Exploring Imports, Exports, and Exchange Rates

Which country is the largest trading partner of the US?

• China

• Mexico

• Vietnam

• Canada

What is the term used to describe the annual difference between a country's exports and imports?

• Gross domestic product

• Net exports

• Trade balance

• Fiscal deficit

What is a trade deficit?

• When a country imports more than it exports

• When a country exports more than it imports

• When a country's savings rate is high

• When a country has no international trade

Why does the US import most of its clothing?

• Due to lower costs

• To support foreign economies

• Because of higher quality

• Lack of domestic production

What was a significant effect of NAFTA according to its proponents?

• Increased US trade deficits

• Decreased prices of consumer goods

• Increased protectionism

• Decreased manufacturing jobs

What is the main goal of the World Trade Organization (WTO)?

• To enforce strict protectionism

• To increase tariffs on imports

• To support only rich countries

• To promote free trade by reducing trade barriers

What happens when the dollar appreciates against another currency?

• US exports become cheaper

• Foreign imports become cheaper

• US imports become more expensive

• US exports become more expensive

What can cause a currency to appreciate?

• Decreased demand for the currency

• Increased supply of the currency

• Increased demand for the currency

• Stable political conditions only

What does the balance of payments record?

• All international transactions

• Only the country's imports

• Only the country's exports

• Domestic transactions only

Why might a country choose to run a trade deficit?

• To support domestic production only

• To consume more than it produces

• To increase its savings rate

• To decrease its exports