Unit 4: International Trade

If Great Britain has a comparative advantage over France in the production of cars, which of the following is true?

• Britain and France should not trade

• Britain should export cars to France

• Neither Britain nor France will gain from trade

• France should export cars to Britain

U. S. has absolute advantage over Guam in all goods. Which trade possibility is true?

• The terms of trade will be based on the United States' absolute advantage.

• Since U.S. has absolute advantage in all goods, it's unwise to trade

• They will trade if each focuses on a good which they have comparative advantage

• Guam could benefit from a trade with the U.S. but the US would not benefit

"Protectionist" trade policies are design to

• Increase imports

• Protect domestic industry

• Reduce tariffs on foreign products

• increase government transfer payments

What is an exchange rate?

• The rate at which goods are exchanged between two countries

• How many US dollars you can exchange for RMB at Travelex

• The price of one nation's currency in terms of another's

• The price of goods in terms of a foreign currency

If the US $ were to appreciate in relation to the Euro, what effect would this have?

• European consumers would have more purchasing power in US

• US consumers can buy more English goods and services for fewer $$

• US consumers can buy more European goods and services for fewer $$

• European tourists to the US will spend more $$

The policy of imposing duties or quotas on imports in order to protect home industries from overseas competition

• free trade

• balance of trade

• protectionism

• internationalism

To focus on producing one thing to improve productivity is known as:

• Specialization

• Absolute Advantage

• International Trade

• Supply & Demand

If I am better at all types of production, I have the ________ in all forms of prodcution.

• Comparative Advantage

• Absolute Advantage

• Specialization

• Developed nation

If nations limit trade in clothing who will benefit?

• Domestic consumers of clothing

• Foreign Producers of Clothing

• Domestic producers of clothing

• Depart stores who sell clothing

If the USA exports $100 million of goods and imports $150 million, what does the USA have?

• a trade deficit

• a trade surplus

• a budget deficit

• a budget surplus