Chapter 3 ITB

The exchange rate is the interest rate that foreign banks receive when borrowing money from the United States.

• true

• false

According to the principle of absolute advantage, each country should specialize in the products that it can produce most readily and cheaply and trade those products for products that foreign countries can produce most readily and cheaply.

• true

• false

the tax that the United States imposes on imported carbon steel products is called a tariff.

• true

• false

When a country sells its products in a foreign country at a cheaper price than usual, and sometimes even at a loss, it is dumping products.

• true

• false

The need for businesses to expand their markets is one of the most fundamental reasons for the growth in world trade.

• true

• false

How has terrorism affected world trade?

• Terrorism has curtailed the liberal inflows of skilled and blue-collar workers.

• Terrorism has let to tighter emigration policies.

• Terrorism has resulted in merchandise be moved more quickly across nations.

• Companies are stocking less inventory than ever before.

• Terrorism has not affected global trade.

Botswana produces diamonds, copper, nickel, soda ash, meat, and textiles, which it sells to the members of the European Union. To Botswana, the diamonds, copper, nickel, soda ash, meat, and textiles it produces are examples of:

• embargo

• tariff

• import

• export

• countertrade

The US has one of the very few areas in the world where kaolin can be mined. Kaolin is a necessary ingredient in many products ranging from stomach medication to paper. The US produced kaolin is sold all over the world. Kaolin is a(n) ____________ for the countries that purchase it.

• embargo

• tariff

• import

• export

• countertrade

Canadian logging companies sell timber in the United States. To the US, the timber is a(n) __________, and for Canadians, the timber is a(n) ____________.

• import; countertrade

• import; export

• export; exchange

• export; import

• countertrade; exchange

The ____________ is defined as the difference in value of a country's exports and imports over a period of time.

• balance of trade

• federal deficit

• federal surplus

• balance of exchange

• balance of payments