Latin America Economics (Test Study Guide)

How does the command economy of Cuba answer the three basic economic questions (what to produce, how to produce and for whom to produce)?

• The past guides all decisions about how to answer the basic economic questions.

• The government makes all the decisions about answering the basic economic questions.

• Supply and demand will determine how all the basic economic questions are answered.

• Supply and demand will answer the basic economic questions, but government will make changes to guarantee fairness and productivity.

Which is an advantage of a market economy?

• ability to control the cost of labor

• ability to adjust to changes over time

• ability to set high prices for all consumer goods

• ability to limit consumer choices to practical goods

Use the continuum to answer the following question. Which country in the diagram has the LEAST free economy?

• Cuba

• Mexico

• Canada

• United States

Use the information and the continuum to answer the following question. Where would the country being described be placed on the continuum?

1. The government owns the oil industry.

2. Most businesses are owned by private citizens.

3. Entrepreneurs such as small farm owners have struggled due to a free trade zone with neighboring countries.

• Point A

• Point B

• Point C

• Point D

In what way are the Mexican and Brazilian economies similar?

• They are both mixed economies.

• They are both mixed economies.

• They are both pure market economies.

• They are both pure command economies.

Use the information to answer the following question.

Brazil has made economic changes such as turning some government-run industries over to private businesses and lessening regulations (laws) on others.

What effect would this have on Brazil’s location on the economic continuum?

• Brazil would be more mixed.

• Brazil would keep in the same location.

• Brazil would move closer to a pure market.

• Brazil would move closer to a pure command.

Which countries are closer to a pure market?

• Cuba and Brazil

• Cuba and Mexico

• Brazil and Mexico

• Brazil, Cuba, and Mexico

Use the information to answer the following question.

Country A is a South American country which is often covered by snow and has a short growing season. They have a difficult time supplying their citizens with enough food. They do have an abundant (large) supply of fresh water from snow melt and many freshwater lakes.

What is a solution for Country A’s food scarcity?

• use their fresh water to help grow their crops

• increase their growing season by clearing land

• use trade barriers to protect their workers and goods

• specialize in fresh water trade to get the food needed

Use the information to answer the following question.

Adrian lives in Brazil. He is planning a trip to visit his sister, who recently moved to Mexico. He plans to take a taxi from the airport when he arrives in Mexico.

What must Adrian do in order to pay cash for the taxi ride?

• get a job so that he can earn Mexican pesos

• pay a travel tariff to the government of Mexico

• exchange his Brazilian reals for Mexican pesos

• pay a travel subsidy to the government of Mexico

Which of the following statements BEST describes the relationship between currency and international trade?

• The value of a country’s currency, and how that value affects international trade, never changes.

• International trade often requires that buyers and sellers agree on a currency in which to conduct business.

• The dollar has the highest value of all currencies in the world, allowing the United States to dictate terms in most trade agreements.

• International trade requires the buyers to purchase the foreign currency, while allowing the seller to work only with their own currency.