Economics: Unit 5A Review

What is a trade surplus?

• More imports than exports
• More exports than imports
• Spending more money than making it.
• When imports and exports are equal.

What is a tariff?

• Limit on imports
• Prohibits trade with another country for political reasons
• Tax on imports
• Requirements for safety concerns

What is a standard?

• Limit on imports
• Requirements to limit imports for safety concerns
• Government payment to domestic industry
• Government prohibits trade with country due to political reasons

What is an embargo?

• Limits imports
• Government prohibits trade due to political reasons
• Tax on imports
• Government payment to aid domestic industry

What is the effect of a tariff? 

• Lower prices
• Increased unemployment
• Reduced trade barriers
• More sales for domestic industry

Which term is used to describe when different countries exchange goods? 

• Specialization
• Domestic trade
• International trade
• Balance of trade

Which country has absolute advantage in peas?

• Brazil
• Italy
• None
• Both

Which country has comparative advantage in carrots? 

• Italy
• Brazil
• None
• Both

If it costs $2.00 lb. to produce butter in the U.S. and $3.50 lb. to produce butter in France, which country has absolute advantage? 

• France
• U.S.
• Both
• Neither

What is a subsidy? 

• Limit on imports
• Requirements on imports for safety concerns
• Government payment to aid domestic industry
• Tax on imports