Econ Review: International Trade

When a country has the ability to produce a product at a lower opportunity cost than another country.

• Comparative Advantage
• Favorable Advantage
• Absolute Advantage
• Positive Net Export

A tax placed on imports

• Quota
• Duty Tax
• Protectionism
• Tariff

When a nation imports more than they export, that nation has a

• Free trade agreement
• Trade surplus
• Trade deficit
• Trade free economic system

What is the primary purpose NAFTA?

• To reduce trade barriers among the US, Canada, and Mexico
• To reduce trade barriers among Central America and Mexico
• To reduce trade barriers among Brazil and Mexico
• To encourage free trade between the US, Europe, and Canada

Those in favor of protectionist trade policies would MOST likely

• Support a reduction in tariffs
• Argue against trade barriers
• Argue for trade barriers
• believe that trade restrictions harm consumers.

What is the most likely effect of a U.S. import quota on foreign cars?

• The price of domestic cars would decrease because of improved production methods.
• Foreign automobile manufacturers would be allowed to sell more cars in the United States
• Domestic automobile manufacturers would sell more cars in markets in the United States
• The price of cars would increase in foreign countries because of the trade restrictions

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

• capital 
• investment 
• rationing
• specialization

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

• 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.

An increase in the value of a nation's currency compared to another is called

• appreciation

• depreciation

• trade surplus

• exchange rate

Country A can produce more coal than Country B. An economist would say that Country A has ______ over country B.

• an export advantage
• a comparative advantage
• an absolute advantage
• a production possibility advantage