1. The International Trade Quiz
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2. 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.

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

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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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.

13. 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

14. 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

15. 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

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

17. 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

18. 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

19. 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

20. 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

21. 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

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

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

24. 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!
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