Mods 44-45: Trade and Foreign Exchange

Why should we buy goods from other countries and send our money overseas? (Select all that apply.)

• Specialization makes more goods available.

• Trade barriers protect American jobs.

• Exchange rates go up when we purchase goods from other countries.

• Comparative advantage lowers opportunity costs.

• Most foreign goods are superior to US goods.

A country that makes all of its own products and does not import products from overseas is:

• an open economy

• common in the world today

• more successful than other countries

• a closed economy

• a fixed exchange rate regime

Which of the following is a difference between the effects of a tariff and the effects of a quota?

• Domestic supply increases with a quota but not a tariff.

• Domestic price increases with a tariff but not a quota.

• Government revenue increases with a tariff but not a quota.

• Imports increase with a quota but not a tariff.

• Exports increase with a quota but not a tariff.

Which of the following is put forth as a reason for trade restrictions? (Select all that apply.)

• national pride

• not wanting to send money overseas

• protectionism is needed to develop a comparative advantage

• not wanting to be overly reliant on foreign countries

• imperalism

Which of the following shifts demand in the foreign exchange market?

• Domestic purchases of foreign goods

• Domestic purchases of foreign services

• Domestic purchases of foreign monetary assets

• Foreign purchases of domestic goods

• Foreign exports

When the dollar appreciates:

• the demand for US exports increases.

• the supply of US exports increases.

• the demand for US exports decreases.

• the supply of US exports decreases.

• the exchange rate does not change.

Which of the following shift supply on the foreign exchange market? (Select all that apply.)

• Interest rates changes

• Price level changes

• Foreign purchases of domestic services

• Domestic purchases of foreign goods

• Changes in exports

Check all that apply: When the interest rate in Mexico increases relative to the interest rate in the United States,

• demand for the dollar increases.

• demand for the dollar decreases.

• the US dollar appreciates.

• supply of the Mexican peso increases.

• supply of the Mexican peso decreases.

Which of the following would cause appreciation of the US dollar? (Select all that apply.)

• Greater demand for US exports

• Greater demand for foreign products in the US

• Increased supply of the US dollar

• Decreased supply of the US dollar

• A trade war with China