialization
Which of the following are effects of the expansion of trade? (choose all that apply)
increases the variety of products available for consumers to purchase increases competition, which lowers prices and improves quality increases employment in industries that export goods to other nations generates economic growth and encourages investment
Which verse says, "In the same way, let your light shine before others, so that they may see your good works and give glory to your Father who is in heaven"?
matthew 5:16
When American companies move production overseas, it is called ________.
offshoring
In the United States, how many small businesses fail within the first year?
one in five
In the United States, one in five small businesses fail within the first year. How many fail within the first five years?
one in two
When American companies send work to businesses or workers in other countries, it is called _________.
outsourcing
An agreement between business partners that outlines each partner's privileges and responsibilities is known as a ____________ agreement.
partnership
In his discussion of economic problem solving, Hazlitt quotes philosopher George Santayana, who wrote that logic "traces the _________ of truth."
radiation
What is the chief consequence of trade barriers?
reduced competition
Hazlitt writes that economics "is a science of recognizing ____________ consequences."
secondary
An individual who owns stock in a corporation is called a ____________.
shareholder
Proverbs 19:15 says, "Slothfulness casts into a deep ______, and an idle person will suffer hunger."
sleep
Because of increased __________, the world's nations have becoming increasingly interdependent economically.
specialization
____________ occurs when a nation focuses its resources on producing goods that it expects to trade.
specialization
When a country determines its areas of comparative advantage and specialization, it puts itself in a position to ____________ through trade with other countries.
strengthen its economy
Hazlitt writes, "The effect of a tariff, therefore, is to change the ____________ of American production" because it makes some industries larger and others smaller.
structure
When a nation exports more goods than it imports, it has a trade ________.
surplus
Which of the following is the most common trade barrier?
tariff
What is one key element that encourages people to trade?
the ability to buy a particular good from someone else cheaper than it costs to make it yourself
Which of the following factors impact how much trade takes place between two countries? (choose all that apply)
the exchange rate between their currencies each country's capacity to produce goods the size of each country transportation costs the political climate in each country the countries' willingness to encourage or discourage trade
In one sentence, explain the term weak dollar.
the value of a dollar, in terms of the number of goods and services it can buy, is decreasing relative to the value of one or more foreign currencies
Which of the following are reasons that trade barriers are established? (choose all that apply)
to apply diplomatic pressure to a foreign government to strengthen national defense to protect domestic industries that would be hurt by free trade
What does Hazlitt say is the goal of economic science?
to see the problem as a whole, and not in fragments
Ecclesiastes 2:24 says, "There is nothing better for a person than that he should eat and drink and find enjoyment in his ____."
toil
What happens when all nations specialize in the areas where they have comparative advantages? (choose all that apply)
total world production increases the global standard of living increases
Owners of sole proprietorships and partnerships have _____________ liability for their business.
unlimited personal
In the past, the United States has been so focused on exporting goods that it gave other nations loans to pay for the goods America exported to them. But if these loans are never repaid, it means that _____________.
we are giving the goods a
In the past, the United States has been so focused on exporting goods that they gave other nations loans to pay for the goods America exported to them. But if these loans are never repaid, it means that _____________.
we are giving the goods away
If the US dollar has a low value relative to other countries, it's said to be ________.
weak
When do entrepreneurs earn a profit?
when they're able to sell their goods for more money than it cost them to produce those goods
Genesis 2:15 says, "The Lord God took the man and put him in the garden of Eden to ____ it and keep it."
work