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WorksheetsInternational Trade and Economics Review Quiz
Total questions: 33
Worksheet time: 17mins
What is comparative advantage?
when relative costs of production differ between nations
when transportation costs are almost zero
when a country can produce a product more efficiently than another country
when a country can produce more of some product than other nations can
What does a trade deficit imply?
exports of goods and services exceed imports of goods and services
imports of goods and services exceed exports of goods and services
investment income received from abroad exceeds investment income paid to foreigners
investment income paid to foreigners exceeds investment income received from abroad
Which of the following is true if a nation does NOT have an absolute advantage in producing any good or service?
it cannot have a comparative advantage either
It will have a comparative advantage in the production of the good or service in which it has a lower opportunity cost
It will export raw materials and import finished products
No country will want to trade with this nation because it is not cost effective to do so
Suppose two countries are each capable of individually producing two given commodities. Instead, each specializes by producing the commodity for which it has a comparative advantage and then trades with the other country. Which of the following is most likely to result?
The two countries will become more independent of each other
Unemployment will increase in one country and decrease in the other
There will be more efficient production in one country but less efficient production in the other
Both countries will become better off
If other things are held constant, an increase in the United States imports will
tend to cause the dollar to appreciate because the world supply of dollars will rise
tend to cause the dollar to appreciate because the world demand for dollars will rise
tend to cause the dollar to depreciate because the world supply of dollars will rise
tend to cause the dollar to depreciate because the world demand for dollars will rise
Tariffs and quotas can have all of the following effects EXCEPT:
Promoting third-world development
Increasing prices consumers pay for goods
Protecting domestic industry
Reducing trade deficits
A persistent trade deficit causes:
Unemployment to increase in import industries
Unemployment to increase in export industries
The dollar to grow stronger
Lower prices on imported goods
The United States trade deficit causes
The value of the dollar to strengthen in foreign exchange markets
The value of the dollar to fall in foreign exchange markets
Increased employment opportunities for Americans in export industries
Worldwide recessions
The price at which a currency can be bought or sold is its:
Export rate
Foreign Rate
Market Rate
Exchange Rate
Which of the following is NOT an example of trade barriers?
Quota
Tariff
Flat Tax
Embargo
One advantage of a weak dollar is that
Travel abroad is cheaper for Americans
American income tax rates go down
Imports are cheaper for Americans to buy
American exports increase
What effect does the port of Savannah have on Georgia's economy?
Decreases the amount of international trade
Increases the amount of international trade
Has no effect on international trade.
Only affects local shipping.
Multinational corporations in Georgia, generally, have what effect on the state's economy?
Decrease job availability.
Increase job availability.
Have no economic effect.
Decrease the amount of exports.
What is a tariff?
A limit on the quantity of imports.
A government subsidy for exports.
A tax on imported goods.
A complete ban on trade.
What is a quota?
A tax on imported goods.
A limit on the quantity of imported goods.
A government subsidy.
A trade agreement.
What is an embargo?
A tax on exports.
A trade agreement.
A complete ban on trade.
A limit on exports.
What is the effect of a weak dollar on U.S. exports?
Exports increase.
Exports decrease.
Exports remain unchanged.
Has no effect on exports.
What is the effect of a strong dollar on U.S. imports?
Imports increase.
Imports decrease.
Imports remain unchanged.
Has no effect on imports.
Which of the following is a result of countries specializing in comparative advantage?
Decreased efficiency in production.
Increased global trade.
Higher trade barriers.
Decreased consumption of goods.
What is one factor that causes changes in exchange rates?
Consumer preferences.
Government spending.
Interest rates.
Weather patterns.
How do trade barriers primarily affect consumers?
They lower prices.
They increase prices.
They have no effect on prices.
They increase the amount of goods available.
What is a primary benefit of international trade?
Increased domestic unemployment.
Greater variety of goods.
Decreased competition.
Higher domestic prices.
What is the balance of trade?
The difference between a nation's exports and imports of goods.
The total value of all financial transactions.
The total amount of money in circulation.
The total value of all goods produced in a nation.
What is absolute advantage?
The ability to produce a good at a lower opportunity cost.
The ability to produce more of a good than another country.
A trade agreement between nations.
A government subsidy for exports.
What is a subsidy?
A tax on imports.
A limit on the quantity of imports.
Government financial assistance.
A trade agreement.
Which of the following is most likely to happen when a nation's currency depreciates?
export decrease, import increase.
exports increase, import decrease.
both exports and imports increase.
both exports and imports decrease.
Which of the following is most likely to happen when a nation's currency appreciates?
export decrease, import increase.
exports increase, imports decrease.
both exports and imports increase.
both exports and imports decrease.
What is the main effect of trade barriers on domestic producers?
increased competition.
decreased competition.
no effect on competition.
increased production costs.
What is the main effect of free trade on consumers?
Reduced product variety.
Increased prices.
Greater product variety and lower prices.
Decreased product quality.
How does the presence of multinational corporations typically affect employment in a state like Georgia?
It leads to a decrease in overall employment.
It creates new job opportunities.
It has no significant impact on employment.
It primarily affects employment in the agricultural sector.
Which of the following is a primary factor that can cause a nation's currency to depreciate?
Increased interest rates.
High levels of inflation.
A trade surplus.
Strong economic growth.
How do Georgia's ports contribute to the state's participation in the international economy?
By increasing the cost of imported goods.
By facilitating the export of Georgia-produced goods.
By limiting the flow of international investment.
By exclusively serving domestic trade within the United States.
What is a key economic benefit of nations specializing in the production of goods and services where they have a comparative advantage?
Increased domestic unemployment.
Higher overall global production and consumption.
Decreased reliance on international trade.
Reduced efficiency in resource allocation.
