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IB International Economics SWC

Total questions: 60

Worksheet time: 1hrs 2mins

Name
Class
Date
1.
The ability of one person or nation to produce more of a good than another person or nation
a)
Comparative Advantage
b)
Absolute advantage
c)
exports
d)
protectionism 
2.
The use of trade barriers to protect a nation’s industries from foreign competition
a)
Balance of trade
b)
NAFTA
c)
Quotas
d)
Protectionism 
3.
Exports minus imports or how many goods a county exports versus imports
a)
Exports
b)
Subsidy
c)
Quotas
d)
Balance of Trade
4.
A regional trade organization made up of European nations
a)
NAFTA
b)
EU
c)
ASEAN
d)
CARICOM
5.
Limit of the amount of a good that can be imported
a)
Subsidy
b)
Quota
c)
Exports
d)
Appreciation 
6.
A good that is sent to another country for sale
a)
export
b)
import
c)
quota
d)
subsidy 
7.
Government payments to a local supplier to reduce the supplier costs. This helps local businesses survive because it is getting direct aid from the government
a)
Balance of trade
b)
protectionism
c)
exchange rate
d)
subsidy
8.
What happens when a nation’s currency depreciates?
a)
Its products become more expensive to other nations
b)
Its products become cheaper to other nations and exports may increases
c)
Nothing
d)
It halts all trade
9.
Suppose the US decreases the tariff on imported beef which makes foreign beef cheaper than US beef. What would the consequences be?
a)
There would be an increase in the number of imported beef and the number of beef produced in the US
b)
There would be a decrease in the number of imported beef and the number of beef produced in the US
c)
There would be an increase in the number of imported beef and a decrease in the number of beef produced in the US
d)
There would be a decrease in the number of imported beef and an increase in the number of beef produced in the US
10.
Those in favor of protectionist trade policies would most likely
a)
Believe that restrictions harm consumers
b)
Argue in support of free trade
c)
Support a massive reduction in tariffs
d)
Cite the need to preserve domestic industries and jobs
11.
According to the law of comparative advantage, a country should 
a)
Specialize and export goods with the lowest production cost
b)
Specialize and export goods with the lowest opportunity cost
c)
Specialize and export goods with the lowest average cost
d)
Specialize and export goods with the highest opportunity cost
12.
Suppose that there is a balance of trade in both the US and Canada. Then, the US dollar appreciates against the Canadian dollar. What would the likely outcome be? 
a)
A trade deficit in both countries 
b)
A trade surplus in Canada
c)
A trade surplus in the US
d)
A trade deficit in Canada
13.

What is a potential benefit of free trade?

a)

More employment in sunrise industries

b)

Specialization in commodity production

c)

Less unemployment in sunset industries

d)

Access to goods that are not produced in the domestic market

14.

Japan claims that the snow in Japan is different from other places. Because of this, their laws prevent skis from being imported into the country unless they meet specific standards. This is called a

a)

tariff

b)

quota

c)

standard-based trade barrier

d)

non-trade-related restriction

15.

To plan for his business trip to Denmark, Tony needs to know how many Danish krones his US dollars are worth. Tony needs to be aware of

a)

the exchange rate.

b)

any currency embargoes.

c)

international tariffs.

d)

whether or not the US dollar currently enjoys a comparative advantage in trade.

16.

Floating exchange rates are determined by

a)

supply and demand

b)

the President of the United States

c)

the central bank

d)

the stock of gold reserves

17.

Taiwanese baseballs sell in the US for $10, but an identical domestically made one sells for $12.50. If the US government imposes a 20% tariff on Taiwanese baseballs, what would be the result?

a)

Since the Taiwanese ball would still be cheaper, there would be little to no change.

b)

Since the Taiwanese ball is now more expensive, US sales will likely increase.

c)

Since the Taiwanese ball will now sell at the same price as the US ball, sales will likely equalize.

d)

Since the Taiwanese ball is now more expensive, the US will begin exporting balls to Taiwan.

18.

Based on this table, which statement BEST describes the situation?

a)

Germany has an absolute advantage in both products, but Greece should still specialize in fish.

b)

Germany has an absolute advantage in motorcycles, and Greece has an absolute advantage in fish.

c)

Germany has an comparative advantage in motorcycles, but Greece has an absolute advantage in both products.

d)

In this particular case, neither side would benefit from specializing more in one of the particular products.

19.

The Panamanian balboa (currency) always exchanges at a rate of 1 balboa = 1 US dollar. The balboa has a(n)

a)

floating exchange rate

b)

appreciating exchange rate

c)

depreciating exchange rate

d)

fixed exchange rate

20.

Which of the following would be MOST supportive of British tariffs?

a)

a US company hoping to export goods to Great Britain.

b)

a British company hoping to export goods to other countries.

c)

British consumers.

d)

British manufacturers who sell their products domestically.

21.

If 1 USD costs 4 BRL (1 BRL=0.25 USD) and the BRL depreciates the new exchange rate could be

a)

1 BRL = 0.10 USD

b)

1 BRL = 0.50 USD

22.

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

a)

Cheaper

b)

More expensive

23.

An appreciation of a country's currency means that for foreigners this country's goods are

a)

Cheaper

b)

More expensive

24.
This trade barrier limits the number of products that can be brought into a country.
a)
Tariff
b)
Quota
c)
Embargo
d)
Subsidy
25.

What kind of economic integration arrangement has common policies on product regulation, and free movement of goods, services, capital and labour?

a)

Common markets

b)

Preferential trading area

c)

Free trade areas

d)

Custom unions

26.

It is correct to say that countries within a customs union have...

a)

Common external barriers

b)

Common currency and a common central bank

c)

Common policies on product regulation.

d)

None of the above

27.

The EU is better seen as an example of...

a)

A Economic and monetary union

b)

Free trade area

c)

A Customs Union

d)

A Complete Economic integration

28.

The following image demonstrates Donald Trump's preference for....

a)

Globalism

b)

Internationalism

c)

Protectionism

d)

Americanization

29.
The current account shows ...
a)
international movement of goods and services
b)
international movement of capital
c)
foreign exchange market
d)
international movement of investments
30.
An increase in the exchange value of one nation's currency in terms of currency of another nation's is called...
a)
Depreciation of currency
b)
Appreciation of currency
31.
Each month, Ima Newhere, who recently arrived in the United States, sends half her paycheck to her sister in Poland.
a)
credit
b)
debit
32.

Each month, Ima Newhere, who recently arrived in the United States, sends half her paycheck to her sister in Poland.

a)

Current account

b)

Capital/Financial account

33.
BMW pays $1 million to a U.S. shipper for transporting cars from Germany to the United States.
a)
credit
b)
debit
34.

BMW pays $1 million to a U.S. shipper for transporting cars from Germany to the United States.

a)

Current account

b)

Capital/Financial account

35.

A Chinese company sells $1 million worth of socks to the U.S. army.

a)

credit

b)

debit

36.
Andre Prenoor, U.S. entrepreneur, invests $50 million to develop a theme park in Malaysia.
a)
credit
b)
debit
37.

Andre Prenoor, U.S. entrepreneur, invests $50 million to develop a theme park in Malaysia.

a)

Current account

b)

Capital/Financial account

38.

Harley-Davidson USA purchases $25 million in production machinery from a Japanese company.

a)

Current account

b)

Capital/Financial account

39.
Financial Account transactions include items such as
a)
Imports
b)
Exports
c)
Transfers & Remittances
d)
Purchase and sale of stocks and bonds
40.
Currency depreciation could be caused by
a)
Supply Increase or Demand Increase
b)
Supply Increase or Demand Decrease
c)
Supply Decrease or Demand Decrease
d)
Supply Decrease or Demand Increase
41.
Currency depreciation results in
a)
Increased exports, increased imports
b)
Decreased exports, decreased imports
c)
Increased exports, decreased imports
d)
Decreased exports, increased imports
42.
The Malaysian government buys a new Boeing 787 from the U.S. This transaction is recorded as
a)
current account
b)
financial/capital account
c)
official reserves
43.
How is spending by tourists visiting Australia recorded in the BoP?
a)
As a service debit in the current account
b)
As an income credit in the current account
c)
As a service credit in the current account
d)
As a service credit in the capital account
44.
Expenditure by Toyota Australia, on freight costs for imported cars, is recorded in the balance of payments as
a)
an income debit in the current account
b)
a service debit in the current account
c)
a service deficit in the current account
d)
an income deficit in the current account
45.
The Australian govt spent $19m on the construction of the Thai-Laos Friendship bridge across the Mekong River. This payment was recorded in the Balance of Payments as
a)
a debit in secondary income
b)
a debit in the Financial account
c)
a capital transfer debit
46.
Higher income levels in the US would result in
a)
Increased exports and appreciation of the US Dollar
b)
Increased exports and depreciation of the US dollar
c)
Increased imports and appreciation of the US Dollar
d)
Increased imports and depreciation of the US Dollar
47.

Higher interest rates

a)

Make foreigners decide to buy more of a country's government bonds

b)

Attracts portfolio flows to a country

c)

Controls inflationary pressures

d)

All the above

48.
Which of the following is NOT an argument in favor of protectionism?
a)
Protectionism shields infant industries from competition
b)
Protectionism safeguards workers’ jobs
c)
Protectionism promotes industries that are essential to national security
d)
Protectionism makes domestic firms more competitive in the long run
49.
When Mataeo buys Euros through _________________________, he will use his U.S. dollars to pay for them.
a)
A. the foreign exchange market
b)
B. the currency exchange market
c)
C. a floating exchange market
d)
D. foreign currency market
50.
If the U.S. government uses an expansionary monetary policy to reduce interest rates, then it will: 
a)
A. lead to higher imports and lower exports.
b)
B. cause the exchange rate for U.S. currency to depreciate.
c)
C. lower levels of consumption and investment.
d)
D. cause the exchange rate for U.S. currency to appreciate.
51.
A stronger British pound is beneficial for:
a)
A. U.S. exchange students studying in Britain with a U.S. scholarship.
b)
B. British firms selling goods and services in Canada.
c)
C. British investors who have invested money in Australia.
d)
D. exchange students with a British scholarship studying in Canada
52.
 A strong dollar leads to 
a)
cheaper imports.
b)
more expensive imports.
c)
no change in international prices.
d)
cheaper exports.
53.
What does a protective tariff seek to protect?
a)
Protectionists
b)
Free Trade
c)
Revenue
d)
Domestic Industries
54.
When domestic currency gain its value in relation to a foreign currency in the international money market, it is a situation of:
a)
Currency appreciation
b)
Currency depreciation
c)
Currency devaluation
d)
None of these
55.
Which of the following is most likely to cause an increase in the international value of the dollar?
a)
Higher U.S. interest rates
b)
lower U.S. government spending
c)
higher real interest rates abroad
d)
expansionary monetary policy in the U.S.
56.
which of the following would decrease the demand for A$ by the Japanese 
a)
a fall in their unemployment 
b)
increased Japanese exports of steel and cars 
c)
decreased Japanese imports of iron ore 
d)
a free trade agreement between Japan and Australia 
57.
which of the following would decrease the demand for A$ by the British 
a)
more UK students go on gap year in australia
b)
UK buy more australian exports 
c)
Uk invest in australian mining projects 
d)
UK tourists decide to stay in Majorca  rather than go all tge way to australia 
58.
a reason why some countries use fixed exchange rates- often set at low values  is so 
a)
exports are encouarged and imports made more expensive 
b)
to improve their budget surplus 
c)
to allow investment in capital infrastructure 
d)
all of these options 
59.
a problem with a fixed exchange rate is that if it is set too low 
a)
it will slow exports 
b)
it will reduce imports 
c)
it will increase the level of debt a government must pay back 
d)
it will force up interest rates 
60.
China has a pegged exchange rate which means 
a)
it always keeps below US $ and maintains its advantage in trade 
b)
it is part fixed and part floating depending on world events 
c)
it is pegged to currency in Asia so that CVhina maintains its dominance 
d)
all of these options 

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