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WorksheetsUnit 4: International Economics
Total questions: 62
Worksheet time: 31mins
Based on the information in the chart, which of the following is correct?
Country X has a comparative advantage in the production of airplanes and should specialize in that good.
Country Y has a comparative advantage in the production of automobiles and should specialize in that good.
Country Y has both an absolute and comparative advantage in the production of airplanes and should specialize in that good.
Country X has both an absolute and a comparative advantage in the production of automobiles and should specialize in that good.
Country A and Country B are trading partners. Each country can produce corn and computers. Based on the information in the graph, all of the following statements are true EXCEPT
Country B has a comparative advantage over Country A in computer production.
Country A has an absolute advantage over Country B in corn and computer production.
It would be most efficient if Country A produced corn, Country B produced computers, and they traded.
Both countries should produce an equal amount of both goods to maximize their trade opportunities.
Because Nebraska specializes in the production of corn and Main specializes in the production of lobsters, the two states can engage in trade that benefits both parties. This law of economics is known as
Supply and demand
Parallel consumption
Comparative advantage
Relative distribution
A nation’s ability to produce a product more efficiently than another country is referred to as
Globalization
Foreign trade
Interdependence
Comparative advantage
The country of “Econoland” can use its resources to produce either 500 tons of crab or 200 tons of plywood. Its rival, “Arcadonia,” is able to produce either 200 tons of crab or 100 tons of plywood. From this information, it can be concluded that
Arcadonia should specialize in producing plywood
Econoland has a comparative advantage in plywood
Arcadonia has an absolute advantage in the production of both crab and plywood
Econoland should specialize in producing plywood, and trade them with Arcadonia for crabs
Based on the information in the table, which BEST explains the relationship between Country A and Country B?
Country A has an absolute advantage over Country B
Country B has an absolute advantage over Country A
Country A has a comparative advantage over Country B
Country B has a comparative advantage over Country A
Suppose that in France 40 labor hours are required to produce a liter of wine. In Italy, 30 labor hours are required to produce a liter of wine. These figures indicate that
Italy has an absolute advantage in wine production
France has an absolute advantage in wine production
Italy has a comparative advantage in wine production
France has a comparative advantage in wine production
Countries around the world specialize production, and trade with other countries based upon
The overall size of the economy
The rate of inflation in the economy
The comparative advantage in production
The amount of capital available to produce products with
Which statement about Country Y’s balance of trade is correct?
Country Y has an overall trade surplus
Country Y has a perfect balance of trade
Country Y has a trade deficit with Country X
Country Y has a trade surplus with Country Z
Which statement about Country X’s balance of trade is correct?
Country X has a perfect balance of trade
Country X has a trade deficit with Country Y
Country X has a trade deficit with Country Z
Country X has a trade surplus with Country Y
Which statement about Country Z’s balance of trade is correct?
Country Z has an overall trade deficit
Country Z has a perfect balance of trade
Country Z has a trade deficit with Country X
Country Z has a trade deficit with Country Y
Which statement about Country Y’s balance of trade is correct?
Country Y has a perfect balance of trade
Country Y has an overall trade deficit
Country Y has an overall trade surplus
Country Y has a trade surplus with Country Z
Which statement about Country X’s balance of trade is correct?
Country X has an overall trade deficit
Country X has an overall trade surplus
Country X has a perfect balance of trade
Country X has a trade deficit with Country Z
Which statement about Country Z’s balance of trade is correct?
Country Z has an overall trade deficit
Country Z has an overall trade surplus
Country Z has a trade deficit with Country Y
Country Z has a trade surplus with Country X
Since the mid-1990s, China has had a trade surplus. What does this mean?
China exports more goods and services than it imports
China imports more goods and services than it exports
The total spending of the Chinese government is higher than its revenue
The total spending of the Chinese government is lower than its revenue
A trade surplus is generally known as a
Positive balance of trade
Negative balance of trade
Positive balance of payments
Negative balance of payments
If the US exports $100 million of goods and imports $150 million, what does the US have?
A trade deficit
A trade surplus
A budget deficit
A budget surplus
If the US imports $100 million of goods and exports $150 million, what does the US have?
A trade deficit
A trade surplus
A budget deficit
A budget surplus
Which of these BEST describes a situation in which a country has a “trade deficit”?
Their inflation exceeds 1%
Their unemployment exceeds 6%
Their exports exceed their imports
Their imports exceed their exports
What are tariffs?
Political boundaries between nations
Military blockades of specific countries
Disputes between state governments over boundaries
Taxes on the import or export of goods from a country
What is the difference between tariffs and quotas?
Tariffs raise prices on exports, while quotas set limits on imports
Tariffs raise prices on imports, while quotas set limits on exports
Tariffs raise prices on exports, while quotas set limits on exports
Tariffs raise prices on imports, while quotas set limits on imports
Tariffs, quotas, and subsidies are examples of
Free trade
Trade barriers
Trade incentives
Restrictive licenses
All of these are trade barriers EXCEPT
Quotas
Embargoes
Standards
Trade deficits
An import quota is a
Tax on import quantities above the legal limit
Way to increase tariff revenues for the exporting country
Legal limit on the amount of a good that can be imported into a country
Legal incentive for members of WTO to increase their exports of a good or service
The nation of Tupalow is outraged that the Republic of Za has repeatedly violated international human rights laws. As a result, Tupalow has decided not to export goods to or import goods from Za. What is such an action called?
tariff
embargo
trade treaty
unfavorable balance of trade
Which statement BEST explains why a tariff is considered a trade restriction?
Manufacturers use tariffs to determine the number of laborers needed for production
The government uses tariffs to limit the number of imports that can enter a country
Tariffs allow nations to specialize and focus on producing goods at a cheaper cost
Tariffs result in higher priced imported goods and lower priced domestic goods
What would be the effect of a US import quota on cars?
Lower car prices for US customers
Higher car prices for US customers
Fewer domestic jobs in the car industry
More foreign cars flowing into the US
A protective tariff is intended to protect the
Consumer from higher prices on foreign goods
Consumer from higher priced goods produced within the country
Manufacturer from higher prices on materials produced within the country
Manufacturer from lower priced goods imported into the country
Protectionist trade polices are designed to
Increase imports
Protect domestic industry
Reduce tariffs on foreign products
Increase government transfer payments
What would happen if the European Union put a quota on American jeans and only allowed 4000 pairs of jeans to be imported a year?
Nothing, because European countries dislike American products
American jeans would become very expensive and desirable in the EU
American jeans would be less desirable in the EU and there would be no demand
French jeans would be more popular than any jeans and America would stop importing jeans to Europe
Advisers in France recommend to the French President that they should place a limit on the number of American cars the French import. What would be a likely result if such an action were taken?
France would increase its production of cars
The US would stop selling to the French
The US would increase production of cars
The US would place a limit on the amount of French imports into the US
NAFTA encourages free trade between the United States and which two other countries?
Canada and Cuba
Japan and China
Canada and Mexico
Panama and Brazil
The European Union was created specifically for what purpose?
to end hunger
to encourage free trade
to defend against terrorism
to prevent another world war
The European Union (EU) has positively affected the economies of Europe by
Refusing to allow countries to trade with each other
Allowing England to become the richest European country
Lowering or eliminating barriers that slow down trade between countries
Making taxes on imported goods higher and promoting economic independence
This map highlights (in dark blue) the organization founded in the 1960s known as
ASEAN
NAFTA
NATO
OAS
These are all arguments used by someone who would be OPPOSED to
The North American Free Trade Agreement (NAFTA)
The creation of tariffs on imported goods
The construction of a wall along the US-Mexico border
The North Atlantic Treaty Organization (NATO)
This graph would MOST LIKELY be used by someone who
Opposes the end to minimum wage laws
Opposes stopping illegal immigration
Supports the North American Free Trade Agreement (NAFTA)
Supports the passage of import duties on manufactured goods
Which argument would MOST LIKELY be made by a supporter of the North American Free Trade Agreement (NAFTA)?
Increased trade would benefit the consumer due to the availability of more low-cost goods
Lack of trade barriers would mean loss of jobs for American workers due to cheaper labor
Quotas are necessary in order to protect domestic companies from foreign competition
Tariffs reduce a consumer’s willingness to purchase goods made domestically
Free trade gives consumers
Higher prices and lower-quality products
A wider variety of goods from which to choose
The right to purchase goods and services on credit
The opportunity to satisfy all of their wants and needs
If Country X and Country Y agree to reduce barriers to trade between them, how will this MOST LIKELY affect consumers in Country X?
The products consumers can buy will be of lower quality than before
The consumers will have access to a wider range of goods than before
The products consumers can buy will cost more to produce than before
The consumers will be forced to pay higher prices for goods than before
When two or more nations engage in free trade, how is the standard of living improved in the participating countries?
Goods become cheaper, demand rises, and output increases
Goods become cheaper, demand lowers, and output decreases
Goods become more expensive, demand rise, and output increase
Goods become more expensive, demand lowers, and output decreases
“Eliminating tariffs and import duties will benefit producers and consumers in all nations.” This is an argument for
free trade
import quotas
market economics
trade barriers
“Tariffs and import duties will protect American businesses from unfair competition by countries like China and Japan.” This is an argument against
free trade
import quotas
market economics
trade barriers
What is an argument against free trade?
Allowing unlimited trade levels will help insure fair competition among all sides
Fewer trade barriers will lead to increased trade, production, and revenues for all sides
Removing import duties will give an unfair advantage to countries in which labor is cheap
A “level playing field” for trade is best achieved by protecting US firms from unfair competition
Supporters of free trade would argue that it
Increases government control of a nation’s economy
Limits the growth of an economy an prevents inflation
Hampers democratic reforms and opens markets in areas that are already strong
Stimulates democratic reform and opens markets in areas in need of improvement
A supporter of free trade would support all of these actions EXCEPT
Reducing quotas
Reducing tariffs
Imposing subsidies
Eliminating embargoes
The price of one nations’ currency in terms of another nation’s currency is called
fiscal policy
monetary policy
the exchange rate
the discount rate
Four tourists visited the United States in December 2015. They each loved it so much they returned in December of the following year. If each tourist exchanged 100 units of their home country's currency for US dollars each time, which tourist would have received more US dollars in 2016 than they did in 2015?
Anita, a tourist from Stockholm, Sweden
Neil, a tourist from Cape Town, South Africa
Rainer, a tourist from Hamburg, Germany
Yara, a tourist from Mansoura, Egypt
Based on the exchange rate table, all of the following countries’ currencies appreciated in value between 2015 and 2016 EXCEPT
Peru
Russia
South Africa
Egypt
Based on the exchange rate table, all of the following countries’ currencies depreciated in value between 2015 and 2016 EXCEPT
China
Germany
Sweden
Guatemala
Jasmine took a vacation to several countries in December of 2015. She enjoyed her trip so much, she revisited the same places one year later. In each country, she exchanged $100 for as much of the local currency as that could buy. In which country did Jasmine receive more local currency for her $100 in 2015 than she did in 2016?
China
Germany
Russia
Sweden
Shelby traveled to Mexico to a resort and took $100 in US currency. When she exchange it for pesos, she received
10.3 pesos
103 pesos
900 pesos
1034 pesos
When the dollar “rises” (appreciates) compared to other currencies, this means
It takes more dollars to equal a unit of foreign currency
It takes fewer dollars to equal a unit of foreign currency
The value of a unit of foreign currency is harder to measure in dollars
The value of a dollar is harder to measure, compared to foreign currencies
When the dollar “falls” (depreciates) compared to other currencies, this means
It takes more dollars to equal a unit of foreign currency
It takes fewer dollars to equal a unit of foreign currency
The value of a unit of foreign currency is harder to measure in dollars
The value of a dollar is harder to measure, compared to foreign currencies
If the demand for British pounds increases,
The dollar price of the British pound will increase
The dollar price of the British pound will decrease
The trade balance between the two nations will be out of equilibrium
The exchange rate between dollars and pounds will be out of equilibrium
Micah is an exchange student from the US living in Japan. He wants to buy a new-release move for 2000 Japanese yen. When he calls home, he discovers the move sells for $25. Micah decides to
wait because the movie costs relatively the same amount in both countries
buy the movie in Japan because it is relatively less expensive than in the US
wait to buy the movie in the US because it is relatively less expensive in the US
buy the movie in the US and pay $10 to ship it because the total cost will still be less
When the dollar appreciates compared to other currencies, which group benefits the most?
Those who export products overseas
Those who import products from overseas
Those who have large cash savings on hand
Those who speculate and trade in currencies
When the dollar depreciates compared to other currencies, which group benefits the most?
Those who export products overseas
Those who import products from overseas
Those who have large cash savings on hand
Those who speculate and trade in currencies
The value of the dollar appreciates versus the Euro. Who will benefit?
No one benefits
An American exporters
An American traveling to Europe
A French traveler to the United States
If there was a sudden change in exchange rates that resulted in fewer US dollars being required to buy a Euro, you could expect
Europeans to buy more American products
The dollar to depreciate quicker than the Euro
Gold and silver would shift from Europe to the US
The dollar to appreciate when compared to the Euro
The US increases its imports from Europe. What will be the effects on relative value of the dollar and the Euro on the currency exchange market?
The relative values of the dollar and euro will appreciate
The relative values of the dollar and euro will depreciate
The relative value of the dollar will depreciate and the euro will appreciate
The relative value of the dollar will appreciate and the euro will depreciate
Travis takes two trips to Ecuador. On his first trip, he finds that one US dollar is worth 25,000 Ecuadorian Sucre. On his return trip, he finds that the dollar is now worth 26,000 Ecuadorian Sucre. What is a LIKELY result of this change in exchange rates?
More Americans will travel to Ecuador
More money will be printed in Ecuador
More Europeans will travel to Ecuador
Fewer Americans will travel to Ecuador
