The International Trade Quiz Begin Quit

Directions: Get into teams of 4 or 5 (depending on class size) Each team should have a whiteboard and a marker Every member of each team must participate – a quiz grade will be given for participation based on total points. Teams may use notes and to find the answers There will be multiple points available for each question Two points will go to the team that holds up their whiteboard first with the correct answer. All other teams with the correct answer will get one point. Additional points will be granted for giving a correct explanation or answering a follow up question by the winning team. If that team is unable to give a good explanation, other teams can steal the points by providing the answer or additional explanation.

Most of the United States’ international trade is with: Other industrial nations Developing countries The OPEC countries Russia and China

The United States’ most important trading partner is: Mexico Canada Germany Japan

In recent years, the US has: Exported more than it has imported Imported more than it has exported Balanced its exports and imports Seen decreases in both exports and imports

One of the primary benefits of international trade is: More efficient use of world resources Less dependence on foreign suppliers Greater economic security for domestic producers More stable domestic employment

If the exchange rate changes from $1=200 yen to $1=300 yen: The dollar has appreciated in value The dollar has remained stable The dollar has depreciated in value The yen is ruined

Mexican imports of US goods: Create a supply of pesos Reduce the demand for dollars Create a supply of dollars Have no effect on the exchange rate

Depreciation of the dollar will: Increase the price of imports, and decrease the price of exports Decrease the price of imports, and increase the price of exports Increase the price of both exports and imports Decrease the price of both exports and imports

Protective tariffs are: Limits on the quantity of a good that can be shipped to a nation Excise taxes placed on imported items Licensing requirement or unreasonable quality standards Government payments to domestic producers

A nation’s true gain from international trade is: Increased employment in export industries An overall increase in output due to specialization and exchange Added technological knowledge The tariff revenue that goes to the national treasury

The “most-favored-nation” clause of reciprocal trade agreements: Outlaw tariffs on products for which the exporting country has a comparative advantage Single out a particular nation for exemptions from import quotas Means that any tariff reduction the US negotiates with one country must apply to all Confers special trade privileges to countries where the US has military bases.

The General Agreement on Tariffs and Trade (GATT) is based on the principle of: Establishing a single international currency Tariff reductions through multilateral negotiations Converting tariffs to import quotas Establishing common environmental and labor standards

The World Trade Organization: Sets tariffs to balance international trade among nations Is the successor to GATT Is better known as the European Union Sets exchange rates to balance international trade among nations

NAFTA refers to: National Association of Free Trade Agencies National Alliance for Foreign Trade and Assistance North American Free Trade Agreement Northern Alliance for Tariff Adjustment

Global competition: Forces domestic producers to become more efficient Drives up prices worldwide Reduces unemployment worldwide Creates higher flows of international migration

Relative exchange rates Relative inflation rates Countries engaged in international trade specialize in production based on: Relative levels of GDP Comparative advantage Relative exchange rates Relative inflation rates

Free trade based on comparative advantage is economically beneficial because: It promotes an efficient allocation of world resources It increases competition It provides consumers with a wider range of products All of the above reasons

Decreases with the level of fish caught Assume the following: Singsong: 1 fish = 2 chickens Harmony: 1 fish = 4 chickens In Singsong, the domestic real cost of each chicken: Is ½ a fish Increases with the level of fish caught Is 2 fish Decreases with the level of fish caught

Assume the following: Singsong: 1 fish = 2 chickens Harmony: 1 fish = 4 chickens If these two nations specialize based on comparative advantage: Singsong will produce both fish and chicken Singsong will produce fish, and Harmony will produce chicken Harmony will produce both fish and chicken Singsong will produce chicken and Harmony will produce fish

The “infant industry” argument for tariff protection is criticized for all of the following reasons except: It is difficult to determine which industries merit protection Direct subsidies are better for stimulating such industries They do not raise enough tariff revenue The tariffs often remain after the industry matures

The exchange rate currently used by industrially advanced nations is: The gold standard The Bretton Woods System Managed float A fixed rate system

Summary: Trade is good. Everyone should specialize according to comparative advantage. Trade barriers are bad. Exchange rates change with supply and demand.

Well done. You now have the comparative advantage in Economics Quizzes Well done! You now have the comparative advantage in Economics Quizzes! You have defeated all trade barriers! Your currency has appreciated! Play again Quit