International trade UBE w 11 Quiz

International trade raises the standard of living in all trading countries.

• raises the standard of living in all trading countries.

• lowers the standard of living in all trading countries.

• leaves the standard of living unchanged.

• raises the standard of living for importing countries and lowers it for exporting countries.

• raises the standard of living for exporting countries and lowers it for importing countries.

Net exports of a country are the value of

• goods and services imported minus the value of goods and services exported.

• goods and services exported minus the value of goods and services imported.

• goods exported minus the value of goods imported.

• goods imported minus the value of goods exported.

• goods exported minus services exported.

A country sells more to foreign countries than it buys from them. It has

• a trade surplus and positive net exports.

• a trade surplus and negative net exports.

• a trade deficit and positive net exports.

• a trade deficit and negative net exports.

• a trade balance but negative net exports.

Refer to Table 31-1. Purchased abroad means bought from abroad. Sold abroad means selling to abroad. What are Argentina's exports?

• $60 billion

• $40 billion

• $35 billion

• $25 billion

• $10 billion

Answer explanation

Export = 10 +25=35 billion (sold abroad)

Refer to Table 31-1. What are Argentina's imports?

• $60 billion

• $40 billion

• $35 billion

• $25 billion

• $10 billion

Refer to Table 31-1. What are Argentina's net exports?

• $30 billion

• $5 billion

• -$5 billion

• -$25 billion

• -$60 billion

Answer explanation

Argentina's net exports are calculated as exports minus imports. The correct choice is 35-60 = -$25 billion

If you go to the bank and notice that a dollar buys more Mexican pesos than it used to, then the dollar has

• appreciated. Other things the same, the appreciation would make Americans less likely to travel to Mexico.

• appreciated. Other things the same, the appreciation would make Americans more likely to travel to Mexico.

• depreciated. Other things the same, the depreciation would make Americans less likely to travel to Mexico.

• depreciated. Other things the same, the depreciation would make Americans more likely to travel to Mexico.

• devalued. Other things the same, this would have no effect on travel to Mexico.

You are staying in London over the summer and you have a number of dollars with you. If the dollar depreciates relative to the British pound, then other things the same,

• the dollar would buy more pounds. The depreciation would discourage you from buying as many British goods and services.

• the dollar would buy more pounds. The depreciation would encourage you to buy more British goods and services.

• the dollar would buy fewer pounds. The depreciation would discourage you from buying as many British goods and services.

• the dollar would buy fewer pounds. The depreciation would encourage you to buy more British goods and services.

• the dollar would buy more pounds. The appreciation would encourage you to buy more British goods and services.

If the exchange rate were 0.8 Canadian dollars per U.S. dollar, a watch that costs 8 U.S. dollars would cost

• 6.4 Canadian dollars.

• 10 Canadian dollars.

• 12.50 Canadian dollars.

• 8 Canadian dollars.

• 16 Canadian dollars.

Answer explanation

To convert 8 U.S. dollars to Canadian dollars at an exchange rate of 0.8, multiply 8 by 0.8. This gives 6.4 Canadian dollars, making the correct answer 6.4 Canadian dollars.

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

• buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Honduras.

• buying bananas in Honduras and selling them in Guatemala, which would tend to raise the price of bananas in Guatemala.

• buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Guatemala.

• buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in Honduras.

• buying bananas in Guatemala and selling them in Honduras, which would tend to raise the price of bananas in both countries.

Answer explanation

If the dollar buys fewer bananas in Guatemala, traders can profit by buying in Honduras (where prices are lower) and selling in Guatemala (where prices are higher), raising prices in Honduras as demand increases.