Trade Policy

What does it mean to have jobs reshuffled?

• Its a negative side effect of trade policies

• Its a consequence of international trade that forces some people to change jobs from less competitive industries to more competitive ones in the country

• Its a policy of companies to change their sites to lower income nations.

• None of the above

If Mexico has a large trade surplus from its exchange with the US (its largest trading partner), how come its trade balance is negative?

• Mexico is not collecting its payable accounts from the US

• Mexicans travel and spend a lot of the dollars made back in the US "illegally"

• Most of the US purchases relate to illegal or off the books purchases

• Mexico buys too many things from all other countries and their trade deficit eats away the surplus with the US

A trade deficit is ....

• Bad because it means jobs are shipped out of the country

• Good because people are buying everything they want at the cheapest price possible

• It depends on the size of the deficit

• It is not clear, a deficit can be good if it represents buying techonology for new industries and cheaper food for the population or it can be bad if its mostly buying luxury superflouos items

International trade makes sense when it is based on...

• comparative advantage

• exchange rates

• high gold value

• excess production

Some negative side effects of trade between low income and high income countries are:

• Environmental degradation

• Lower prices

• Bad working conditions including poor protection in the work environment

• Bad quality items

When the peso appreciates then...

• Mexican exports decline

• Mexican exports increase

• Mexican imports decline

• Mexican imports increase

Protectionist trade policies...

• Cause an appreciation of the domestic currency

• Cause a decrease in the volume of trade

• Reduce trade deficit

• Reduce taxes

Inflation often causes tha currency of the country with the highest rate to...

• Depreciate

• Appreciate

• Peg

• None of the above

What should a Mexican do if the PPP says the exchange rate should be 10 pesos per dollar and the actual exchange rate is 14 pesos per dollar?

• Buy and hold dollars

• Exchange their dollars and buy stuff in pesos

• Save their pesos

• None of the above