Japan will trade electronic equipment for goods in other countries as long as Japan’s balance of payments is in positive territory. Other countries have absolute advantage in electronic equipment. Japan has comparative advantage in electronic equipment. Other countries have more desirable exchange rates.

Which group is MOST LIKELY to benefit if the US Dollar appreciates against the Yen? Japanese business with contracts to buy US goods United States banks holding Japanese currency United States investors buying Japanese stock Tourists traveling from Japan to the United States

Which group benefits the most when the US Dollar depreciates? Foreign governments that hold US Treasury bonds Citizens from other countries traveling to the United States Business in the US that must repay loans to banks in other countries US citizens traveling in other countries

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Why do domestic producers of a good benefit from trade barriers like embargos or quotas? The number of goods imported is lower They decrease the desire for other countries’ goods Domestic producers get money from the government They tax the foreign completion

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Balance of trade differs from balance of payments in that balance of trade Is not used when calculating GDP Measures only purely financial transactions Is calculated by the Fed Measures only exports minus imports

What is MOST LIKELY to happen if the dollar becomes stronger relative to other currencies? Both imports and exports will decrease Both imports and exports will increase Imports will decrease, exports will increase Imports will increase, exports will decrease

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Which statement is correct concerning NAFTA’s role in trade NAFTA was replaced by the EU and is no longer relevant It is an agreement that promotes more free trade The countries that agreed to NAFTA were anti-trade before the agreement NAFTA establishes many trade barriers between the US and Mexico

A US tariff is placed on all imported MP3 players A US tariff is placed on all imported MP3 players. Which statement is true? Domestic producers of MP3 players will be hurt because they will now have more competition. Foreign producers of MP3 players will be hurt because their goods are more expensive now. Domestic consumers will be helped because there will be fewer goods to choose from. Foreign producers by MP3 players will be helped because the domestic goods are more expensive now.

Embargo Quota Tariff Subsidy If a country wanted to implement a barrier to trade that would help its producers AND consumers, which option would be best? Embargo Quota Tariff Subsidy

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Countries X and Y both produce salt and sugar Countries X and Y both produce salt and sugar. They have the same opportunity costs for both goods. Based on their information, which is true concerning trade between these countries? There is no information concerning absolute advantage so a decision about trade cannot be reached. Country X has comparative advantage in sugar and Country Y has comparative advantage in salt. Since neither has comparative advantage, they will not benefit from trade with each other. They should flip a coin to decide who should produce sugar and then trade to be better off.

If the government pays a business a subsidy, what is MOST likely to happen in that market? The market will see an increase in supply of the good. The market will see an increase in demand for the good. There will be a decrease in demand for the good. There will be a decrease in the quantity supplied.

Which BEST describes exchange rates? The price of one nation’s currency in terms of another An interest rate charged to consumers who take out a loan An increase in the price of a market basket over a given time period The difference between the total number of exports minus the number of imports

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Country X has decided that economic growth will be their primary goal for the next several years. The best way to achieve this would be to Invest heavily in the stock market Invest in capital and education of workers Decrease trade with other countries and focus on more domestic production Reduce the amount of government spending

Which headline would ASEAN be MOST LIKELY to oppose? “Philippines considering subsidies to fishing industry.” “Vietnam to remove quotas on Malaysia.” “Canada favors trade with Mexico over the US.” “Germany increasing tariffs on French goods.”

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One argument in favor of a tariff would be that it would Help foreign producers by allowing them to ship goods to the US Reduce competition for domestic producers Force foreign companies to ship goods that meet certain quality standards in the US Help domestic consumers by allowing them to pay a lower price

How do tariffs affect domestic consumers over time? There is a wider variety of goods available The consumers pay lower prices for both foreign and domestic goods Fewer foreign goods are available and domestic producers will likely increase prices Domestic goods are more expensive, but foreign goods are cheaper

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Which trade barrier is associated with laws that require certain shipping methods and proper handling of food or equipment? Embargoes Subsidies Quotas Standards

The United States does not allow any company to legally import goods from Cuba. This type of trade barrier is known as a/an Subsidy Quota Embargo Standard

The United States exports $10 million worth of farm equipment to Nicaragua. In terms of international accounting, this transaction will show up in Only the balance of trade because it is an export Neither the balance of trade or balance of payments because it deals with money not goods Both the balance of trade and balance of payments Only the balance of payments because it is an export

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Trade will MOST LIKELY take place when two countries Specialize in producing goods in which they have absolute advantage Produce essentially the same goods Have the same opportunity costs in goods Specialize in producing goods in which they have comparative advantage

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Suppose the EU removes ALL tariffs, embargoes, subsidies, and quotas Suppose the EU removes ALL tariffs, embargoes, subsidies, and quotas. What is MOST LIKELY to happen to the international value of the Euro? Depreciate, because Americans will want more European goods Appreciate, because Europeans will buy more goods from other countries Depreciate, because Europeans will buy more goods from other countries No change because trade barriers do not affect exchange rates

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