Unit 8 - SchoolNet

Which of the following best describes why NAFTA was established?

• to improve political negotiations with overseas nations
• to create a system to allow citizens to pass freely between borders
• to institute regulations on the quality of imported products
• to increase the potential for profits in a competitive market

Which phrase BEST describes the effect of an increase in U.S. steel imports?

• higher tariffs on foreign steel
• less foreign steel bought by consumers
• higher wages for U.S. steel workers
• fewer goods sold by U.S. steel companies

How are exchange rates determined?

• business leaders
• elected officials
• market forces
• global organizations

What happens if the U.S. dollar depreciates?

• The production of goods declines, while market demand increases
• Consumer spending rises, while services decline
• Government spending decreases, while private investments grow
• Import prices increase, while export prices decrease

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

Why do nations create trade agreements?

• Nations are preparing to raise taxes on goods and services.
• Nations are training workers to use new tools and processes.
• Nations are loaning money to people who want to start businesses.
• Nations are seeking goods best produced outside of their own borders.

How are the daily exchange rates of national currencies determined?

• They are established by the International Monetary Fund.
• They fluctuate according to changes in financial markets
• They are based on the amount of gold held by governments
• They are approved by World Trade Organization officials

In 2012, the value of the British pound dropped 30 percent against the U.S. dollar. Which group would welcome a devalued pound?

• British investors because they would have more local opportunities
• British homeowners because their debt would be reduced
• British consumers because they would pay lower prices
• British exporters because their goods would be sold more cheaply abroad

Which statement best describes a benefit of the 1994 North American Free Trade Agreement (NAFTA)?

• Trade agreements protect domestic industries through subsidies
• A limited membership results in increased prices for goods
• Trade agreements require improvements in exchange rates
• A reduction in tariffs encourages an increase in trade

A U.S. auto manufacturer plans to relocate plant operations to Mexico as a result of the North American Free Trade Agreement (NAFTA). Which criticism of free trade agreements would be based on this relocation?

• The demand for U.S. automobiles will increase
• The cost for producing U.S. automobiles will increase
• U.S. automotive designers will have to create more efficient cars
• U.S. automotive factory workers will have to compete with foreign workers