Small Test - Economics EOC (GSE) UPDATED Domain: International Economics
Mexico is experiencing high inflation while Canada is enjoying a steady GDP and stable inflation. What should happen in the foreign exchange market? (A)
No Answer Selected A) a depreciation of Mexico's currency B) a decrease in the supply of Mexico's currency C) a decrease in the demand for Canada's currency D) an increase in the supply for Canada's currency
Which is an argument against free trade? (C)
A) Allowing unlimited trade levels will help insure fair competition among all sides. B) Fewer trade barriers will lead to increased trade, production, and revenues for all sides. C) Removing import duties will give an unfair advantage to countries in which labor is cheap. D) A "level playing field" for trade is best achieved by protecting US firms from unfair competition.
Excerpt from A Petition, published in 1845 by Frederic Bastiat 'From the Manufacturers of Candles, Tapers, Lanterns, Candlesticks, Street Lamps,.... To the Honorable Members of the Chamber of Deputies.... You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry...." Which quote BEST represents the idea of trade barriers? (C)
A) "You are on the right track." B) "You reject abstract theories" C) "You wish to free him from foreign competition" D) "[You] have little regard for abundance and low prices"
This map highlights (in dark blue) the organization founded in the 1960s known as (A)
A) ASEAN. B) NAFTA. C) NATO. D) OAS.
On May 13, 2005, Benjamin Wu, the Department of Commerce's assistant secretary for technology policy delivered this testimony to the House of Representatives Committee on Government Reform. (excerpt) "Mr. Chairman and members of the Committee, thank you for the opportunity to address your concerns on the use of domestic source restrictions by foreign governments. Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restrictions by foreign governments, in the form of standards as trade barriers, are a concern and have prompted the Department of Commerce to take recent action. The Department of Commerce is committed to ensuring that standards are fair and responsive to market and technology needs, and that we partner with industry to combat standards as trade barriers to American goods and services. While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and participate in the Chinese marketplace, it is important that there is a standards development process that is open, transparent, participatory, and fair in China. In 2004, China was the United States' third largest trading partner, with total merchandise trade between the two nations reaching $231 billion. The United States exported over $35 billion of merchandise to China, an increase of over 25 percent over the previous year. Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In this regard, I have been asked by the Committee to address a specific example where China has caused great concern with U.S. industry in its application of domestic source requirement standards - China's pending software procurement regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. software companies, which are widely recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's growing information technology market. This is especially necessary to combat and offset the perceived high rate of software piracy in China. The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representative, have been working hard to ensure that U.S. software companies continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal." Which quote from the passage represents a specific example of a trade barrier? (A)
A) "China's pending software procurement regulation" B) "[T]he perceived high rate of software piracy in China" C) "China was the United States' third largest trading partner" D) "American industry has demonstrated a clear interest to compete...in the Chinese marketplace"
If you were doing a presentation about "balance of trade," which journal entry would likely be the MOST helpful? (A)
A) "Exports Take a Strong Hit in 3rd Quarter" B) "Prices of Foreign Cars Remain Constant" C) "Farmers Face a Tough Drought Situation" D) "Stock Prices Soar With Economic Forecast"
If a U.S. citizen could buy £25,000 for $100,000, the rate of exchange for the pound would be (C)
A) $0.25. B) $1. C) $4. D) $25.
· Value of $1 U.S. in pesos is 10.34 · Value of 1 Peso in U.S. Dollars is $0.09 Shelby traveled to Mexico to a resort and took $100 in U.S. currency. When she exchanged it for pesos, she received (D)
A) 10.3 pesos. B) 103 pesos. C) 900 pesos. D) 1,034 pesos.
Foreign Exchange Rates County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Foreign Currency UK / Pound 2.0292 .4928 Japan / Yen .0084 118.9599 India / Rupee .0248 40.3950 Canada / Dollar .9394 1.0645 Misha traveled to India and took $200 in U.S. currency. When Misha exchanged the $200 in India, she received about (D)
A) 2,480 Indian rupees. B) 4,040 Indian rupees. C) 4,960 Indian rupees. D) 8,079 Indian rupees.
In 1999, the U.S. announced trade sanctions worth $116.8 million, targeting goods from France, Germany, Italy and Denmark. The sanctions were in retaliation for a ban on U.S. hormone-treated beef by which organization? (B)
A) ASEAN B) EU C) NAFTA D) WTO
In 2002, Canada, Mexico, and Japan were the largest trading partners of the United States. The respective order is MOST LIKELY due to (C)
A) ASEAN. B) EU. C) NAFTA. D) OPEC.
Established in 1967 in Thailand with more than 500 million members, one of the largest regional markets in the world is (A)
A) ASEAN. B) NAFTA. C) NATO. D) OPEC.
The September 27, 2003, Toronto Star had a headline reading, "Global Economy is Shifting Focus to East Asia". The article MOST LIKELY references (A)
A) ASEAN. B) EU. C) NAFTA. D) OPEC.
The September 27, 2003, Toronto Star had a headline reading, "Global Economy is Shifting Focus to East Asia". The article MOST LIKELY references (A)
A) ASEAN. B) EU. C) NAFTA. D) OPEC.
Established in 1967 in Thailand with more than 500 million members, one of the largest regional markets in the world is (A)
A) ASEAN. B) NAFTA. C) NATO. D) OPEC.
Travis takes two trips to Ecuador. On his first trip, he finds that one US dollar is worth 25000 Ecuadorian Sucre. On his return trip, he finds that the dollar is now worth 26000 Ecuadorian Sucre. What is a LIKELY result of this change in exchange rates? (B)
A) American Exports to Ecuador Increase B) American Imports from Ecuador increase C) There is not enough information to answer D) Ecuadorians invest more in infrastructure
The country of "Econoland" can use its resources to produce either 500 tons of crab or 200 tons of plywood. Its rival, "Arcadonia," is able to produce either 200 tons of crab or 100 tons of plywood. From this passage, it can be concluded that (A)
A) Arcadonia should specialize in producing plywood. B) Econoland has a comparative advantage in plywood. C) Arcadonia has an absolute advantage in the production of both crab and plywood. D) Econoland should specialize in producing plywood, and trade them with Arcadonia for crabs.
Historically, why has the United States restricted trade to Cuba? (C)
A) Because Cuba is too close geographically to the United States for competition. B) Because the United States did not want the Cubans to flood the American market with Cuban cigars. C) Because of Cuba's communist government and its failed protection of the human rights of Cuban citizens. D) Because Cuba failed to allow the United States to annex the nation of Cuba after the Spanish American War.
The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 What is the benefit of the U.S. producing only Product B and Japan producing only Product A? (A)
A) Because of comparative advantage, the two countries can produce a greater amount of products. B) Because of absolute advantage, the two countries can produce a greater amount of products. C) The two countries can produce enough of each product individually to meet their needs. D) The total output of Product B increases by 300,000 units.
Coming into effect in 1994, NAFTA encouraged free trade between the United States and which two other countries? (C)
A) Canada and Cuba B) Japan and China C) Canada and Mexico D) Panama and Brazil
Country Widgets Produced by 1 Unit of Labor A 65 B 80 Based on the information in the table, which BEST explains the relationship between Country A and Country B? (B)
A) Country A has an absolute advantage over Country B. B) Country B has an absolute advantage over Country A. C) Country A and Country B enjoy a comparative advantage. D) Country A and Country B are economically interdependent.
Decreased tariffs between the nations of U.S., Mexico, and Canada All three Countries experienced real wage increases Increased trade between the U.S., Mexico and Canada Created more jobs for all three countries What is this list describing? (B)
A) EU B) NAFTA C) NATO D) OPEC
What is the name of the tariff-reducing pact that makes it easier for producers to manufacture and distribute products between the countries shown in the image? (C)
A) European Union (EU) B) North Atlantic Treaty Organization (NATO) C) North American Free Trade Agreement (NAFTA) D) Organization for Economic Co-operation and Development (OECD)
If there was an sudden change in exchange rates that resulted in fewer U.S. Dollars being required to buy a Euro, you could expect (D)
A) Europeans to buy more American products. B) the dollar to depreciate quicker than the Euro. C) gold and silver would shift from Europe to the U.S. D) the dollar to appreciate when compared to the Euro.
Which statement BEST explains why a tariff is considered a trade restriction? (D)
A) Manufacturers use tariffs to determine the number of laborers needed for production. B) The government uses tariffs to limit the number of imports that can enter a country. C) Tariffs allow nations to specialize and focus on producing goods at a cheaper cost. D) Tariffs result in higher priced imported goods and lower priced domestic goods.
Foreign Exchange Market by Business & Economics Research Advisor, from the Library of Congress In 1971, U.S. dollars were no longer exchanged for gold; and in 1973, the floating exchange rate system that governs the FX market today was put into place. Now, all currencies are valued by the market forces of supply and demand. Since the abandonment of the gold standard, the FX market has become an important part of international economics. With the advent of floating exchange rates, the foreign exchange market has become unregulated. No institution sets rules for trading, and it is not under the supervision of any international organization. When necessary, governments and central banks often work together to restore stability to the FX market. Foreign exchange and international trade are closely connected. Together, they affect the economic situation of people throughout the world. Currently, how are foreign exchange rates established? (A)
A) Foreign exchange rates are unregulated. B) Governments set the foreign exchange rates. C) The World Bank establishes foreign exchange rates. D) The World Trade Organization establishes foreign exchange rates.
Advisers in France recommend to the French President that they should place a limit on the number of American cars the French import. What would be a likely result if such an action were taken? (D)
A) France would increase its production of cars B) The United States would stop selling to the French C) The United States would increase production of cars D) The United States would place a limit on the amount of French imports into the United States
Based on the political cartoon, what is the artist's argument in regards to free trade? (D)
A) Free trade is good because it helps corporations. B) Free trade is bad because it hurts corporations. C) Free trade is good because it helps workers. D) Free trade is bad because it hurts workers.
According to the chart, the reason for the increase in trade between the US and Mexico was the start of what program? (B)
A) GATT B) NAFTA C) NATO D) WTO
Comparative Advantage Computers Drills Country Computers Drills United States 10 20 Germany 2 10 This chart shows how many units of Computers or Drills a worker can produce in one day if he/she specializes the production of only one good. Using this data, determine which of the statements is correct. (B)
A) Germany has an absolute advantage in both drill and computer production. B) The U.S. has an absolute advantage in both drill and computer production. C) Germany has an comparative advantage in both drill and computer production. D) The U.S. has an absolute advantage in drill production and Germany has an absolute advantage in computer production.
I. the European Union II. ASEAN III. OPEC IV. NAFTA People who support free trade would MOST LIKELY support the efforts of which of these organizations?? (C)
A) I and IV only B) II and IV only C) I, II, and IV only D) I, III, and IV only
I. Two countries produce the same goods for the same opportinity cost II. Two countries produce different goods for different opportinity costs III. Two countries are isolated by geography and politics IV. Two countries have the same identical markets What fact or facts support a situation where trade is advantageous? (A)
A) II only B) IV only C) III and IV only D) I, III, and IV only
I. Two countries produce the same goods for the same opportunity cost II. Two countries produce different goods for different opportunity costs III. Two countries are isolated by geography and politics IV. Two countries have the same identical markets What fact or facts support a situation where trade is disadvantageous? (D)
A) II only B) IV only C) III and IV only D) I, III, and IV only
Suppose that in France 40 labor hours are required to produce a liter of wine. In Italy, 30 labor hours are required to produce a liter of wine. These figures indicate that (A)
A) Italy has an absolute advantage in wine production. B) France has an absolute advantage in wine production. C) Italy has a comparative advantage in wine production. D) France has a comparative advantage in wine production.
The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 What is the MOST LIKELY result of specialization in producing Products A and B? (C)
A) Japan stops producing and using Product B. B) The U.S. stops producing and using Product A. C) The increased output means the U.S. and Japan can trade excess units of Products A and B. D) Specialization means the U.S. will trade 800,000 units of Product B for 60,000 units of Product A.
MAP KEY: Blue- United States Green- Current Free Trade partner Orange- Proposed Free Trade partner Which statement BEST summarizes the information presented in this map? (C)
A) Many nations refuse to trade with the United States. B) The value of US exports exceeds the value of imports. C) The U.S. has free trade agreements with many foreign nations. D) Europe is the most important participant in free trade with the U.S.
Travis takes two trips to Ecuador. On his first trip, he finds that one US dollar is worth 25,000 Ecuadorian Sucre. On his return trip, he finds that the dollar is now worth 26,000 Ecuadorian Sucre. What is a LIKELY result of this change in exchange rates? (A)
A) More Americans will travel to Ecuador B) More money will be printed in Ecuador C) More Europeans will travel to Ecuador D) Fewer Americans will travel to Ecuador
What would happen if the European Union put a quota on American jeans and only allowed 4,000, pairs of jeans to be imported? (B)
A) Nothing, because European countries dislike American products. B) American jeans would become very expensive and desirable in the EU. C) American jeans would be less desirable in the EU and there would be no demand. D) French jeans would be more popular than any jeans and America would stop importing jeans to Europe.
Which is an argument in favor of free trade? (B)
A) Placing caps on trade levels will help insure fair competition among all sides. B) Fewer trade barriers will lead to increased trade, production, and revenues for all sides. C) Import duties will help maintain fairer pricing structures in all the countries involved. D) Government subsidies to private companies will allow those companies to export more of their goods.
United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restrictions by foreign governments, in the form of standards as trade barriers, are a concern and have prompted the Department of Commerce to take recent action. The Department of Commerce is committed to ensuring that standards are fair and responsive to market and technology needs, and that we partner with industry to combat standards as trade barriers to American goods and services. Why does the author feel standards are such a vital issue? (A)
A) Standards affect over 80 percent of global commodity trade. B) U.S. standards limit U.S. companies from participating in the Chinese software industry. C) Standards should be raised, increasing U.S. trade barriers to combat inferior foreign goods. D) U.S. exports to China have exceeded imports from China, and higher standards have a negative affect.
States like Georgia and Texas are trading partners with trading blocs such as ASEAN, the Association of Southeast Asian Nations. Why are these states such strong trading partners with ASEAN? (D)
A) States with massive infrastructures are able to trade with other countries. B) States trade with other nations in order to hurt economies of other states. C) States with international trade agreements with blocs such as ASEAN have to trade with them. D) States with access to international shipping more easily trade with nations and blocs such ASEAN.
Trade Costs in Africa World Bank Document, September 2008 High trade costs—for transporting goods and getting them across borders—have a negative impact on prospects for expanding African trade, making producers less competitive. While reducing tariffs and other trade barriers remains important, and must continue as part of the liberalization process, many African countries will not be able to benefit from reform unless trade costs are reduced. Bottlenecks in the form of regulatory and administrative constraints to transport and transit must also be reduced. Customs procedures, duty drawback schemes, and other requirements push up the cost of trade. Which statement would MOST LIKELY be claimed by the author of this passage? (A)
A) That man-made trade barriers are the biggest challenge facing Africa's international trade success. B) That agricultural, industrial, and service sector reforms must be made for Africa to trade internationally. C) The solution to Africa's international trade problems must be dictated by the United Nations and the World Trade Organization. D) Environmental factors such as drought and desertification are the
The Gains from Trade Output Before Specialization and Trade U.S. Japan Total Product A 20,000 30,000 50,000 Product B 500,000 30,000 530,000 Output After Specialization and Trade U.S. Japan Total Net Gain Product A 0 60,000 60,000 10,000 Product B 800,000 0 800,000 270,000 What happens to the production of Product A as a result of comparative advantage? (B)
A) The output of Product A decreases to 0 total units. B) The output of Product A increases to 60,000 total units. C) The output of Product A decreases to 30,000 total units. D) The output of Product A increases to 800,000 total units.
A Weak Dollar by The Columbus Dispatch, September 7, 1999 If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against major foreign currencies. On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheaper for foreigners to buy U.S. goods. The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the Euro. If the price of buying a foreign car in the U.S. rises as the passage suggests, which of these might balance the trade deficit? (B)
A) The price of foreign cars becomes more attractive to buyers. B) The price of domestic cars becomes more attractive to buyers. C) The high value of the yen encourages U.S. investment in Japan. D) Severe unemployment in the domestic car industry forces layoffs.
Aisha is taking a trip to South America for spring break. To determine the current exchange rate, she should research using (D)
A) an Economics textbook. B) a magazine like Financial Advisor. C) the historical Federal Reserve rates since 2000. D) a newspaper like the New York Times.
The United States increases its imports from Europe. What will be the effects on relative value of the Dollar and the Euro on the currency exchange market? (C)
A) The relative values of the dollar and euro will appreciate. B) The relative values of the dollar and euro will depreciate. C) The relative value of the dollar will depreciate and the euro will appreciate. D) The relative value of the dollar will appreciate and the euro will depreciate.
What is one way that a negative trade balance can be converted into a $0 balance of payments? (B)
A) The use of import quotas B) The imposition of tariffs C) The negotiation of trade agreements D) The funding of public works projects
Which of these would BEST represent the effect of an embargo on trade with China? (C)
A) There would be a bear market. B) There would be a bull market. C) Prices for goods usually imported from China would rise. D) Prices for goods usually imported from China would fall.
When NAFTA went into effect in 1994, what was the concern of labor leaders and environmentalists in the United States? (D)
A) They believed Mexico would increase their prices to the US to make up for the difference. B) The feared that Mexican companies would drive out of business established corporations in the United States. C) They feared the US would lose money by not imposing tariffs therefore leading to an increase in unemployment. D) They believed companies would move to Mexico where wages were lower and enviromental controls were less therefore leading an increase in the US unemployment rate and more pollution.
As nations learn to specialize in production, they will trade with other nations when what happens? (B)
A) They have absolute advantage in trade. B) They have comparative advantage in trade. C) They will not trade with another country. D) When they lose their advantage in that area of trade.
When the dollar "falls" compared to other currencies, which group benefits the most? (A)
A) Those who export products overseas. B) Those who import products from overseas. C) Those who have large cash savings on hand. D) Those who speculate and trade in currencies.
In addition to creating jobs and obtaining scarce resources, why do countries trade with one another? (B)
A) To increase tariffs and quotas B) For comparative advantage C) To limit imports and exports D) For environmental protection
Over the course of a year, the Mexican peso has depreciated relative to the U.S. dollar. Who would MOST benefit from this occurrence? (B)
A) U.S. consumers of U.S. goods B) U.S. consumers of Mexican goods C) Mexican consumers of U.S. goods D) Mexican consumers of Mexican goods
United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives Tensions have arisen, however, when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In this regard, I have been asked by the Committee to address a specific example where China has caused great concern with U.S. industry in its application of domestic source requirement standards - China's pending software procurement regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. software companies, which are widely recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's growing information technology market. This is especially necessary to combat and offset the perceived high rate of software piracy in China. If China enforces the software procurement regulation, the MOST LIKELY result is (A)
A) U.S. software companies will have limited access to Chinese markets. B) U.S. software companies will increased their access to Chinese government customers. C) U.S. software companies will increase their presence in the information technology market. D) U.S. software companies will invest billions of dollars in China to combat
Kris is going to London, England, as an exchange student. To help figure out how much the U.S. dollar is worth compared to the British pound, Kris will keep track of the exchange rate. Which information source would be the BEST place to look for current exchange rate information? (B)
A) a magazine like Forbes B) a newspaper like The Wall Street Journal C) a television program like Entertainment Tonight D) an Economics textbook like The Economy of Britain
Free trade increases sales and profits for U.S. businesses, thus strenghtening the economy. Free trade creates U.S. middle-class jobs over the longterm. Free trade is an opportunity for the U.S. to provide financial help to some of the world's poorest countries. Who would be MOST critical of these statements about Free Trade Agreements? (C)
A) a politician who is reviewing data about increased US profits B) a US factory worker whose job has been replaced by new technology C) a US factory worker whose job has been outsourced to a foreign country D) a factory worker in a developing nation who now has a steady source of income
When one country can produce a product more cheaply than another country can, this is called (C)
A) a tariff. B) free trade. C) comparative advantage. D) economic interdependence.
Imposing some sort of cost on trade that raises the price of the traded products is MOST LIKELY an example of (A)
A) a trade barrier. B) a trade surplus. C) a trade deficit. D) a trade incentive.
If the the United States imports $100 million of goods and exports $150 million, what does the United States have? (B)
A) a trade deficit B) a trade surplus C) a budget deficit D) a budget surplus
Which of these international trade concepts results in specialization and trade increases in total world output? (C)
A) absolute advantage B) balance of payments C) comparative advantage D) international tariffs
Pat decides to purchase a Hyundai from South Korea instead of the U.S.-produced Ford because of the vehicle's lower price. This illustrates the (D)
A) absolute advantage of the U.S. in producing Ford vehicles. B) absolute advantage of South Korea in producing Ford vehicles. C) comparative advantage of the U.S. in producing Hyundai vehicles. D) absolute advantage of South Korea in producing Hyundai vehicles.
In 1987, the United Nations General Assembly passed a resolution that prohibited countries from buying oil from South Africa in an effort to persuade the nation to end the racist policies of apartheid. This is an example of a(n) (B)
A) blockade. B) embargo. C) quota. D) tariff.
A Weak Dollar by The Columbus Dispatch, September 7, 1999 If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against major foreign currencies. On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheaper for foreigners to buy U.S. goods. The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the Euro. According to the passage, Midwestern farmers have surplus grain to sell. This is an example of (D)
A) business cycle. B) comparable worth. C) infant industries. D) absolute advantage.
Which of these is a major motivation for countries to trade with one another? (D)
A) decrease in wages B) access to illegal goods C) higher costs to consumers D) obtaining scarce resources
We will create a stable, prosperous and highly competitive ASEAN Region in which there is a free flow of goods, services and capital, equitable economic development and reduced poverty. -ASEAN Vision 2020, Association of Southeast Asian Nations, 1997 What MIGHT be the cause of the problems ASEAN is trying to address with the Vision 2020? (A)
A) economic imbalance B) political inequality C) environmental destruction D) lack of access to education
In 1994, Canada signed a treaty known as NAFTA, the North American Free Trade Agreement. Which of these actions would MOST likely be addressed by NAFTA? (B)
A) establishing an embargo on sugar cane imported from Cuba B) eliminating tariffs on cars imported from the United States. C) creating a quota on all agricultural goods imported from Mexico D) ending any trade barrier between Canada and members of the European Union
You and two of your friends decide to open an e-business selling a product online. Instead of all three partners creating the product, you each specialize in one aspect of the business. This is MOST reflects the concept of (D)
A) exports. B) imports. C) absolute advantage. D) comparative advantage.
United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restrictions by foreign governments, in the form of standards as trade barriers, are a concern and have prompted the Department of Commerce to take recent action. The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representative, have been working hard to ensure that U.S. software companies continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal. In promoting free trade, the author seems to be supporting (A)
A) fair and responsive standards to reduce trade barriers. B) fair and responsive standards to increase trade barriers. C) higher standards on Chinese goods to reduce software piracy. D) lower standards on Chinese goods to decrease investment by U.S. companies in China.
We will create a stable, prosperous and highly competitive ASEAN Region in which there is a free flow of goods, services and capital, equitable economic development and reduced poverty. -ASEAN Vision 2020, Association of Southeast Asian Nations, 1997 What MIGHT be a solution to unequal development applied by ASEAN, according to Vision 2020? (A)
A) free trade B) democratic elections C) equal public education D) protection of religion and human rights
Tariffs, quotas, and subsidies are examples of (B)
A) free trade. B) trade barriers. C) trade incentives. D) restrictive licenses.
Eliminating tariffs and import duties will benefit producers and consumers in all nations. This sounds MOST like an argument for (A)
A) free trade. B) import quotas. C) market economics. D) unbridled competition.
Tariffs and import duties will protect American businesses from unfair competition by countries like China and Japan. This sounds MOST like an argument against (A)
A) free trade. B) import quotas. C) market economics. D) unbridled competition.
A nation's ability to produce a product more efficiently than another country is referred to as (D)
A) globalization. B) foreign trade. C) interdependence. D) comparative advantage.
When two or more nations engage in free trade, how is the standard of living improved in the participating countries? (A)
A) goods become cheaper, demand rises, and output increases B) goods become cheaper, demand lowers, and output decreases C) goods become more expensive, demand rise, and output increases D) goods become more expensive, demand lowers, and output decreases
What was the primary subject of the 1990s treaty between the U.S., Canada, and Mexico? (D)
A) immigration B) ending drug smuggling C) reduction of nuclear weapons D) free trade between the three countries
Supporters of NAFTA and free trade would contend that such agreements (D)
A) increase government control of a nation's economy. B) limit the growth of an economy and prevents inflation. C) hamper democratic reforms and open markets in areas that are already strong. D) stimulate democratic reform and open markets in areas in need of improvement.
"Protectionist" trade policies are designed to (B)
A) increase imports. B) protect domestic industry. C) reduce tariffs on foreign products. D) increase government transfer payments.
Which of these would help improve Colombia's economy? (D)
A) increasing government spending B) eliminating taxes on personal property C) reducing the number of government workers D) establishing free trade agreements with other countries
Foreign Exchange Rates County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Foreign Currency UK / Pound 2.0292 .4928 Japan / Yen .0084 118.9599 India / Rupee .0248 40.3950 Canada / Dollar .9394 1.0645 In relation to the Indian Rupee, the Canadian dollar (C)
A) is worth slightly more. B) is worth slightly less. C) is worth significantly more. D) is worth significantly less.
When the dollar "falls" compared to other currencies, this means (A)
A) it takes more dollars to equal a unit of foreign currency. B) it takes fewer dollars to equal a unit of foreign currency. C) the value of a unit of foreign currency is harder to measure in dollars. D) the value of a dollar is harder to measure, compared to foreign currencies.
Which result would you expect from a U.S. import quota on automobiles? (B)
A) lower automobile prices for U.S. customers B) higher automobile prices for U.S. customers C) fewer domestic jobs in the automobile industry D) more foreign automobiles flowing into the U.S.
One of the PRIMARY reasons that trade between nations takes place is because (D)
A) no nation can be economically self-sufficient. B) resources are evenly distributed around the world. C) nations use their absolute advantage in production to monopolize international markets. D) nations produce a surplus at a lower cost and export it for goods that are too costly to produce.
What are tariffs? (D)
A) political boundaries between nations B) military blockades of specific countries C) disputes between state governments over boundaries D) taxes on the import or export of goods from a country
The purpose of the founding of the European Union (E.U.) in 1993 was to (D)
A) prevent the poor from causing a revolution. B) fight the growing global network of terrorism. C) become an economic power to compete with the Unites States. D) guarantee the freedom of movement of people, goods, services and capital.
One of the main economic goals of the African Union is to (D)
A) promote peace and security on the continent. B) unite all member nations under a single government. C) develop a working constitution for each member nation. D) reduce trade barriers and promote free trade among member nations.
An exchange rate is used to (D)
A) promote the argument supporting free trade. B) promote the use of subsidies on foreign goods. C) determine the price of one country's imports in terms of another country's imports. D) determine the price of one country's currency in terms of another country's currency.
All of the following are considered benefits of free trade EXCEPT (D)
A) quota reduction. B) growth of trade. C) protective tariff reduction. D) protection of domestic industries.
All of these restrict international trade EXCEPT (D)
A) quotas. B) subsidies. C) embargoes. D) trade deficits.
Since the 1980s, Australia has increased its role in international trade significantly. Which of these actions would have helped to achieve this result? (B)
A) raising domestic taxes B) reducing barriers to trade C) focusing only on importing D) becoming politically liberal
A supporter of free trade would support all of these actions EXCEPT (C)
A) reducing quotas. B) reducing tariffs. C) imposing subsidies. D) eliminating embargoes
The European Union has positively affected the economies of Europe by (C)
A) refusing to allow countries to trade with each other. B) allowing England to become the richest European country. C) lowering or eliminating barriers that slow down trade between countries. D) making taxes on imported goods higher and promoting economic independence.
Because Nebraska specializes in the production of corn and Maine specializes in the production of lobsters, the two states could engage in trade that benefits both parties. This law of economics is known as (C)
A) supply and demand. B) parallel consumption. C) comparative advantage. D) relative distribution.
An import quota is a (C)
A) tax on import quantities above the legal limit. B) way to increase tariff revenues for the exporting country. C) legal limit on the amount of a good that can be imported into a country. D) legal incentive for members of WTO to increase their exports of a good or service.
Which situation is the BEST example of the concept of cooperation? (A)
A) the creation of the North American Free Trade Agreement in 1994 B) the "Water War" that exists between Georgia, Alabama, and Florida C) the 1991 Persian Gulf conflict and the 2003 U.S. invasion of Iraq D) the embargo that the United States enforces against products from Cuba
If the demand for British pounds increases, (A)
A) the dollar price of the British pound will increase. B) the dollar price of the British pound will decrease. C) the trade balance between the two nations will be out of equilibrium. D) the exchange rate between dollars and pounds will be out of equilibrium.
A Weak Dollar by The Columbus Dispatch, September 7, 1999 If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against major foreign currencies. On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheaper for foreigners to buy U.S. goods. The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the euro. The passage MOST LIKELY relates to (B)
A) the national debt. B) the exchange rate. C) the inflation rate. D) the stock exchange.
Countries around the world specialize production, and trade with other countries based upon (C)
A) the overall size of the economy. B) the rate of inflation in the economy. C) the comparative advantage in production. D) the amount of capital available to produce products with.
Which of these BEST describes a situation in which a country has a "trade deficit"? (D)
A) their inflation exceeds 1% B) their unemployment exceeds 6% C) their exports exceed their imports D) their imports exceed their exports
Why would a country want to erect trade barriers such as tariffs or quotas? (C)
A) to make goods cheaper B) to expand their markets C) to protect domestic jobs D) to stimulate the economy
Foreign Exchange Rates County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Foreign Currency UK / Pound 2.0292 .4928 Japan / Yen .0084 118.9599 India / Rupee .0248 40.3950 Canada / Dollar .9394 1.0645 Micah is an exchange student from the U.S. living in Japan. He wants to buy a new-release movie for 2,000 Japanese yen. When he calls home, he discovers the movie sells for $25. Micah decides to (B)
A) wait because the movie costs relatively the same amount in both countries. B) buy the movie in Japan because it is relatively less expensive than in the U.S. C) wait to buy the movie in the U.S. because it is relatively less expensive in the U.S. D) buy the movie in the U.S. and pay $10 to ship it because the total cost will still be less.
