2024 Fall BMF2 Exam Review

What is a true statement about how specialization increases productivity in a nation?

• If a nation has an absolute advantage for producing a specific product, it should produce that product.

• It allows a nation to allocate its resources more efficiently.

We can also call a trade surplus a(n)

• Elastic Balance of Trade

• Positive Balance of Trade

• Flat Balance of Trade

• Negative Balance of Trade

It was founded in 1995 to ensure compliance with GATT to negotiate trade agreements and to resolve trade disputes.

• NAFTA

• EU

• WTO

• ASEAN

These are determined by the supply and demand for a certain currency.

• Exchange Rates

• Tariffs

• Trade Rates

• Currency Type

This is an argument FOR protectionism.

• Nations that trade together are less likely to go to war with each other.

• Cheaper imported goods are available for consumers.

• Jobs go overseas in favor of cheaper labor.

• It enables greater specialization within nations.

Which of these is NOT a trade bloc?

• ASEAN

• WTO

• NAFTA

• EU

A good sent to another country for sale is called what?

• Tariff

• Quota

• Import

• Export

How some countries avoid the negative market effects of having a strong currency.

• Protectionism

• Free Trade

• Floating Exchange Rates

• Currency Manipulation

What happens if Canada’s currency appreciates?

• Canada’s exports become more expensive.

• Canada’s imports become more expensive.

• All nations will stop trading with Canada.

• Canada will lose its position in NAFTA.

Nation A imports $500 and exports $300. Nation B imports $250 and exports $275. What is a true statement about nations A and B?

• Nation A has a trade surplus and Nation B has a trade deficit.

• Nation A has a trade deficit and Nation B has a trade surplus.

• Both nations have a trade deficit.

• Both nations have a trade surplus.