International Trade

What happens when a nation’s currency depreciates?

• Its imports increases.

• Its products become more expensive to other nations.

• Its products become cheaper to other nations.

• Its trade decreases.

A nation has a deficit in its international balance of trade when______________.

• government expenditures exceed tax revenues

• it buys goods of greater value from other nations that it sells to them

• it sells goods of greater value to other nations than it buys from them

• it invests more in other countries that it receives from them

Japan increased its tariff on U.S. made cars by 50%. The U.S. raised the tariffs on Japan’s products such as cameras. Which of the following would result from the change in tariffs on cars and cameras?

• The standard of living would remain the same.

• The standard of living would decrease.

• The standard of living would be unpredictable.

• The standard of living would increase.

Assume that all nations have low tariffs. Each country freely buys and sells to other countries. However, as a result of a rise in nationalism, each country imposes high tariffs. Which of the following would likely occur?

• Interdependence between nations will stay the same.

• Interdependence between nations will decrease.

• Standard of living in both nations will increase.

• Interdependence between nations will increase.

International trade and specialization most often lead to which of the following?

• A decrease in a nation’s economic growth in the long term.

• An increase in a nations productivity.

• An increase in a nation’s import tariffs

• A decrease in a nation’s standard of living.

The U.S. Congress places a quota on sweaters made in Afghanistan. This decreases the number of sweaters America will purchase from Afghanistan. Which of the following would result from the change in quota for sweaters?

• The price of sweaters from Afghanistan sold in the U.S. will increase.

• The price of sweaters from U.S. sold in Afghanistan will increase.

• The price of sweaters from Afghanistan sold in the U.S. will remain the same.

• The price of sweaters from Afghanistan sold in the U.S. will decrease.

What does the process of specialization do for an economy?

• It makes it easier to control.

• It fosters competition.

• It eliminates unemployment.

• It makes the economy more efficient.

The United States placed a limit on the number of goods that can be brought into the country for sale. This is an example of ____________________.

• an import quota

• a tariff

• a customs duty

• a voluntary restraint

Which of the following is a treaty which eliminated all trade barriers between Canada, Mexico, and the United States?

• EU

• APEC

• OPEC

• NAFTA

What is it called when countries attempt to keep the values of their currencies constant compared to one another?

• High interest rates

• Fixed exchange rates

• Low APR

• Flexible exchange rates