E1&E2 Study Guide

The United State prohibits all trade with Cuba. This is an example of the following trade barrier:

• Tariff

• Embargo

• Quota

• NAFTA

Jacques lives in Montreal, Canada. He has just returned home from a trip to the United States. Jacques still has five US dollar bills left from his trip. When he tries to use them to buy lunch, the restaurant will not take the US dollars. Why did the restaurant refuse to take the money?

• because the US dollar is not legal tender in Canada

• because businesses in Canada only accept the peso

• because US currency cannot be converted to Canadian currency

• because Canadian currency is not divided into small denomonations

What is true about specialization?

• Factories CANNOT produce goods quickly because their workers are constantly being moved asked to learn new positions.

• Workers do NOT become experts in their jobs because they are not well trained.

• A factory can produce more goods in less time for less money because their workers know very well how to do a specific job.

• Businesses will be quicker in selling their products in spite of the fact that their workers are disorganized.

The United Nations has decided to limit the amount of equipment that can be sold to Iran for making nuclear fuel. This is an example of what trade barrier?

• Tariff

• Embargo

• Quota

• NAFTA

Colombia and the United States are trading partners. The United States exports agricultural goods and manufactured goods to Colombia. Colombia specializes in cut flowers, gold, and coffee.

What would happen if the United States placed an embargo on Colombia?

• the price of coffee and cut flowers from Colombia would go up

• the price of coffee and cut flowers from Colombia would go down

• people in Colombia would not be able to sell coffee or cut flowers to other countries

• people in the United States would not be able to buy coffee or cut flowers from Colombia

Country A charges a 35% tax on automobiles imported into the country. This is an example of

• a tariff.

• a quota.

• an embargo.

• a specialization.

Country X, a small country in Latin America, is a major exporter of oil, natural gas, and coal. The country has a modern, industrialized manufacturing sector and a thriving automobile industry. Rapid population growth coupled with a severe drought have led to food shortages and a sharp rise in grain prices.

Which country should Country X trade with?

• a country that specializes in energy production

• a country that specializes in car manufacturing

• a country that specializes in textile manufacturing

• a country that specializes in agricultural production

Why do countries trade with each other?

• Most countries trade with other countries in order to make alliances.

• Most countries trade for foreign currency to promote economic growth.

• Most countries produce a surplus of goods that would be wasted otherwise

• Most countries cannot efficiently produce everything their populations need.

Adriana lives in Brazil. She is planning a trip to visit her sister, who recently moved to Mexico. She plans to take a taxi from the airport when she arrives in Mexico. What must she do in order to pay for the taxi?

• get a job so that she can earn Mexican pesos

• exchange her Brazilian reais(real) for Mexican pesos

• pay a travel tariff to the government of Mexico

• pay a travel subsidy to the government of Mexico

Why do countries need to have a system for exchanging currency with other nations?

• to have a uniform value of currency so they can identify what the value of goods are

• to know which countries' currency has the greatest value so they can buy goods at the lowest cost

• to know the value of their money compared to the value of other countries' money so they can trade goods

• to have an international bank that converts the money of each country so countries can buy and sell goods