3. Comparative & Absolute Advantage Exchange Rates Trade Deficits & Surpluses Strong vs. Weak Dollar Trade Barriers 115151515 226262626 337333 448444

4. South Africa has larger and more easily accessible deposits of gold in its land than the United States. This allows South Africa to mine and sell gold to the world much more cheaply efficiently than the U.S. This is known as this. What is absolute advantage?

5. Focusing on producing items that have a lower opportunity cost and trading for the items that have a higher opportunity cost is an example of this. What is comparative advantage?

7. The 3 main differences in countries that result in comparative advantages. What are differences in climate, differences in factors of production, and differences in technology?

8. Two countries that produce essentially the same product but with different levels of quality style and features (and price). Those products are known as this. What are differentiated products?

9. TRUE or FALSE: countries expect to be paid for their exports in their own currency. What is TRUE?

10. The exchange rate from Euros to dollars is €1 = $1.32. €100 will exchange for this amount of dollars. What is $132?

11. FIXED or FLOATING: a country that pegs its currency to another country’s currency and only trades its currency for a specified amount of the other currency has this type of exchange rate. What is fixed?

12. FIXED or FLOATING: a country that allows the exchange rate for its currency to go up and down based on the supply of and demand for the currency has this type of exchange rate. What is floating?

13. GOES UP or GOES DOWN: this is what happens to imports to a country when its currency devalues. What is GOES DOWN?

14. GOES UP or GOES DOWN: this is what happens to exports from a country when its currency devalues. What is GOES UP?

15. GOES UP or GOES DOWN: this is what happens to a country’s GDP when its currency devalues and results in increased exports. What is GOES UP?

16. This is what happens to a country’s ability to repay debt to a foreign country when its currency devalues. What is the debt becomes easier to pay off?

17. This is the term used to refer to a situation where a country’s exports are GREATER than its imports. What is a trade surplus?

18. This is the term used to refer to a situation where a country’s exports are LESS than its imports. What is a trade deficit?

20. The 2 groups who benefit from a trade surplus. Who are businesses that export and workers in businesses that export?

21. This is the group who might be harmed by a trade surplus. Who are consumers?

22. This is the group who benefits from a trade deficit. Who are consumers?

24. The 2 groups who might be harmed by a trade deficit. Who are businesses that compete with imports and workers in businesses that compete with imports?

25. This is why lower-income consumers are benefited when a strong dollar causes imports to go up. What is the lower-priced imports they normally buy get less expensive?

26. This is why the economy overall is harmed when a strong dollar causes imports to go up. What is less exports harm the economy overall by lowering the GDP?

27. This is why investment flows into the US due to a strong dollar. What is US investments will return a larger amount of the foreign currency in the future?

28. This is why lower-income consumers are harmed when a weak dollar causes imports to go down. What is the lower-priced imports they normally buy get more expensive?

29. This is why the economy overall benefits when a weak dollar causes exports to go up. What is more exports benefit the economy overall by raising the GDP?

30. This is why investment flows out of the US due to a weak dollar. What is foreign investments will return a larger amount of dollars in the future?

31. This is the term that refers to a tax on imports. What is a tariff?

32. This is the term that refers to a limit on the quantity of an import allowed by a country. What is a quota?

33. This is the term that refers to a prohibition of trade between two countries normally imposed by one country to put political pressure on the other country. What is an embargo?

34. This is the term that refers to when a country voluntarily agrees to limit the quantity of goods it exports to a country in order to avoid even harsher trade restrictions by that country. What is a voluntary export restraint?

35. TRUE or FALSE: tariffs & quotas usually result in destroying more jobs than they save. What is TRUE?

36. TRUE or FALSE: tariffs & quotas usually result in higher prices for those products subject to the tariffs & quotas than would otherwise be paid in a free market. What is TRUE?