Module 6: Business & Trade

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

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

Short Answer: Name four countries that the United States has a free trade agreement with.

Australia, Canada, Mexico, and Korea

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.

Which of the following is a regional political and economic union that promotes trade by removing trade barriers and adopting a common currency?

EU

Short Answer: In one sentence, explain the effect entrepreneurs have on competition in market economies.

Entrepreneurs affect competition in market economies by increasing overall competition, which in turn lowers prices and increases the quality of goods.

Hazlitt quotes an essay by William Graham Sumner, in which A and B work together to propose laws that help X, who is suffering, but that these laws usually focus on what C will do for X. C is referred to as the ______________.

Forgotten Man

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.

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

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.

Short Answer: List three of the four main incentives of entrepreneurship.

Profit, Independence, and helping others

____________ occurs when a nation focuses its resources on producing goods that it expects to trade.

Specialization

What effect do tariffs have on domestic producers?

Tariffs help producers in the protected industries at the expense of all other domestic producers.

Hazlitt's arguments against tariffs are directed against which of the following fallacies? (choose all that apply)

That tariffs raise wages. That tariffs provide employment. That tariffs protect the American standard of living.

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.

Short Answer: In one sentence, define the term absolute advantage.

The term absolute advantage refers to a nation's ability to produce a particular good or service at a lower cost than its trading partner.

Short Answer: In one sentence, define the term comparative advantage.

The term comparative advantage refers to a nation's ability to produce a particular good or service at a lower opportunity cost than its trading partners.

Short Answer: In one sentence, define the term globalization.

The term globalization refers to the interaction and integration of individuals, businesses, and governments worldwide.

Which of the following are advantages of cooperatives? (choose all that apply)

Their owners don't have personal liability for the business. Their owners often get discounts on the goods and services produced by the cooperative. Their owners all have a say in how the business is run.

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 disadvantages of sole proprietorships? (choose all that apply)

Their owners usually have limited financial resources. Their owners have unlimited personal liability.

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)

There would be no net addition to American industry or employment. American consumers would be forced to subsidize this industry.

Which of the following are advantages of partnerships? (choose all that apply)

They are generally easy and inexpensive to start. Their owners don't have to pay any special business taxes. Their owners can share responsibilities based on their different skills.

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

What should you do when you reach the traditional retirement age of sixty-five?

You can quit your regular job if it's feasible, but you should continue working to advance God's kingdom as long as you're able.

If Country A can produce wheat at a lower cost than Country B, then Country A has a(n) ____________ advantage in wheat production.

absolute

Which of the following would be hurt by a weak dollar? (choose all that apply)

an American consumer buying products from England an American traveling to Germany an American company that buys steel from China

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

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 labor

Trade barriers are harmful to which of the following groups? (choose all that apply)

domestic consumers foreign producers in the affected industries

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

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

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

Which of the following are ways that entrepreneurs benefit society? (choose all that apply)

generating economic growth fostering technological advancements developing new products improving existing products

Work is a(n) ______ from God.

gift

Which of the following can discourage the creation of new businesses?

high tax rates

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

When American companies move production overseas, it is called ________.

offshoring

A business with two or more owners is called a _____________.

partnership

A limit on the quantity of a product that's allowed into a nation is called a(n) _______.

quota

What is the chief consequence of trade barriers?

reduced competition

Hazlitt writes that economics "is a science of recognizing ____________ consequences."

secondary

In Nearing Home, Billy Graham writes that "someone who brags about working seventy or eighty hours a week" has become a(n) ________ of his or her job.

slave

Proverbs 19:15 says, "Slothfulness casts into a deep ______, and an idle person will suffer hunger."

sleep

In Adam Smith's theories, free trade was considered as one aspect of the __________ of labor.

specialization

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

Which of the following is the most common trade barrier?

tariff

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

Which of the following factors impact how much trade takes place between two countries? (choose all that apply)

transportation costs the countries' willingness to encourage or discourage trade the exchange rate between their currencies the political climate in each country the size of each country each country's capacity to produce goods

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

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