Economics Trade Test

Use the scenario to answer the question.

The United Kingdom customs service has found toxic lead-based paint in toys imported from a Chinese toy company. These toys are intended for sale in the United Kingdom. Exposure to the paint over a long period of time could be fatal to children under 6 years old.

What type of trade barrier would guarantee that no child in the United Kingdom would be exposed to the deadly lead-based paint?

• tariff

• quota

• embargo

• exchange rate

Use the scenario to answer the question.

Adam and Amanda owned a small store where they sold designer purses. They received a shipment of lovely handbags from France. They had ordered 100 but were only allowed to purchase 50.

What type of trade barrier is being described?

• tariff

• quota

• embargo

• exchange rate

When would the European Union be MORE LIKELY to set a trade embargo on an outside country instead of a tariff?

• If its goal was to continue importing from that country.

• If its goal was to enforce a penalty against that country.

• If its goal was to keep prices in its own economy constant.

• If its goal was to make its own economy more competitive.

What is the purpose of a tariff?

• to decrease the prices of imported goods to a country, so people can buy what they need for the lowest cost

• to increase the prices of imported goods and protect a country's industries from foreign competition

• to increase the prices of exported goods so a country's businesses are less likely to send their products to other nations

• to decrease the prices of exported goods so people in other countries will buy the foreign nation's product over one from their country.

Why is it important for nations to have a system for exchanging from one currency to another?

• The dollar is the most valuable currency in the world

• Banks are not able to deal with different types of currencies.

• Exchanging to different currencies makes products cost less.

• Exchanging currencies makes it possible to buy and sell goods from different nations.

How do Germany and France both benefit from being members of the European Union

• The European Union refuses to allow The United States to join.

• The European Union uses more trade barriers than the United States.

• The European Union enacts tariffs instead of quotas for the United States.

• The European Union does not use trade barriers against member countries.

What relationship exists between literacy rate and the standard of living in Europe?

• There is no relationship between literacy rate and standard of living.

• Countries generally have a low literacy rate and high standard of living.

• Countries generally have a high literacy rate and high standard of living.

• Countries generally have a high literacy rate and a low standard of living.

Use the speech below to answer the question.

You are watching a speech by the German Chancellor on T.V. with your parents. The President is explaining a plan for improving the German economy.

In the speech, he says:

“Our workers must be prepared for the high-tech jobs of the 21st century. My plan will give incentives (rewards) to companies who provide technology training for their employees.”

The Chancellor’s plan is based on the conclusion that:

• An embargo on technology from other countries will help the German economy.

• An investment in capital goods will increase the country’s gross domestic product (GDP)

• An investment in human capital will increase the country’s gross domestic product (GDP)

• Adjusting the exchange rate will increase the profit the Germans make in international trade

Which of the following will MOST LIKELY result in economic growth?

• A change in political leadership

• An increase in the unemployment rate.

• A decrease in the population

• An increase in GDP per capita

Why is it economically important for Germany to maintain its 99% literacy rate?

• Educated workers are often paid less, because employers had to pay for their training.

• Educated workers are more efficient, leading to decreased demand for capital goods.

• Educated workers are often paid less, because employers do not have to train them.

• Educated workers are more efficient, leading to a more productive workforce.