WHSS Economics 2281: International Trade 2021 - 2015

A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit?

A increased exports of its services

B increased international competitiveness of its goods

C increased numbers of visitors from abroad

D increased spending on its military bases abroad

• A

• B

• C

• D

A US car dealer agrees an import price of US$25 000 for a Japanese car at the current rate of exchange. The US dollar then strengthens by 10% against the Japanese yen. What will be the new import price paid for the Japanese car?

A US$20 000

B US$22 500

C US$25 000

D US$27 500

• A

• B

• C

• D

Which method of protection always reduces the supply of an imported good to zero?

A embargo

B quota

C subsidy

D tariff

• A

• B

• C

• D

What is a disadvantage of increasing international specialisation?

A Consumers pay higher prices for goods and services reducing their welfare.

B Domestic firms may be uncompetitive leading to structural unemployment.

C Domestic firms may experience rising costs as they pay more for imports.

D Resources may be used less efficiently as domestic firms face less competition.

• A

• B

• C

• D

What is an immediate effect for a country of a fall in its foreign exchange rate?

A a fall in the money supply

B an increase in purchasing power

C cheaper imports

D more competitive exports

• A

• B

• C

• D

The US imposed tariffs on cars and motorcycles from Germany. What is the effect of these tariffs?

A decrease in inflation in the US

B decrease in trade between the US and Germany

C increase in profits of car and motorcycle producers from Germany

D increase in standards of living in the US and in Germany

• A

• B

• C

• D

The diagram shows China’s trade with Brazil for two years.

What happened to China’s trade balance with Brazil between year 1 and year 2?

A It experienced a falling surplus.

B It experienced a rising deficit.

C It moved from deficit to surplus.

D It moved from surplus to deficit.

• A

• B

• C

• D

A country specialises in the production of steel, toys and textiles. What is a disadvantage of specialisation for the country’s workers?

A They cannot afford to buy products from other countries.

B They could become structurally unemployed if global demand changes.

C They have to learn a variety of skills.

D They have too much choice which wastes their time.

• A

• B

• C

• D

A large clothing manufacturer has factories in more than one country. What is not a reason why a company might decide to produce internationally?

A the availability of raw materials

B the high costs of transporting finished products

C to ensure that wage rates are equal in all factories

D to serve the local markets more easily

• A

• B

• C

• D

A newspaper reported that exports from Sweden remained low for five months as changes in the rate of exchange meant that Swedish goods became more expensive to buy abroad. What else would be likely to happen?

A Imported goods would become cheaper in Sweden.

B Swedish people would switch to buying home-produced goods.

C The Swedish balance of payments would improve.

D The Swedish balance of trade would improve.

• A

• B

• C

• D