A protective tariff is intended to protect the

• consumer from higher prices on foreign goods.
• consumer from higher priced goods produced within the country.
• manufacturer from higher prices on materials produced within the country.
• manufacturer or farmer from lower priced goods imported into the country.

Coming into effect in 1994, NAFTA encouraged free trade between the United States and which two other countries?

• Canada and Cuba

• Japan and China

• Canada and Mexico

• Panama and Brazil

The difference between money paid to, and received from, other nations in trade is the

• balance of trade
• absolute advantage
• balance of payments
• comparative advantage

Which statement BEST reflects the difference between tariffs and quotas?

• Tariffs raise prices on exports, while quotas set limits on imports.
• Tariffs raise prices on imports, while quotas set limits on exports.
• Tariffs raise prices on exports, while quotas set limits on exports.
• Tariffs raise prices on imports, while quotas set limits on imports.

An exchange rate is used to

• promote the argument supporting free trade.
• promote the use of subsidies on foreign goods.
• determine the price of one country's imports in terms of another country's imports.
• determine the price of one country's currency in terms of another country's currency.

The price of one nation's currency in terms of another nation's currency is called

• foreign exchange
• exchange rate
• foreign exchange rate
• currency converter

Currently, the foreign exchange rate for all world currencies is

•  fixed exchange rate, based on the U.S. dollar.
• a floating exchange rate, based on the U.S. dollar.
• a fixed exchange rate, based on market forces of supply and demand.
• a floating exchange rate, based on market forces of supply and demand.

Which relationship BEST illustrates a comparison of absolute advantage and comparative advantage?

• A country with an absolute advantage will always have a comparative advantage in producing products.
• A country with a comparative advantage can produce a greater output of a products than a country with an absolute advantage.
• A country with an absolute advantage can produce a product at a lower opportunity cost than a country with a comparative advantage in producing all products.
• A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods.

A trade surplus is generally known as a

• positive balance of trade.
• negative balance of trade.
• positive balance of payments.
• negative balance of payments.

What are tariffs?

• political boundaries between nations
• military blockades of specific countries
• disputes between state governments over boundaries
• taxes on the import or export of goods from a country