International Trade and Economics Quiz

What is an exchange rate?

• The price of one nation's currency in terms of another's

• The rate at which goods are exchanged between two countries

• How many US dollars you can exchange for RMB at Travelex

• The price of goods in terms of a foreign currency

If the US $ were to appreciate in relation to the Euro, what effect would this have?

• US consumers can buy more English goods and services for fewer $$

• European tourists to the US will spend more $$

• US consumers can buy more European goods and services for fewer $$

• European consumers would have more purchasing power in US

If the US is currently experiencing inflation, what will happen to the value of its currency?

• It will likely depreciate

• No change

• It will likely appreciate

What might cause the value of the U.S. dollar to appreciate in relationship to the euro?

• Increases in the U.S. money supply

• Increased demand for U.S. products in Europe.

• Increased demand for European products in the U.S.

• High rates of inflation in the U.S.

One advantage of a weak dollar is that… ?

• Imports are cheaper for Americans to buy.

• American income tax rates go down.

• American exports increase.

• Travel abroad is cheaper for Americans.

What must first take place in order for one country to trade with another?

• Agree to export

• Exchange currency for the currency accepted by the trading country.

• Decide what they will trade.

• Agree in import

What is an exchange rate?

• The price of goods in terms of a foreign currency

• The rate at which goods are exchanged between two countries

• The price of one nation's currency in terms of another's

• How many US dollars you can exchange for RMB at Travelex

What is a decrease in the value of a currency?

• Appreciation

• Depreciation

• Inflation

• Absolute advantage

A depreciation of a country's currency means for this country's residents that imported goods are

• More expensive

• Cheaper

• lesser pay

• bargained price

What is a tariff?

• A government order to stop trade

• A limit placed on imports

• A tax placed on imports

• burdened tax