econ unit 5

Importing more than exporting is

• trade surplus
• trade deficit
• balance of trade
• balance of payment

What is a currency system in which each country tries to keep the value of its currency constant against one another called?

• fixed exchange rate
• flexible exchange rate
• floating currency exchange
• constant pricing

Only producing certain goods instead of everything you need is known as

• importing
• specialization
• balance of trade
• absolute advantage

An agreement to eliminate trade barriers between Canada, Mexico, and USA. 

• WTO
• MFN
• USDA
• NAFTA

A limit on the number of cars that can be brought into the country

• import quota
• tariff
• customs duty
• voluntary export constraint

What would be one consequence of a prolonged decline in the value of the euro relative to the U.S. dollar?

• European exports to the United States would become less expensive.
• U.S. exports to Europe would become cheaper.
• European imports from the United States would increase.
• U.S. imports from Europe would become more expensive.U.S. imports from Europe would become more expensive.

Which factor is the basis for the theory of comparative advantage?

• capital 
• investment 
• rationing
• specialization

What is one advantage of establishing trade barriers rather than allowing free trade?

• an increase in local regulations
• the improvement of foreign relations
• the protection of domestic industries
• a reduction in foreign product prices

Which term is defined as a tax on imported goods?

• embargo
• quota
• subsidy
• tariff

If a country can produce a certain good at a lower opportunity cost than another country is has the...

• absolute advantage 
• competition
• specialization 
• comparative advantage