Voluntary Trade Quiz Jan. 31

What is voluntary trade?

• Trade that is forced by the government

• Trade that occurs when countries choose to exchange goods

• Trade that only happens within a country

• Trade that is illegal

Why do countries engage in voluntary trade?

• To sell all their resources to other countries

• Because no country has all the resources needed to produce everything

• To avoid producing any goods

• To keep all their resources for themselves

What is specialization?

• Producing everything a country needs

• Focusing on producing goods that a country can make best

• Trading with every country in the world

• Stopping all trade with other countries

How does specialization encourage trade?

• It makes countries less efficient

• It allows countries to produce goods at a higher cost

• It helps countries get what they need at a lower cost

• It prevents countries from trading

Which of the following is a natural trade barrier?

• Tariffs

• Quotas

• Deserts

• Embargoes

What is a tariff?

• A limit on the amount of goods imported

• A tax on imported goods

• A complete ban on trade

• A type of currency exchange

What is the purpose of a quota?

• To increase the price of goods

• To limit the amount of a good that can be imported

• To eliminate all trade barriers

• To encourage more imports

What happens during an embargo?

• Countries trade freely with each other  

  
  

• A country refuses to trade with another country  

  
  

• Countries lower their tariffs

• A country increases its exports

Why is currency exchange important in international trade?

• It allows countries to keep their currency the same

• It helps countries buy goods using their own currency

• It allows countries to trade without any money

• It converts one country's money into another's for trade

What does the exchange rate tell us?

• How much goods cost in one country

• The value of one country's currency compared to another's

• The amount of goods produced in a country

• The number of countries a nation trades with