2018 Africa ECONomics

Why does specialization make trade between countries easier?

• There will always be a steady supply of goods on the market so trade is not needed.
• Countries can produce what they make best and trade with others for what they need.
• A country’s economy will never go through a difficult time if they specialize in a good.
• The competition between countries will not exist without interdependance.

Why is it important for nations to have a system to convert from one currency to another?

• Converting currency makes it possible to buy and sell goods between countries with different types of money.
• The dollar is the most valuable currency in the world.
• Converting currencies makes goods cost less so more people are likely to trade.
• It is not important because international trade can now occur with an exchange rate.

In a traditional economy, how are economic decisions made?

• Government leaders
• Consumers
• Customs and traditions
• A mix of consumers and government leaders

What is the definition of Gross Domestic Product (GDP)?

• The total value of all the goods and services a country produces in a year.
• The total value of all goods imported within a year.
• The total value of taxes collected in a year.
• The total value of all goods produced by entrepreneurs in a year.

Scenario: The US refuses to trade with any countries that support terrorism. What trade barrier is this?

• Tariff
• Quota
• Embargo
• Physical trade barrier

Tariffs and quotas are alike because they both __________________.

• restrict or limit trade between countries.
• completely stop trade between countries.
• increase trade between countries.
• make trading a lot easier between countries.

Countries who specialize in oil as their main export like Nigeria usually import items such as

• food
• raw materials
• technology
• all of the above

The OPEC nations control 40% of the worlds oil output. The OPEC countries work together to control prices for oil and to keep profits flowing in their countries. One way that they control prices is to limit production. Each member country is given a maximum amount of oil they can sell in a given time. What describes the limit that OPEC puts on its members' production of oil?

• tax
• tariff
• quota
• embargo

What happens to the price of oil when OPEC countries decide to reduce production?

• prices rise
• prices drop
• prices stay the same
• oil stops being sold

What is South Africa’s main export?

• Oil
• Textiles
• Gold & Diamonds
• Agricultural products