WorksheetsInternational Economics
Total questions: 35
Worksheet time: 38mins
How do subsidies act as barriers to trade?
Subsidies impose a limit on the amount of foreign goods that can be imported.
Subsidies impose restrictions on the manner in which goods must be produced.
Subsidies artificially increase the price of imported goods.
Subsidies artificially lower the cost of producing domestic goods.
One party has a comparative advantage over other parties in producing a given good when it can produce the good at the
lowest absolute cost
lowest opportunity cost.
greatest rate.
greatest efficiency.
Suppose the value of the Mexican peso depreciates relative to the US dollar. How would this affect the United States or Mexico?
Consumers in Mexico would be able to purchase more goods from the United States for their money.
Consumers in the United States would be able to purchase more goods from Mexico for their money.
US exporters would see an increase in demand in Mexico for their goods.
Mexican exporters would seen an decrease in US demand for their goods.
What effect will barriers to trade usually have on a given domestic industry?
They will cause the domestic industry to fail due to a lack of consumers.
They will cause the domestic industry to function more efficiently.
They will cause the domestic industry to function less efficiently.
They will cause the domestic industry to fail due to a lack of competition.
Suppose last month the price of a Japanese-made Toyota was $17,000 in the United States (US), and the price of a US-made Chevrolet was $15,000 in Japan. The exchange rate was US dollar/yen 120. This month, however, the exchange rate is US dollar/yen 110. What will happen to the prices of the vehicles?
The price of both types of vehicle will rise
The price of both types of vehicle will fall
The price of Toyotas will rise in the US
The price of Chevrolets will rise in Japan.
In 2021, the Georgia Ports Authority moved forward with a multimillion-dollar project called the Northeast Inland Port, which aims to expand Georgia's port system to the Northeast region of the state. How will the project most likely affect Georgia?
Georgia's investment in infrastructure will reduce its public debt in the short term.
Georgia's ability to participate in international trade will increase
Georgia's domestic production of goods and services will decrease.
Georgia's businesses will raise their prices as they face increased competition.
Which of the following plays a significant role in determining exchange rates between two countries?
supply and demand for the goods and services offered by the countries
distribution of income amongst the population of each of the countries
availability of credit for consumers in each of the countries
level of foreign direct investment in the two countries
What factor typically causes the value of nation's currency to fall compared to other currencies?
high levels of inflation
low levels of public debt
low levels of unemployment
high levels of export activity
Which country's car manufacturing industry is the MOST protected from foreign competition?
Country Y, in which there are low tariffs on foreign cars and subsidies for domestic car manufacturers
Country Z, in which there are low tariffs on foreign cars and no domestic subsidies
Country W, in which there are high tariffs on foreign cars and no domestic subsidies
Country X, in which there are high tariffs on foreign cars and subsidies for domestic car manufacturers
What effect do protectionist barriers to trade have on the productivity of the global economy?
They increase global economic productivity because they improve the ability of countries to exploit their absolute advantages.
They decrease global economic productivity because they restrict the ability of countries to exploit their comparative advantages.
They increase global economic productivity because they protect fledgling industries from competition.
They decrease global economic productivity because they cause monopolies to develop in domestic industries.
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
the exchange rate.
any currency embargoes.
international tariffs.
whether or not the US dollar currently enjoys a comparative advantage in trade.
The ability to produce more of a given product using a given amount of a resource.
Absolute Advantage
Comparative Advantage
Positive Advantage
Negative Advantage
The ability to produce a product most efficiently given all the other products that could be produced.
Absolute Advantage
Comparative Advantage
Positive Advantage
Negative Advantage
A tax on imported goods.
Embargo
Subsidy
Tariff
Quota
Many in the US are concerned about the depreciation of the US dollar. They would like to increase the value of the dollar. Which is the BEST argument for or against whether the value of the dollar should be increased?
Yes, boosting the dollar will increase US exports
Yes, boosting the dollar will decrease US imports
No, boosting the dollar will anger foreign consumers and start a trade war
No, boosting the dollar will increase US imports and decrease US exports
Based on this table, if these two countries trade with each other, what should each country make?
South Korea makes all of the TV sets and Japan makes all the cars
South Korea makes all of the cars and Japan makes all of the TV sets
South Korea makes all TV sets and Japan gives up 50 TV sets in favor of 25 cars.
Japan makes all of the cars and South Korea shifts half of its car production to TVs
Floating exchange rates are determined by
supply and demand
the President of the United States
the central bank
the stock of gold reserves
Based on this table, which statement BEST describes the situation?
Germany has an absolute advantage in both products, but Greece should still specialize in fish.
Germany has an absolute advantage in motorcycles, and Greece has an absolute advantage in fish.
Germany has an comparative advantage in motorcycles, but Greece has an absolute advantage in both products.
In this particular case, neither side would benefit from specializing more in one of the particular products.
In an effort to bring down the government of Cuba, the US adopted a policy of refusing to trade with Cuba. This is called
a tariff
a negative trade balance
an embargo
a trade treaty
The purpose of a tariff, when used for protectionism, is to
limit the number of foreign goods imported into the country.
make an imported good more expensive than its domestically produced counterpart.
raise revenues to pay subsidies to domestic producers.
stall importation while perishable items rot.
Which of the following is usually an effect of an embargo?
Prices fall because consumers have more options.
Prices rise because consumers have fewer options.
Countries benefit because open trade is encouraged.
Smaller countries give in to the demands of larger countries.
What is the difference between comparative advantage and absolute advantage?
There is no difference
Nations with comparative advantage specialize in the production of goods for which they have a lower opportunity cost
Nations with comparative advantage specialize in the production of goods for which they have a higher opportunity cost
An unimportant consideration in a nation's decisions on what to produce & trade
Consumers benefit from _________ of the dollar.
compounding
appreciation
depreciation
recycling
Most currencies in the world today are ________ and are influenced by ___________
flexible; Gross Domestic Product
fixed; inflation
flexible/demand & supply
fixed; the Unemployment rate
Trade barriers generally make goods __________.
easier to buy
cheaper to buy
slower to buy
costlier to buy
Why is free trade beneficial to consumers?
more goods are available at cheaper prices
protection for domestic industries
consumers have a wider variety of goods available to them
protects against dumping
According to the table, what is the Euro equivalent of 1 USD?
1.32 Euros
0.53 Euros
.76 Euros
1.59 Euros
According to the table, what is the USD equivalent of 1 Australian?
0.97 USD
1.32 USD
1.28 USD
1.03 USD
The U.S. can produce 50 cars and 25 tools. Peru can produce 20 cars and 15 tools. Who has the absolute advantage in tools?
Peru
U.S.
neither
not enough info
