Global Economy Unit

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 quota embargo tariff

quota

A tariff: raises the price of imported goods, increasing the demand for domestic substitute goods lowers the cost of producing domestic goods raises the price of domestic goods

raises the price of imported goods, increasing the demand for domestic substitute goods

International agreements such as NAFTA discourage international trade. increase barriers to trade. reduce barriers to trade.

reduce barriers to trade.

All of the following are major barriers to world trade EXCEPT embargoes quotas specialization

specialization

If a government wants to tax goods entering at its borders, it will impose what is called a(n): quota export restraint tariff

tariff

Comparative advantage is related to trade stocks insurance

trade

Occurs when a nation buys more goods from other countries than it sell to other countries trade surplus trade deficit free trade

trade deficit

When the dollar depreciates, Americans sell more exports Americans buy more imports American travel abroad more often

Americans sell more exports

When one producer can create a given amount of output with fewer inputs, what exists? Absolute advantage Absolute disadvantage Comparative advantage

Absolute advantage

When one producer has a lower opportunity cost of production than another producer for a given item, what exists? Absolute advantage Comparative advantage Comparative disadvantage

Comparative advantage

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

Competition results in improved products.

What do you call the number that represents the nominal value of currency in two countries? Output Exchange rate Price

Exchange rate

Mechanic A can change a tire in 1 hour and change a sparkplug in 2 hours. Mechanic B can change a tire in 0.5 hours and change a sparkplug in 0.25 hours. Who has the comparative advantage in changing spark plugs? Both mechanics Mechanic A Mechanic B

Mechanic B

When a country imports more than it exports, what is the value of the net exports? Negative Positive Zero

Negative

What is the equation that describes net exports? Net exports = exports - imports Net exports = exports - output Net exports = imports - exports

Net exports = exports - imports

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

North American Free Trade Agreement (NAFTA)

Why would one country place an embargo another? Political differences Lack of natural resources Distance

Political differences

There are three producers. Producer A spends $10 to make a widget. Producer B spends $50 to make a widget. Producer C spends $4. Who has the absolute advantage? Producer A Producer B Producer C

Producer C

What is it called when the government gives domestic industries grants to keep them running competitively? Subsidies Taxes Quotas

Subsidies

The euro is the name for a currency deposited outside its country of origin. a bond sold internationally. a common European currency.

a common European currency.

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

To make domestic producers competitive

The term used when a government interferes in free trade is Trade Policy Trade Intercession Trade Barrier

Trade Barrier

Which of the following is a situation in which trade is advantageous? Two countries produce the same goods for the same costs Two countries produce different goods for different costs Two countries have the same markets

Two countries produce different goods for different costs

Which is not a member of the European Union? France Italy United States

United States

The international organization that serves as a forum for trade discussions and the development of trade rules is called the WTO World Bank United Nations

WTO

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

a fixed rate of exchange.

A complete ban on the import or export of products to a particular country is known as a tariff an embargo a quota

an embargo

Goods and services sold to one country from another are exports imports treaties

exports

A trade surplus occurs whenever the country has money outflows that exceed its money inflows exports more goods than it imports imports more capital than it exports

exports more goods than it imports

Goods or services bought by one country from another country are treaties exports imports

imports