Unit 7: International Trade and Currency

Match the term with its description. 1. happens when the value of imports exceeds exports 2. happens when the value of exports exceeds imports

1. trade deficit 2. trade surplus

If two countries have a trade dispute, the case will most likely be heard by the

World Trade Organization

In most cases, international trade leads to

a higher standard of living across the globe.

If the US dollar appreciates compared to other currencies, US consumers can

can afford to buy more imports.

The nations shown in this map are members of

NAFTA

Which of these cities does not have a Federal Reserve Office?

San Diego

If Mr. Jones wanted to invest 3,000,000 yen in the Japanese stock market, how many dollars would he need if the exchange rate was $1 for 150 yen?

$20000

Match the trade barriers with their examples. 1. standards 2. quotas 3. subsidies 4. tariffs 5. sanctions

1. After the outbreak of "mad cow" disease countries had strict inspections rules for imported beef. 2. United States place a limit on the number of minivans that could be brought into the country. 3. France gave tax benefits to its aircraft manufactures. 4. China taxes software purchases from the United States. 5. The US has a ban on trade with and travel to Cuba.

Match the term with its definition. 1. Absolute Advantage 2. Opportunity Cost 3. Comparative Advantage 4. Specialization

1. Refers to a country's ability to produce a certain good more efficiently than another country 2. Refers to what you sacrifice in making an economic choice. In this instance, it refers to the value of the goods you sacrifice in deciding to produce one good instead of another. 3. Refers to a country's ability to produce a particular good with a lower opportunity cost than another country 4. Refers to a country's decision to produce a certain good or list of goods because of the advantages it possesses in their production

Which of the following statements is true according to the information in this graph?

After specializing, Charlie and Patty can produce more cups and plates.

Which of the following is the correct formula for balance of payments?

Balance of Payments = Capital Account + Current Account

Which of the following is NOT a function of the Federal Reserve Board?

Conduct monetary policy

Which institution has the job of regulating the money supply in the US?

Federal Reserve Board

Which of the following nations is a member of the European Union?

Germany

This chart shows how many hours the production of the items takes (input). Which statement is correct?

The United States has the absolute advantage in jeans and CD's.

Which of the following groups would most likely favor protectionist tariffs?

US labor unions

Which of the following statements are favorable to free trade?

When countries specialize the world has more goods and standard of living goes up.

Because France specializes in the production of wine, and United Kingdom specializes in the production of beef, trade between the two countries is beneficial. This law of economics was first identified by David Ricardo as

comparative advantage

Americans who are for free trade would

have supported the United states signing the NAFTA agreement.

When a country places tariffs on foreign goods, it hopes to

help domestic producers compete better.

Farmers in Mexico protest that cheaper corn from the US is driving them out of business. They are most likely to ask for

higher tariffs on corn imported from the US.

Economically speaking, increased trade has

made countries more interdependent.

The example of the T Shirt in the global economy shows that

manufacturing of final products including harvesting or mining raw materials takes place within the borders of one country.

When the United States wanted to pressure South Africa to end its apartheid practices it

placed an embargo on trade with South Africa.

Flexible or floating exchange rates are determined by

supply and demand

Debbie Smith is the CEO of Smith Trading Company. This company sells most of its goods overseas. Ms. Smith is happy when

the dollar depreciates.

What is a main goal of the World Trade Organization? (WTO)

to encourage trade

Why would the United States impose standards on goods imported from China and other countries?

to protect US consumers from harmful products that might enter the country.

According to this graph, the United States has been running a

trade deficit.

If a country exports more than it imports it has a

trade surplus