Chapter 3 – Global Economy Practice Test

Domestic business refers to:

• Trade across national borders

• Business activities within one country

• Selling goods online

• Importing from developing countries

Which of the following would NOT be affected by foreign trade?

• Cost of consumer goods

• Availability of products

• Local community events

• Variety of goods in stores

If a country exports more than it imports, it has:

• A trade deficit

• A trade surplus

• An embargo

• A quota

The value of one nation’s currency compared to another’s is called:

• Interest rate

• Inflation rate

• Exchange rate

• Balance of trade

A country with an agriculture-based economy usually has:

• A high standard of living

• Limited high-quality goods for citizens

• An advanced infrastructure

• Strong international banks

Which of the following can act as an informal trade barrier?

• Quotas

• Tariffs

• Culture and religion

• Free-trade agreements

Which organization’s goal includes eliminating import quotas?

• IMF

• WTO

Which situation represents absolute advantage?

• Saudi Arabia in fresh fish

• Honduras in bananas

• Canada in rice

• Norway in citrus fruit

The amount a country owes to other countries is called:

• Balance of payments

• Foreign debt

• Trade deficit

• National budget

What might cause the dollar’s value to rise?

• Increased U.S. trade deficit

• Lower U.S. inflation

• Low U.S. interest rates

• High agricultural dependency