Module 7

Using the graph above, assume Canada has the comparative advantage in corn and terms of trade are 1 corn = 1 peanut. How many peanuts will Canada be able to consume after trade if there's complete specialization?

60

According to these graphs, which of the following is true?

England has an absolute advantage in tents

According to these graphs, which of these is true?

England has an absolute advantage in tents

If the trade deficit changes from -130 million to -100 million which of these could have happened?

Exports went up

If Mexico can produce the same quantity of tomatoes that the United States can, but Mexico uses fewer resources than the United States to do so, we conclude:

Mexico has an absolute advantage in the production of tomatoes

If the exchange rate changes from $1= 105 yen to $1= 107 yen, the dollar has __________________ and the yen has ___________________________.

NOT appreciated, appreciated

Which of these is NOT a benefit of trade?

NOT increase in maximum satisfaction

Countries should import goods for which they have a _______________ opportunity cost.

NOT low

If the US dollar goes from $1 = 0.98 Euro to $1 = 1.04 Euro, which of these is true?

The US dollar is becoming stronger

______________ can enable trading partners to consume more than they can produce domestically.

Trade

True or False. Nations with persistent trade deficits often experience slower economic growth.

True

True or false: A furniture store in Nepal buys furniture from a manufacturer in India. This transaction represents an export for India and an import for Nepal.

True

True or false: Comparative advantage can move from one country to another if the country does not specialize in the production of the good in which they have the comparative advantage

True

True or false: In most cases, trade barriers are harmful to an economy.

True

True or false: Tariffs provide a government with revenue while protecting domestic industries. Quotas only limit the quantity of imported goods to protect domestic industries and don't provide a government with revenue.

True

True or false: When an embargo is placed on a country, no imports from or exports to that country are allowed.

True

True or false: importing Japanese cars into the United States is cheaper when the U.S. dollar is strong against the Japanese yen.

True

If the United States imports more than it exports, which of these is true?

Unemployment in the United States may increase

Using the graph above, which nation has the comparative advantage in the production of peanuts?

United States

If there is an overreliance on exports to drive economic growth, a slowdown in foreign economies could cause

a slowdown in the domestic economy

When a country imports more than it exports, the difference is called ___________.

a trade deficit

If American farmers sell part of their corn production to Mexican consumers, their sale represents

an export for the United States and an import for Mexico

When a trading partner's economy improves, we expect to see ______ in the quantity of exports from the United States to that country.

an increase

When there is an increase in the quantity of exports, we expect ____________ in the amount of labor used domestically to produce those exports.

an increase

If a German family wishes to tour New York City, they want the German currency (the Euro) to _________________ so they get more dollars per Euro. This also means the US dollar would ________________________.

appreciate, depreciate

true or false: If the dollar-euro exchange rate was $1.25 per euro in June, but changed to $1.30 per euro in July, which currency appreciated (or strengthened) against the other?

euro

Countries who have abundant natural resources are likely to ___________________ those resources to other countries.

export

_________________________ are products that are produced domestically but sold internationally.

exports

True or false: Exchange rates rarely change.

false

true or false: An increase in leather prices in Argentina will not affect the export of Argentinean leather shoes.

false

A sustained trade deficit could be a problem for a country because ____________.

fewer exports translates into lower production and decreased employment

The WTO may support trade barriers when it discovers that

firms in one country are dumping products.

A system that allows supply and demand to determine the exchange rates is called a

floating exchange rate system

import

goods which are produced abroad and sold in the United States.

By encouraging companies to produce goods and services for which they have comparative advantages, free trade

helps increase economic efficiency

France has a comparative advantage in the production of cheese. This means they have a lower ________________ than other nations that produce cheese.

opportunity cost

True or false: If the U.S. dollar strengthens compared to the Mexican peso, imports from Mexico would become less expensive.

true

True or false: exchange rate is the price of one country's currency compared to another country's currency.

true

true or false: If the exchange rate between U.S. dollars and British pounds was $1.50 per British pound, you would receive approximately 150 U.S. dollars for 100 British pounds.

true

The opportunity cost of one tent in England is

two radios

trade surplus

when a country exports more than it imports

An open economy means that countries:

will trade with eachother

When a country exports more than it imports, it is operating with a ____________________

trade surplus

true or false: When the dollar strengthens, traveling abroad is relatively cheaper.

true

FTAs promote which of the following?

(ALL OF THESE) 1. Higher levels of trade. 2. Lower prices on imports. 3. Increased output.

Which of these is a reason that producers may choose to import raw materials(resources) from foreign countries?

(all of these) 1. resources are unavailable in the domestic country 2. a better quality of resources is available from international sources 3. lower cost than domestic product

If Argentina exports $120 million and imports $135 million in goods, what is Argentina's balance of trade?

-15 million

What kinds of goods are typically exported by developed countries?

Capital- and skill-intensive products

Which of these is a benefit of trade to consumers?

Increased options

A ______________ benefits foreign companies selling their products in the United States.

Strong dollar

Which of these is an example of an involuntary exchange?

Your wallet is stolen

Involuntary exchanges are not preferred because _________.

they do not happen at agreed upon prices

______________________ are restrictions that governments impose on trade.

trade barriers

closed economy

an economy that has no interactions in trade or finance with other countries

Which of these is not expected when international trade occurs?

higher prices

When a country buys goods from other countries, these goods are called _____________.

imports

Exchanges that happen across country borders are known as _______.

international trade

Consumers often see lower ____________ when international trade occurs.

prices

_________________ show(s) the maximum amount of output possible given a set quantity of resources and a set level of technology, in a particular time period.

production possibility curves

When countries specialize in the production of goods they have the comparative advantage in, both ___________ and ___________________ will increase

production, consumption

Other nations could make the United States trade deficit larger if they _____

purchase fewer US exports