International Economy

Our largest exports to Japan consist of A.) Agricultural products B.) Crude oil C.) Steel products

A.) Agricultural products

Comparative advantage, specialization, and free trade benefit A.) All parties who specialize in the production of the good in which they have a comparative advantage B.) Only the party which specializes the least C.) Only the party which specializes the most

A.) All parties who specialize in the production of the good in which they have a comparative advantage

If the U.S. dollar depreciates in terms of the Euro: A.) American goods would be cheaper for Europeans B.) Americans would have to pay fewer dollars for one Euro C.) European goods would be cheaper for Americans

A.) American goods would be cheaper for Europeans

When the dollar depreciates, A.) Americans sell more exports B.) Americans buy more imports C.) American travel abroad more often

A.) Americans sell more exports

International trade A.) Can raise the standard of living in all trading countries B.) Lowers the standard of living in all trading countries C.) Leaves the standard of living unchanged

A.) Can raise the standard of living in all trading countries

With flexible rates of exchange, the value of the U.S. dollar on the world market A.) Changes daily B.) Stays the same for a period of time C.) Changes infrequently

A.) Changes daily

Goods and services sold to one country from another are A.) Exports B.) Imports C.) Treaties

A.) Exports

Which of the following would contribute to a positive trade balance for a country? A.) Having tourists visit the country B.) Importing textiles C.) Importing financial services

A.) Having tourists visit the country

What is the equation that describes net exports? A.) Net exports = exports - imports B.) Net exports = exports - output C.) Net exports = imports - exports

A.) Net exports = exports - imports

If foreigners buy $200 billion worth of U.S. exports and Americans buy $150 billion worth of foreign imports in a given year, net exports would be A.) Positive $50 billion B.) Positive $150 billion C.) Positive $200

A.) Positive $50 billion

The one benefit of placing tariffs and quotas on foreign imports is the A.) Protection of certain domestic industries from the effects of import competition B.) Reduction of prices of domestically produced goods and services C.) Reduction of the tax burden on lower income Americans

A.) Protection of certain domestic industries from the effects of import competition

If a government limits the number of Japanese ball bearings that may enter its country to protect its domestic industry, it is using a (n) A.) Quota B.) Embargo C.) Tariff

A.) Quota

Chinese exports to the U. S. are greater than the imports of the U.S. goods, resulting in a U.S. trade deficit. A.) True B.) False

A.) True

Foreign investments in U.S. businesses increase when the U.S. dollar is weak. A.) True B.) False

A.) True

If the U.S. dollar appreciates against other currencies, U.S. exports will become more expensive to foreign consumers. A.) True B.) False

A.) True

The balance of trade is in balance when the value of exports equals the value of imports. A.) True B.) False

A.) True

Tours visiting the U.S. contributes to a positive trade balance. A.) True B.) False

A.) True

When a U.S. company buys oil from Saudi Arabia, this is an example of a U.S. import. A.) True B.) False

A.) True

In a given year, a country's exports total $25 billion and its imports are $27 billion. Its net exports are: A.) $52 billion B.) - $2 billion C.) $2 billion

B.) - $2 billion

The United States has free trade agreements ______different countries. A.) 12 B.) 17 C.) 27

B.) 17

A complete ban on the import or export of products to a particular country is known as A.) A tariff B.) An embargo C.) A quota

B.) An embargo

People specialize and trade A.) Because most people are not self sufficient B.) Because each person can consume more than they produce by specializing and trading C.) Because most people are good at producing only one thing

B.) Because each person can consume more than they produce by specializing and trading

Our biggest trade deficit is with A.) Japan B.) China C.) Germany

B.) China

Which of the following is an argument for free trade? A.) Trade restrictions damage import industries B.) Competition results in improved products C.) Job security is threatened

B.) Competition results in improved products

If the forces of supply and demand cause the price of a currency to fall, this is called A.) Foreign exchange B.) Depreciation C.) Elasticity of demand

B.) Depreciation

A trade surplus occurs whenever the country A.) Has money outflows that exceed its money inflows B.) Exports more goods than it imports C.) Imports more capital than it exports

B.) Exports more goods than it imports

A country exports $250 of goods and services and imports $170 of goods and services. The country has a balance of trade deficit of $80. A.) True B.) False

B.) False

A trade deficit is realized when U.S. exports exceed U.S. imports. A.) True B.) False

B.) False

It costs more for Americans to travel abroad when the U.S. dollar is strong. A.) True B.) False

B.) False

The foreign exchange rate describes the balance of trade. A.) True B.) False

B.) False

Buying goods from another country is called A.) Exporting B.) Importing C.) Financing

B.) Importing

The European Union was created by the A.) NATO Treaty B.) Maastricht Treaty C.) WTO Pact

B.) Maastricht Treaty

The idea of comparative advantage is based on: A.) Game theory B.) Opportunity cost C.) Property rights

B.) Opportunity cost

Which interest groups would benefit from a strict quota on imported steel? A.) American consumers B.) Steelworkers in Maryland and Ohio C.) U.S. auto makers and their workers

B.) Steelworkers in Maryland and Ohio

A positive balance of trade results when A.) The value of exports equals the value of imports B.) The value of exports exceeds the value of import C.) The value of imports exceeds the value of exports

B.) The value of exports exceeds the value of import

Occurs when a nation buys more goods from other countries than it sell to other countries A.) Trade surplus B.) Trade deficit C.) Free trade

B.) Trade deficit

The most far-reaching global trade agreement in history is administered by the A.) European Union (EU) B.) World Trade Organization (WTO) C.) North American Free Trade Agreement (NAFTA)

B.) World Trade Organization (WTO)

The euro is the name for A.) A currency deposited outside its country of origin B.) A bond sold internationally C.) A common European currency

C.) A common European currency

The present system of currency exchange rates provides all the following EXCEPT A.) A way for countries to know the value of their currency in terms of another nation's currency B.) A way for international firms to easily and quickly convert their currency to another C.) A fixed rate of exchange

C.) A fixed rate of exchange

An example of a service that is exchanged internationally is A.) Bananas B.) Coffee beans C.) Banking

C.) Banking

Our biggest trading partner is A.) Japan B.) China C.) Canada

C.) Canada

The table below shows the maximum output of widgets and gadgets for two countries. Which of the following is correct? A.) County B has a comparative advantage in both goods B.) County A has a comparative advantage in both goods C.) County B has a comparative advantage in widgets

C.) County B has a comparative advantage in widgets

Goods or services bought by one country from another country are A.) Treaties B.) Exports C.) Imports

C.) Imports

When the exchange rate for the dollar appreciates, U.S. goods become A.) Less expensive relative to foreign goods, which makes exports rise and imports fall B.) More expensive relative to foreign goods, which makes exports rise and imports fall C.) More expensive relative to foreign goods, which makes exports fall and imports rise

C.) More expensive relative to foreign goods, which makes exports fall and imports rise

This Trade Agreement Involves Canada, US and Mexico. A.) European Union (EU) B.) World Trade Organization (WTO) C.) North American Free Trade Agreement (NAFTA)

C.) North American Free Trade Agreement (NAFTA)

A numerical limit on the amount of a product that can be imported is called a A.) Subsidy B.) Tariff C.) Quota

C.) Quota

International agreements such as NAFTA A.) Discourage international trade B.) Increase barriers to trade C.) Reduce barriers to trade

C.) Reduce barriers to trade

All of the following are major barriers to world trade EXCEPT A.) Embargoes B.) Quotas C.) Specialization

C.) Specialization

In the Island of Pretend, Wendy only bakes bread, John only picks berries, and Peter only feeds the chickens. At the end of the day they satisfy their needs by trading among themselves. This economic system is based on A.) Absolute advantage B.) Specialization C.) Specialization and exchange

C.) Specialization and exchange

If a government wants to tax goods entering at its borders, it will impose what is called a(n): A.) Quota B.) Export restraint C.) Tariff

C.) Tariff

Which of the following is a reason that the government might impose a barrier to trade? A.) To hurt the economy B.) To help young foreign industries C.) To make domestic producers competitive

C.) To make domestic producers competitive

The term used when a government interferes in free trade is A.) Trade Policy B.) Trade Intercession C.) Trade Barrier

C.) Trade Barrier

Presently, _______ countries are part of the EU. A.) Twelve B.) Fifteen C.) Twenty-seven

C.) Twenty-seven

Which is not a member of the European Union? A.) France B.) Italy C.) United States

C.) United States

Having a comparative advantage in a particular task means that A.) You are better at it than other people B.) You give up more to accomplish that task than do others C.) You give up less to accomplish that task than do others

C.) You give up less to accomplish that task than do others