ECON Unit 4 Test Review

Placing taxes on imported shoes from Vietnam is an example of a

trade barrier

Someone who strongly opposes a trade barrier like quotas or tariffs would MOST LIKELY argue that the barrier

will lead to higher prices and fewer imported goods.

International trade MOST OFTEN takes place because of differences in

comparative advantage

Which situation correctly describes a trade deficit?

imports are greater than exports.

What is MOST LIKELY to happen to US imports and exports if the US dollar becomes stronger relative to other currencies?

imports will increase, exports will decrease

Why is an embargo used in situations where countries have severe political differences?

Embargoes typically ban all trade between two countries.

The fact that the US tends to import goods from Guatemala that it could produce more abundantly itself tends to suggest that

Guatemala has a comparative advantage in producing these goods.

When the US dollar appreciates, US consumers can

afford to buy more foreign products

Having a comparative advantage in a good means that a country can produce the good

at a lower opportunity cost compared to another country

The purpose of a tariff when used for protectionism is to

make an imported good more expensive than its domestically produced counterpart.